Walmart’s Generic Competitive Strategy and

Intensive Growth Strategies

UPDATED ONUPDATED ON AUGUST 22, 2018 BY EDWARD FERGUSON

A Walmart Supercentre in Thornhill,

Ontario, Canada. Walmart Inc.’s generic strategy for competitive
advantage (Porter’s model) and intensive strategies for growth (Ansoff
Matrix) suit the conditions of the retail industry. (Photo: Public
Domain)
Walmart Inc. (formerly Wal-Mart Stores, Inc.) applies its generic
strategy to achieve competitive advantage based primarily on low cost
and the correspondingly low selling prices of goods offered to
consumers in the international retail industry. Michael E. Porter’s
model illustrates that a company uses a generic competitive strategy
as a general and basic approach to effectively compete against other
firms in the industry. In this business analysis case of Walmart,
competitive advantage is maintained through a variety of strategies
and tactics. However, the main generic strategy applied in the
business relies on minimizing cost. This condition enables the
company to adjust its selling prices accordingly. As shown in
the SWOT analysis of Walmart Inc., selling price minimization is a
strength that makes the business competitive against other firms that
operate in the global retail market. The company directly and
indirectly competes against firms like Costco
Wholesale, [Link] Inc. and its subsidiary Whole Foods
Market, Home Depot, and eBay Inc. These companies influence
Walmart’s strategic management and the implementation of its
generic competitive strategy and related strategic objectives.

Walmart Inc. uses its intensive strategies (Ansoff Matrix) to grow the
business and minimize the effects of the retail industry’s competitive
forces. Considering the saturated nature of the retail market, the
company experiences the strong force of competitive rivalry, as shown
in the Porter’s Five Forces analysis of Walmart Inc. With multinational
operations, the company uses its intensive growth strategies along
with its generic strategy to counteract the negative impacts of
competition, especially in the e-commerce environment.

Walmart’s Generic Strategy for Competitive

Advantage (Porter’s Model)
Walmart Inc.’s generic strategy is cost leadership. Michael Porter’s
model defines cost leadership as a generic competitive strategy that
focuses on achieving low costs. As a low-cost producer of retail
services and related business outputs, Walmart is able to compete
based on low selling prices. Low prices are a fundamental strategic
objective used in the company’s pricing strategy (see Walmart Inc.’s
Marketing Mix or 4Ps). Low prices are a main selling point of the retail
business. The company uses various approaches to maintain low costs
and, consequently, low prices. For example, through automation and
related technologies, and through minimized spending for human
resources, the company achieves low costs in operations.

Cost leadership involves low product differentiation. With focus on low

prices as a selling point, Walmart Inc.’s retail services are common
and, thus, poorly differentiated from retail services from other firms in
the industry. In addition, this generic strategy involves a low level of
market segmentation. For example, the company offers its retail
services to every consumer in all segments of its target markets.
Doing so aligns with Walmart’s corporate mission and corporate
vision, which aim for leadership in the global retail market. To succeed
in implementing its generic competitive strategy, the company relies
on process efficiency, management approaches, and other strategies,
such as intensive growth strategies, that help reduce costs. With the
strategic objective of keeping costs low, the corporation is known for
large-scale imports of low-cost goods from countries like China.

Walmart’s Intensive Strategies for Growth

(Ansoff Matrix)
Market Penetration (Primary Strategy). Walmart’s main intensive
growth strategy is market penetration. In Igor Ansoff’s model, this
strategy entails selling more goods or services to the company’s
current markets. Current markets are those where the business has
existing operations. In implementing this intensive strategy, Walmart
Inc. sells more goods and services to its current consumers by giving
discounts and related offers. For example, as a cost leader, the
company offers discounted wholesale packages of various goods. In
addition, Walmart enhances its online presence to improve customers’
access to the products it sells. This access improvement contributes
to the growth of the company’s sales revenues. A strategic objective
related to this intensive strategy is to increase the company’s market
share, especially in the biggest retail markets, such as the United
States. Walmart applies market penetration by using the selling point
of low prices, which is achieved through the cost leadership generic
strategy.

Market Development. This intensive strategy is of secondary

significance in supporting Walmart Inc.’s business growth. Market
development involves offering the company’s existing goods and
services to new markets. For example, in using this intensive growth
strategy, Walmart opens new stores in countries where it does not yet
have operations. A related strategic objective is to continue to
establish the company’s presence in new markets. This objective
includes online presence for retail transactions. The cost leadership
generic competitive strategy supports the market development
intensive growth strategy through low prices that attract consumers
to Walmart stores in these new markets.

Product Development. Walmart Inc. uses product development as a

minor intensive strategy for growing the retail business. Based on the
Ansoff Matrix, product development involves developing and offering
new products to the markets where the company currently has
operations. In this case, Walmart has minimal investment in new
product development. The company focuses its investments on sales
and marketing, which are at the core of the retail business.
Nonetheless, using this intensive growth strategy leads to the
strategic objective of investing more in research and development
(R&D) to introduce new services or improve Walmart’s existing
products. The cost leadership generic strategy requires that product
development must focus on new products that do not impose costly
processes.

Diversification. This intensive growth strategy involves providing

entirely new products in new markets, which are usually industries or
sectors where the company does not yet operate. For example,
Walmart Inc. entered the video streaming market in 2010 upon
acquiring the content delivery and media technology company Vudu
Inc. A strategic objective in using this intensive growth strategy is to
search for and acquire companies that can be integrated into
Walmart’s existing operations, such as via the company’s e-commerce
website. In following the cost leadership generic competitive strategy,
such acquisitions must involve high efficiency and support low-cost
operations, in line with Walmart Inc.’s operations management
strategy. Despite its use in the business, diversification remains a
minor intensive strategy in growing the company. Walmart Inc. has a
low rate of diversification, as the business focuses on retail
operations.