External business environment is the external factors that affect business operations and they include political, economic, legal and technological factors. Economic factors include inflation, unemployment, rates of interest etc. inflation for example has a direct magnitude on the level of prices in the market. Unemployment on the other hand affects people’s level of income which in turn affects their purchasing power. Legal factors include changes in the government’s regulatory procedures. Technical factors are advancement in technology resulting to a change in the production process (Lewis p 95).
Sustainable competitive advantage for a firm is necessary for a business to be able to stay in a competitive business environment for a long time. To be able to attain this goal, certain resources and capabilities are necessary. These capabilities are effective leadership skills which encourage continuous inventions and innovation within the firm. Knowledge is also a necessary resource in order to maintain a sustainable competitive environment. Flexibility is a necessity to be able to maintain a competitive environment.
Vision for a business is the statement that gives the aims the business intends to accomplish in the short run. A mission on the other hand is the statement that defines the firm’s goals and objectives. The goals and objectives of a firm are the specific levels that a company sets to achieve. The difference between a vision and mission is that vision is short term while mission is set to be accomplished over a long period say ten or more. Mission statements are more general while visions, goals and objectives are specific are short term (Bhatia p 195).
For a business to be able to establish a competitive environment, it must identify several competitive dynamics. In this process the company uses several tools to identify tools that would fit its situation. These include evaluating the strengths, weaknesses, opportunities and threats of the company. This process may lead to firms getting the same result which leads to setting up similar strategies.
Question two
The core business strategies that Wal-mart is applying today are several. Among are lowering prices to be able to regain back its lost customers. The store is also changing the types of goods it’s offering to its customers. The store has also added organic foods to its stock. In this strategy, the management aims to recapture high income customers who had left for rival stalls. The business has moved from selling tight jeans to sweat pants and socks. This will attract a different group customer. The store has also started offering discounts to its customers. Selective pricing also aims at attracting different group of customers (Bustillo).
The strategy of lowering prices, giving discounts and bringing in a new stock of organic foods may not be efficient as they were initially when the stores started. Customers for example are not interested in paying premiums on organic foods that the store intends to employ selective discounting. During the years when the store was doing well, it was able to establish a good market base. As a result, it was able to establish a good market base of loyal customers which it has been to maintain for decades. The store has also been able to establish numerous braches which are well stocked. This makes it accessible to most of its customer’s country wide. In the last few years however, these branches have not however been well stocked. As a strategy to move forward, the store should lower the prices of most of the goods in the stock relative to other stores. Since the store targets to reach high income customers, it should also stock relevant goods.
Question three
Countering competition is one of the strategies that the store has adopted to be able to attain growth. Innovative measures such as discounts on organic foods and employing more human capital are some of the innovative measures that the business has taken to enhance growth in sales. The store also sought to reduce the prices of some goods. It also changed the types of goods it added in the stock i.e. from tight jeans to sweat pants. These were meant to change the group of customers targeted. These strategies were however not very successful as it led to shift in the target market from high income earners to middle income earners. Countering competition on the other hand did not prove to be an easy task to the constantly growing market of suppliers. Many retailer stores had also come up (Bustillo).
Human capital strategy fit in the business strategy in that efficient leadership was necessary. Furthermore through human capital, innovation and invention ideas are accessible. The store though has not been able to fully use its human capital. This is evident through the failed policies that the store has been formulating and implementing. Some of these policies are the discounts that store introduced on organic foods that did not catch much of its customer’s attention. Due to the many failed measures that the stores have implemented, it should increase on the level of invention and innovation. More creative and relevant strategies should be sought by the top management. Such strategies may include promotional campaigns and change in display to make it more appealing to the eyes. The company should also restore the initial policies of one stop shopping mall by stocking a wider variety of goods.
Work cited
Lewis P., Goodman S., Fandt P., Michlitsch J. Management. Chicago: Cengage Learning, 2006
Bhatia S. Retail Management. New York: Atlantic Publishers & Distributors, 2008
Bustillo M. Wal-Mart Tries to Recapture Mr. Sam’s Winning Formula
Retrieved on 22 February 2011.
