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Walmart Information Systems Essay

2412 words - 10 pages

Walmart Information Systems
Founded in 1962 by Sam Walton, Walmart has grown to be the largest retailer on the globe. Driven by Mr. Walton’s 10 rules to build a business, Walmart promises to “save people money so they can live better (Wal-Mart Stores, Inc., 2014)”. One of those rules is to “control your expenses better than your competition (Wal-Mart Stores, Inc., 2014)”. Walmart is recognized as leader in incorporating cutting edge information systems and processes that drive out costs and provide advantage over their competitors. In order to maintain their spot at the top of the global retailers list, Walmart continually seeks to improve the technology used to ensure they maintain competitive advantage, efficiently process data, and ensure business continuity and security.
Competitive Advantage
Competitive advantage is a driving force in Walmart’s business model. With 2.2 million associates, 10,700 retail stores and 245 million customers served weekly in 27 countries, Walmart requires an array of information systems functioning harmoniously to meet all of the requirements and expectations of their employees, customers and communities (Walmart, 2013). Mr. Walton believed that sharing profits with and motivating employees and partners were rules of building a business. Sam Walton once said that “our people make a difference” referring to the associates that he viewed as partners that should share in the profits of the company (Wal-Mart Stores, Inc., 2014). Walmart associates process hundreds of millions transactions every week in their retail stores. However, the retail store is only one component of Walmart’s vast supply chain and logistics network which are largely responsible for their continued success. Driving costs out of these networks requires a steady flow of information between multiple internal and external systems that can process data into relevant business intelligence.
Competition is fierce in the retail industry and Walmart has built its company on the principle of controlling costs in order to offer products at lower costs to customers. The Five Forces Model developed by Michael Porter can be used to understand the retail industry’s competitive pressures in terms of buyer power, supplier power, threat of substitute products or services, threat of new entrants, and rivalry among existing competitors (Cummings & Haag, 2013).
Buyer power within the retail industry is very high due to many retailers providing the same or similar products. Walmart has used their information systems to improve efficiency and drive out costs that allow them to offer the same products at lower prices in many cases, which sets them apart from other retailers and thus reduces buyer power. However, other retailers such as Target are reducing or eliminating the price gap by offering similar products at similar pricing as indicated by Supermarket News price check survey earlier this year (Gallagher, 2014). Maintaining...

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