A corporate strategy is designed to establish a business’s value, set goals for profits and growth, and, most importantly, diversify the operation into several product markets. Conversely, a business strategy is designed to establish a competitive advantage and increase a company’s performance in a particular market. The corporate strategy informs what type of business model the company will implement. For instance, Walmart’s corporate strategy is growth, evident from its expansion into the e-commerce market. To secure the effectiveness of its corporate strategy, Walmart continues to focus on the cost leadership business model, which has served the company’s success for decades.
Growth-oriented corporate strategies allow businesses to enlarge the area of their operation. For example, Walmart’s plans for expansion encompass rigorous competition in the e-commerce market. Specifically, Walmart identifies Amazon as its current biggest competitor. According to Jindal et al. (2021), Walmart dominates the offline retailing sector, whereas Amazon’s presence overshadows most competitors in the online trade domain. Walmart attempts to realize the corporate strategy of going into the delivery sector by imitating Amazon’s retailing practices.
Walmart is famous for its accomplishments in reducing the costs of operations. Walmart’s current business strategy is cost leadership, which focuses on providing goods at a lower price than the competitors (Xie & Cooke, 2018). However, to expand the e-commerce market, the company has decided to deviate from this approach. In its e-commerce battle with Amazon, Walmart “invests inordinately in their physical infrastructure to provide quicker delivery of orders” (Jindal et al., 2021, p. 271). This increases product prices, which turns off many customers as they find this inconsistent with the company’s mission statement. As Jindal et al. (2021) note, customers value convenient purchases, lower prices, and certain rather than faster delivery. In short, due to the poor choice of a business model, Walmart jeopardizes the success of its growth-oriented corporate strategy in the e-commerce market.
In conclusion, Walmart’s failure in competition with Amazon shows the relationship between its corporate and business strategies. Whereas corporate strategy aims to establish market, goal, and value, business models are designed to facilitate performance. To grow business and diversify revenue, Walmart attempted to imitate Amazon’s retailing practices with no regard for its competitive advantage. Thus, the lack of strategic adaptation to the specifics of the online market has doomed Walmart to lose the competition.
References
Jindal, R.P., Gauri, D. K., Li, W., & Ma, Y. (2021) Omnichannel battle between Amazon and Walmart: Is the focus on delivery the best strategy? Journal of Business Research, 122, 270-280.
Xie, Y., & Cooke, F. L. (2018). Quality and cost? The evolution of Walmart’s business strategy and human resource policies and practices in China and their impact (1996–2017). Human Resource Management, 58(5), 521-541.