Staying in your core

Well, I have made it through the first phase of my Strategic Management MBA class and am truly enjoying the concept of looking from a strategic perspective at how the wants, needs and demands of a market have to be aligned with the core competencies of a business who wants to reach those customers. This morning I got to read an article from my wise professor of Strat about what happens to companies when they decide to stray away from their core competencies.
Here is the link for your reading pleasure: http://fxn.ws/hw84Hu

In this article Wal Mart- the retail giant is said to have left the founding purposes and core that the founder Sam Walton built it upon. If you ask the general person on the street, what is Wal-Mart known for, they would likely tell you "Lower Prices." And yet, Wal Mart has taken a strategic approach to introduce items that are higher priced, and to even increase prices on some items while lower prices on others. With the amount of volume that comes through their stores, I am not sure how they, they being the executive strategic team, would think that consumers would not notice. As part of my first project, we were dealing in the beverage industry, specifically with Coca Cola (KO), PepsiCo (PEP), and Dr. Pepper Snapple Group (DPS). Clearly the big two players in the market are Coca-Cola and PepsiCo. However all three state in their financial reports that Wal-Mart is one of their big customers. Both DPS and if I recall, KO stated that they had been dealing with some pricing and advertising discrepencies with Wal-Mart but those had been resolved in the 2010 year and shelf space and location of retail displays were being cleared up. It makes me wonder if the beverage and snacking industries (PepsiCo) are being hit with pricing shifts by one of the most well leveraged and well positioned retail corporations today, what their true market strategy is.

As we found in our project, Coca Cola's most critical core Competency is their brand. The "Coke" or "Coca Cola" brand is globally known. This I think ties with one of my previous blogs about Starbucks and since that post I can see that this kind of brand recognition is possibly what they are after within their Coffee and food industry. So, if Wal-Mart brand is known to be value based and a strong Cost-leadership corporation, then they tried to differentiate with certain product lines and they flopped completely.

From a retail product display perspective, I can say that my wife and I have wondered around a few of the new stores with their wider and more open layout and I can say it was VERY frustrating to us as we always knew how to get in, get our stuff, and make it to the customary 10 people deep lines because they never have enough people up front to handle the demand. The know people will generally wait, and so they can save cost of labor having limited number of people there. Flipped from that perspective, my wife and I visited competitor Target the other week, and we approached the lines and there were 6-7 people in 4-5 checkouts, and I could hear over some radio's "Please send all available help to the front to assist" and within moments there were 4-5 more checkout lanes available and we were out of there within a matter of minutes. That experience and customer based approach stuck with me. I feel like Wal-Mart HAS strayed from being customer focused for the best prices and experience, and gone to being the profit driven machine that it is today. Wal-Mart needs to make a shift, it's just a matter of how quickly that shift will show up in their EPS and Net Income.