Case 1 - Management Control Systems Ekky Sabdina Supangat

Ekky Sabdina Supangat 1091002126

1. What is Wal-Marts strategy? What is the basis on which Wal-Mart builds its competitive advantage? Answer : Wal-Marts strategy is selling branded products at low cost. The basis is Wal-Mart deliberately ensured it didnt become too dependant on any one supplier, no single vendor constitued more than 4 percent of its overall purchase volume. Wal-Mart used saturation strategy for store expansion. The standard was to be able to drive from the distribution centre to a store within a day. Wal-Mart built large discount stores in small rural towns. 2. How do Wal-Marts control systems help execute the firms strategy? Answer : Each store constituted an investment center and was evaluated on its profits relative to its inventory systems. Data from over 5,300 stores on its such as sales, expenses, and profit and loss were collected, analyzed, and transmitted electronically on a real-time basis, rapidly revealing how a particular region, district, store, department within a store, or item within a department is performing. Information enables the company to reduce the likelihood of stock-outs and the need for markdowns and slow moving stock, and to maximize inventory turnover. Wal-Mart instituted several other policies and programs for its associates: incentive bonuses, a discount stock purchase plan, promotion from within, pay raises based on performance not seniority, and an open-door policy. Wal-Mart had also persuaded its suppliers to have electronic hook ups with its store. Wal-Mart owned its trucks when most competitors outsources trucks.

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