Walmart’s decision to incorporate grocery stores in some locations creating supercenters is a corporate strategy diversification. It targets the operations of the company while expanding its reach to consumers. Corporate-level strategies seek to specify approaches that a company can adopt to gain a competitive advantage over its competitors.
As a strategy, diversification lowers the variability in the profitability of an organization. It brings several benefits that include risk reduction and exploitation of resources such as time, talent, and managerial skills. Walmart has a low level of diversification since its revenue is derived from Walmart International and Walmart USA. A high level of diversification can affect the value of a firm.
The introduction of grocery stores and supercenters cannot be considered a business-level strategy since this strategy is focused on the mechanisms used by a company to edge over competitors. The main aim of a business-level strategy is to increase business value and brand awareness as perceived by the consumer.
The focus can be on the pricing of the product or product differentiation in a bid to increase consumer value. However, in this case, the supercenters and grocery stores act as a corporate strategy diversification as they seek to enhance competitiveness, gain market influence, and economies of scale.
Walmart’s supercenters are a corporate strategy diversification useful against its biggest competitor Amazon. Le states that companies embrace diversification when they cannot attain their intended goal through their expansion strategy. By using supercenters and grocery stores, the company seeks to dominate the market and make its name known through its volume buying power and size.
Walmart’s main strategy is to provide consumers with a one-stop shopping experience. The supercenters help Walmart’s consumers to cut on time wastage by accessing all products in one stop. The one-stop-shop alternative works effectively for those who have no time to visit diverse stores.