Smart biz choices
D. S. Cheema

Wal-Smart: What it Really Takes to Profit in a Wal-Mart World
by William H. Marquard.
Tata McGraw-Hill. Pages 272. Rs 450.

Wal-Smart: What it Really Takes to Profit in a Wal-Mart WorldGiants like Wal-Mart have changed the traditional rules of the economic game. There is no parallel of Wal-Mart as a business entity in the history of business. Founded by Sam Walton 37 years ago, it is perhaps the only MNC, having direct or indirect impact on the lives of such a large number of human beings around the globe. Over the years, it has earned the admiration of the huge customer base it has, and envy, threat and even contempt of the competitors, retailers, vendors and communities, at the same time. As a highly successful big-box powerhouse retailer, it provides an outstanding example of synergy of the science and art of management through straightforward easy-to-understand value proposition, which is backed up by robust and finely tuned business models.

The author explains the impact of Wal-Mart on the US and the world economy. He insists that choosing "what to do" and "what not to do" with the "intention" of making that choice happen in a world of dominant players is the only smart choice business organisations have. The first part of the book analyses how the Wal-Mart world has happened and why this powerful retail brand is dictating the rules of the retail markets. Companies can make choice of their focus out of innovation, brand, cast, reliability, relationship, etc., and do something incumbent competitors cannot do or replicate easily. Wal-Mart chose cost and has been reinventing and pursuing discount retailing for a long time, through large-scale cost reduction routinely, to seek price leadership. It has perfected its "productivity loop" through merchandising strategy of Every Day Low Pricing (EDLP) by managing cost and passing on saving to the customer. Its success is based on greater efficiency through better inventory management and logistics.

The author lays bare the unique "DNA" of super retailer which makes it a winner in a long race. He identifies five winning elements of Wal-Martófocus, correction of errors, constructive paranoia, thrift and "we-can-make-it-better attitude".

Though competing with giants like Wal-Mart is eminently possible, the competitors have to make specific choices to compete wisely to survive and thrive, keeping at the back of mind Wal-Martís reputation of squelching its competitors and suppliers.

The second part is about how companies can become Wal-Smart. The authorís formula for competing successfully is based on the triad of choice between differentiating, emulating and dominating. Successful giants should perforce to say "No" to certain areas of operation, leaving opportunities for competitors to differentiate themselves in one or more of these areas. Competitors also must emulate such attributes of the giants, which fit in their own scheme of things. Also, competitors should try to become No. 2 by dominating the remaining market which the giants donít occupy.

The author gives the community strategy of "where to belong", "how to align" and "how to engage" as the winning formula. "Where to belong" has three dimensions of physical, financial and emotional. "How to align" means aligning business strategy with community strategy and "how to engage" in public debates for community good. Robert Goizueta, the late chairman of the Coca-Cola company, aptly described engaging strategy: "We cannot for the long term exist as a healthy company in a sick society."

The suppliers have a triad of specific choices if they want to winóthe choice of leveraging selected strengths of the giants, investing in a manner that the giants need the suppliers more than the suppliers need the giants and diversifying away from the giants. The author provides case studies of Manco and Procter and Gamble to prove his point.

This book is not about Wal-Mart, it is a business strategy book for the 21st century. The author has distilled his experience of many years as a thinking partner, across company and industry borders. Deep insight of Wal-Mart DNA can help business organisations in meeting the daunting challenges of surviving and thriving in the unique business world created by the giant players.