COST LEADERSHIP ANALYSIS

Walmart
1. Economies of scale
The brand has led the US retail market through its lowest prices. Today, it
operates more than 11000 physical stores in 28 countries and has ecommerce websites
in more than 11 countries. The focus of Walmart is now on creating a seamless
experience for its customers whether they are shopping from their mobiles or in the
stores. The brand employs around 2.3 million workers whom it calls associates. 1.5
million of them are working in US.
2. Everyday Low prices
The cornerstone of Walmart’s business strategy is its everyday low prices. The
brand sells a very large range of products and its focus always remains on providing
the least prices. The millennial customers are interested in three things. They are
convenience, low prices and product quality From grocery and entertainment to all
kinds of products, Walmart provides a large assortment of products. The strategy is to
attract the customers with low prices and keep them engaged with discounts and
shopping convenience. Its low prices strategy is a real winner and the reason is that
most Americas are obsessed with low prices and many of them will not shop unless
there is a discount or sale attached
3. Large sales volume:
The largest retailer of the world has grabbed the largest market share based on
its pricing model. There are two more things about it. They are its widespread
operation and a large array of products. Out of its more than 11000 stores, 4600 are
there in the US. If customers can find almost everything at your store, and that too at
the lowest prices and with the same convenience that everyone wants then you know
how easy it is for such a retailer to be America’s favourite. This is how Walmart
achieves large sales volumes
4. Walmart’s Supply Chain Innovation for competitive advantage
Researchers often highlight the role of innovative supply chain management in
retail. Walmart’s more than 150 distribution centers have played a central role in
strengthening its business. Its distribution system is one among the largest in the world
and serves a large number of stores, clubs and also caters to the customers directly. Its
transportation system has a fleet of 6,100 tractors, 61,000 trailers and more than 7,800
drivers. This network of Walmart’s distribution centers ships general merchandise, dry
groceries, perishable groceries, and other specialty categories to its consumers daily
5. Lower Operational Costs
Walmart had managed low operational and overhead costs. However, owing to
high pressure from various sources in the recent times, it made several improvements
to make its image in the market and among its customers better. It has improved its
employee wages and their working conditions. Earlier they were subjected to very
high pressure work conditions and paid lower salaries. The situation has grown a lot
better after Walmart made changes to its HR strategy.
6. Technological Innovation for better customer service
 Walmart has also made fast move into ecommerce. It has a global e-commerce
segment with its base in Silicon valley, California that leads all the online and mobile
innovation for Walmart. The innovation center of Walmart has some brightest minds
that are working to provide the customers a seamless experience whether they are
shopping online, mobile or in stores
DIFFERENTIATION ANALYSIS
T- mobile
1. Strong Focus on Customer Service
T-Mobile’s commitment to providing high-quality customer service is of great
strategic importance to the company. This commitment is a means of distinguishing
T-Mobile from its competitors when prices and technology (from a layman’s
perspective) are not wildly different within the wireless industry. Value is created by
T-Mobile’s ability to distinguish itself from its competitors in an area other than price.
T-Mobile’s focus on customer service provides value to the customers (in terms of
services received) and value to the company (in terms of customer retention and
positive public exposure). J.D. Powers has reported on a general decrease in customer
satisfaction levels in recent years. However, through this period, T-Mobile has
repeatedly been named as the number one wireless service provider in terms of
customer service. While Verizon periodically scores highly in some categories of
customer service, the other two national providers, Sprint and Cingular, regularly
score very poorly in all categories. Therefore, T-Mobile’s focus on customer service
can be categorized as rare; thus fulfilling the second criteria of a core competency.
2. Targeting the Youth Market
T-Mobile has been successful in positioning itself as the carrier of choice for the
youth market. T-Mobile’s use of spokespeople who are highly popular within the
youth market along with T-Mobile’s lower than average rates have enabled the
company to successfully target the youth and young adult demographic. This market
provides significant value to the company for a number of reasons. The youth / young
adult target market is much more likely to rapidly upgrade their existing handsets.
This target market is also much more likely to adopt new services. Recent examples
include the wide-spread adoption of SMS (text messages), ring-back call tones,
picture mail and video messaging. All are either existing or new technologies that
were adopted by the youth market long before the older market segments. These
services are typically packaged as add-ons to standard service contracts and thus are a
significant revenue generator for carriers. Furthermore, the youth market is much
more likely to use a cell phone as their sole means of telephone service.
3. Diversification Strategy
Because US-based T-Mobile is a subsidiary of Deutsche Telekom, it does not
necessarily have the autonomy to pursue its own diversification strategies. However,
T-Mobile is in a position to take advantage of the parent companies diversification
strategy. As has been previously stated, Deutsche Telekom has diversified into
providing wireless, wired and internet communications as well as providing software
and R&D services at the b2b level. US T-Mobile is able to take advantage of the
services and skills offered by its sister companies through Deutsche Telekom’s use of
economies of scale. In economies of scale, firms create value by successfully sharing
resources and capabilities at an intra-corporate level and by transferring core
competencies creating in one business unit to another