Month: October 2015

Walmart, created by Sam Walton in 1962, was built on the idea of low prices and great service. After becoming a public company in 1970, they went on to build a corporate empire and is currently ranked first on Fortune 500.

Unfortunately, not all fairy tales can last forever.

Walmart is floundering after undergoing it’s worst stock decline in over 25 years. (Bloomberg) Analysts predict that the company’s profits will drop 6-12% in the next year. (Business Insider) Walmart has been riding high for years by attracting customers with their variety of goods at cheap prices. However, with wholesalers becoming increasingly popular, such as Costco and Trader Joe’s, Walmart is no longer consumers “go-to” store.

So how will Walmart respond?

A good starting place would be reconsidering their business model. To lower their cost structure, Walmart employees are paid minimum wage. However, this provides low incentive to work hard and satisfy customers’ needs. This may be the reason that Walmart, a company founded on great service, is receiving complaints on the treatment of their customers. In addition, their “everyday low prices” may be so low that it’s unsustainable. In response to all the speculation, Walmart CEO Doug McMillon’s taking this all in stride and claims that the company will “continue to get stronger.” (Business Insider) Despite McMillon’s optimism, only time will tell the future of Walmart.

Sources:

Business Insider: Walmart’s Entire Business Model is Crumbling

Business Insider: Walmart is Finally Paying the Price

The Street: Walmart’s Entire Business Model is Being Smashed to Pieces

Walmart: Company Facts

 

 

In 1976, three friends came together to develop a computer prototype deemed the Apple I. Steve Wozniak, Steve Jobs, and Ron Wayne have come a long way since then with the development of MacBooks, iPhones, and iPads. However, it is unlikely that they could have foreseen the empire that Apple would become today. After all, they never predicted their small computer business would expand into the automotive industry.

After dominating the technology market for years, Apple is trying their hand at producing cars. The project, code-named “Titan”, will be an electric car and is said to be shipped out in 2019. It will have CarPlay capabilities, which allows users to connect their iPhones and get directions, receive phone calls, and listen to music.

Although Apple is a multi-billion dollar company, the iCar is a risky venture and may result in huge losses for the business. Apple’s key competitor will be Tesla, as they are both producing electric vehicles for the same customer segment. The cars are rumoured to be similarly priced, giving an advantage to Tesla, who has already built a reputable band name. Apple is hoping their product differentiation through CarPlay will overcome customer’s loyalty to Tesla. Nonetheless, the iCar is still in the making and has a long ways to go before hitting the streets.

Sources:

Global News: Would You Buy an iCar?

The Economist: From iPhones to iCars

The Wall Street Journal: Apple Targets Electric-Car Shipping Date for 2019

Macworld: iCar Release

Porter’s Generic Strategies