Question

WALMART, DOLLAR STORES, AND AMAZON: WHO IS BUYING WHOSE LUNCH? - Walmart deviated from its cost-leadership strategy designed to take market share away from Target by introducing organic foods, remodeling some stores, and reducing the variety of products offered, thereby increasing prices on some goods. - Recognizing its mistake, Walmart has re-focused on low costs and prices, increased its product diversity, and is opening 40 new express stores. Will Walmart will be able to recapture its cost leadership position in the market after giving it up to rivals?

Answer 1

Cost leadership strategy is a strategy of acquiring a competitive advantage by lowering the prices of our own products. The reason behind is the law of demand. Law of demand says that there is an inverse relationship between the price of the product and it's demand, other things being constant.   In this case, wallmart initially did a mistake by increasing prices on some goods thought it enhanced various other qualities. But later, it focusses on low prices and low costs. Hence, obviously it would gain competitive advantage because now the prices are low and also various other aspects have been improved. Also, it is expanding its business by opening 40 new exoress stores. Hence, wallmart will be able to recapture it's cost leadership position.