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How does Wal-Mart Keep their competitive advantage and sustain th...

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How does Wal-Mart Keep their competitive advantage and sustain their position in discount retailing?

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  • October 20, 2007
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Founded in 1962 by Sam Walton, Wal-Mart has grown to be the largest discount retail chain in the world. Wal-Mart currently has over 6,500 thousand stores in 14 different countries, 1.8 million plus associates and nets sales this last quarter of over 85 billion dollars, an increase of 8.3 percent (walmart.com). The only other corporation larger than Wal-Mart to date is Exxon Mobile. So how does Wal-Mart keep their competitive advantage and sustain their position in discount retailing?Historically Wal-Mart main competitive advantage has been their low price of brand name goods. Though their most important competitive advantage, it is not their only one. Wal-Mart's competitive advantage is based off of many key strategic choices, not just their low prices.

Their strategic choice of location has given Wal-Mart a first mover advantage. By Wal-Mart strategically placing their stores within the proximity of their distribution centers, Wal-Mart is able to keep their in-house inventory at a minimal. Their distribution network is based on the hub-and spoke concept, which places stores no more than a day's drive from its distribution centers and replaces goods within 24 hours (refrigeratedtrans.com). Their distribution centers carry more than 85 percent of all merchandise sold by Wal-Mart. With over 3,000 tractors and 12,000 trailers, Wal-Mart has one of the largest private fleets in the country with an on-time delivery record of 99.5 percent, which Mauldin believes is not good enough, that anything less the 100% is unacceptable (refrigeratedtrans.com).

Not only has Wal-Mart's strategic placement of their stores and distribution centers given them a competitive advantage, their strategic operations and inventory management has played a vital role in their success. Wal-Mart's in-store inventory is kept at a minimum, allowing them to achieve maximum efficiency of their store floor space. Inventory is tracked by UPC scanners allowing Wal-Mart to better communicate with...