Assignment for Wal-Mart
1. How was Wal-Mart successful early on? What were its sources of competitive advantage? Sam Walton had been an owner of several Ben Franklin franchises for many years. When his idea for opening up stores in small towns was turned down by the Ben Franklin organization, he and his brother Bud decided they would do it on their own. In 1962 Sam and Bud opened their first Wal-Mart Discount city store. By 1970, Walton had grown his chain to 30 discount stores in rural Arkansas, Missouri, and Oklahoma. One big challenge early on, was that they had poor service from their distributors because they were in such remote places. Sam decided that he had no other choice but to build his own warehouse so he could buy in volume at attractive prices and service his own stores. To raise the kind of money needed to build a warehouse, about $5 million, Sam took the company public and were able to raise over $3 million in the initial public offering. There were two key sources that gave Wal-Mart a competitive advantage early on. The first was location. They decided to put their stores in small towns that everyone else was ignoring, thus they had very little competition. Second was there pattern of expansion. As David Glass explained, “We were always pushing from the inside out. We never jump and then backfill.” Sam intimately studied his competitors, and if he felt like they had a good Idea, he would copy it and incorporate it into Wal-Mart. He took great care of his employees, who he called associates, and treated them appropriately. He always believed that for his associates to treat the customer’s properly, that he and Wal-Mart needed to treat the in kind. Wal-Mart aimed to excel by empowering associates, maintaining technological superiority, and building loyalty among associates, customers, and suppliers
2. How did Wal-Mart's costs compare with those of its competitors in around 1990? Be specific; you can use information in Exhibit 6 and...
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