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Wal Mart

By | July 2011
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What, historically, has been Wal-Marts key source of competitive advantage in discount retailing?

WalMart’s competitive advantage is a result of several key strategic choices. • First, WalMart’s choice of geographic location in rural/small town locations that were not being served by competitors allowed it to establish itself as the sole discount retailer in these areas. • WalMart’s inventory management strategy. From the onset, WalMart has been a leader in implementing new and cost effective methods to manage inventory. Merchandise is tailored to local market demand via “traiting” where a product’s movements are indexed over a thousand store and market traits. • WalMart’s operations strategy. WalMart’s operations activities fit well together to achieve maximal efficiency and lower costs. By having multiple distribution centers, WalMart is able to lower a store’s square footage that is devoted to inventory . This allows higher efficient use of store floor space for displaying more goods and generating greater sales volume. • WalMart’s vendor relations. WalMart has made specific supplier choices along the way that are geared towards minimizing costs and maximizing efficiency. Buying is centralized at headquarters which keeps purchasing costs down • WalMart’s culture. From the onset, Sam Walton led by example and emphasized frugality, customer service, and an open book policy. WalMart’s culture focuses on building loyalty among associates, suppliers and customers.

1. How sustainable is Wal-Marts competitive advantage in discount retailing in 1986?

Wal-Mart’s competitive advantage in discount retailing in 1990 is very sustainable, because they follow the two competition principles – the key to a firm’s success in competition is its competitive advantages; and how sustainable a firm’s success is depends on how sustainable its competitive advantages are. Competitive Advantages are what customers’ value and what a firm is better than its competitors...
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