Wal-Mart Case

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Wal-Mart in China

1) Why is Wal-Mart successful in the U.S.? What are Wal-Mart’s competitive advantages and its sources?

Wal-Mart has been successful and holds many competitive advantages in the U.S. for multiple reasons. First, Sam Walton believed that the future of retail chains lay in discounting. While he certainly had competitors when getting started, Walton focused on opening stores in “one-horse,” rural areas that other retailers ignored. This was key as Wal-Mart grew at a very rapid rate, but was hardly noticed by its competition.

Secondly, Wal-Mart focused on providing value to its customers and two major value drivers are price and service, a combination that sent Wal-Mart to the top. Wal-Mart truly embraced the phrase, “Every Day Low Prices,” as their mission was to offer merchandise at a 20% discount than what would be seen at other local stores. Consumers embraced this because regardless of the time of day/month/year of purchase, they were always getting the lowest possible price. Conversely, at other retailers, consumers tend to get frustrated and peeved in having to keep up with weekly or monthly “sales” or “specials.”

Lastly, Sam Walton believed in great customer service. He believed the three central beliefs in attracting and retaining customers were great customer service, showing respect for individuals and striving for excellence. To conclude, Wal-Mart’s small-town location strategy as it got started, its relentless cost control, and its focus on the consumer have made it an enormous success story in the U.S.

2) Should Wal-Mart replicate its domestic model in its original form in China? Why? Can it build the same competitive advantage in China through its successful domestic model?

No. Based upon the article, Wal-Mart would have a lot of trouble building the same competitive advantage it holds in the U.S. The culture, buying style, and the country’s general retail regulation do not fully embrace what the Wal-Mart...
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