Wall Mart

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Wal-Mart Stores Inc.,

May 2002

Robert M. Grant

Wal-Mart Stores

1. TO WHAT EXTENT IS WAL-MART’S PERFORMANCE ATTRIBUTABLE TO INDUSTRY ATTRACTIVENESS AND TO WHAT EXTENT TO COMPETITIVE ADVANTAGE?

A company has a competitive advantage over its rivals when its profitability is greater than the average profitability of all companies in its industry. It has a sustained competitive advantage when it is able to maintain above-average profitability over a number of years. Wal-Mart is a good example to understand this. First of all we have to know how the industry is’s attractive. We can know with the five forces porter. Analyzing five forces porter we find out if this is an industry attractive or not. • The threat of new competitors is not very high. This makes the industry is closed and businesses one point of tranquility. • The rivalry among competitors is very high and this will cause the continuing price war among supermarkets. • The bargaining power of suppliers is an important point in this sector. Depends on the suppliers throughout the rest of the chain. • Buyers do not have much bargaining power so this will make the industry more attractive. • There is a strong threat of substitutes in this industry.

The center of Wal-Mart's efforts to gain market share through a wide range of categories is still his attitude towards the management of the supply chain. Long recognized as a key competitive advantage, Wal-Mart operates an unrivaled global network of 146 distribution centers. Included in this total are 103 domestic distribution centers that service to approximately 2,800 discount stores, Supercenters, Neighborhood Markets and 525 Sam's Clubs, and 43 other establishments that 1,300 international units of service Wal-Mart located in nine countries.

On the other hand it is important to say that in marketing and strategic management, competitive advantage is an advantage that a company has over other competing companies.

To be truly effective, advantage should be:

1. Difficult to match
2. Only
3.  Possible to maintain
4. Clearly above the competition
5.  Applicable to various market situations

Thanks to innovations in its logistics system, Wal-Mart became the largest chain of stores worldwide. In fact, for their excellent management, today Wal-Mart is the largest company in the world. The most important innovation logistics Wal-Mart, known as cross-docking, is to transfer goods from one truck to another, in places intended for this exchange, without storing them in warehouses never intermediate in its distribution network.

In summary, the advantage that WM was compared to its rivals was to give ordinary people the opportunity to compare the same things as the rich.

A big advantage that Wal-Mart accounts is the low price of their products. The strategy of Wal-Mart to offer financial products as just an open secret. In general, the traditional strategy of any retailer of large volumes: a phenomenal power to negotiate prices and payment terms. What sets Wal-Mart is a very wide shoulders that allow you to exert fierce pressure in suppliers.

Wal-Mart has a clear purchasing policy: "I buy your product to X dollars. The price is not negotiable. Take it or leave it."

2. IN WHICH OF WAL-MART’S PRINCIPAL FUNCTIONS AND ACTIVITIES (NAMELY: PURCHASING, DISTRIBUTION AND WAREHOUSING, IN-STORE OPERATIONS, MARKETING, IT, HRM, AND ORGANIZATION AND MANAGEMENT SYSTEMS/STYLE) DO WM’S MAIN COMPETITIVE ADVANTAGES LIE? IDENTIFY THE DISTINCTIVE RESOURCES AND CAPABILITIES IN EACH OF THESE FUNCTIONS/ACTIVITIES.

With Wal-Mart the power shifted from manufacturers to distribution channels. Then the same pattern was seen in Home Depot and Toys "R" Us. A similar change could be to CarMax or Amazon.com in the near future. And like McDonald's, Toyota and others have become inefficient competitive advantage by repairing weak links in their value chain,...
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