Wal-Mart was established in 1962 at Rogers, Arkansas, and seven years later was incorporated into Wal-Mart stores, Inc and afterwards in 1972 it went publicly on the New York stock exchange. The Wal-Mart brand grew steadily across the United States, and by the being of the 1990’s it was the nation’s largest retailers. By 2002 Wal-Mart brand had surfaced as the largest company in the world in terms of revenues this became possible mainly due to two factors. First being Wal-Mart’s highly automated distribution centers, which extensively reduced the shipping cost and time, and second factor is its computerized inventory system, which speeded up the checking out time and recording of the transactions. Although Wal-Mart improvements over its competitors have been unquestionable for some time, the sources, and extent, of this advantage are not fully understood (Useem, 2003). Part of the reason for this is that retailers productions function such as the relevant inputs and outputs, and the relationship between them. What makes Wal-Mart’s advantages core is the technology and scale over its rivals. The company’s technological edge is in its logistics, inventory control, and distribution having installed a computer in its first distribution center in 1969, and by 1970 it connected all the Wal-Mart stores and distribution centers, along with the company headquarters, to a computer network. . In 1998, the company had over forty distribution center located at different geographical locations in the United States and own its own warehouse to straightforwardly supply 85 percent of the its inventory, as match up to competitors with are roughly around 50 to 60 percent. With reference to 85 percent of the good which were available at the Wal-Mart stores passed thru distribution centers.
Wal-Mart chain level scales have increased its market power in the input markets. Thus it also gives the company an advantage in several activity that involves a fixed cost, such as...
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