Wal-Mart Competitive Advantages - Case Study Example

Wal-Mart’s Competitive Advantages Question 1 1 Question 2 2 Question 3 3 Question 4 4 Bibliography 5 Question 1 What are Wal-Mart's competitive advantages? In the present day, Wal-Mart has to conduct their mode of operation in an efficient manner to keep going company’s competitive advantages. While, Wal-Mart pursues to control the discount in retail market, majority of their winning strategies are susceptible to emulation. Wal-Mart’s opponents have instigated many curriculums to try to go with the Wal-Mart’s low cost formation, improve effectiveness as well as utilize technology. The discounted retail giant Wal-Mart has many of the competitive advantages that have made the company such a market leader for years now. The rural market strategy that the company has undertaken has clearly helped the company to attain increased market share. The other advantage of Wal-Mart has been the age of its stores. In the year of 1990, merely 10% of Wal-Mart stores were more than 8 years old whereas K-Mart, the prime competitor of Wal-Mart had 85% of stores aged above 8 years. The distribution capability is another prominent competitive advantage for Wal-Mart. In their distribution system, they have cross-docking, inside out location strategy which is very much helpful to grow their business in overseas. This is one of the cost saving methods and they can easily reach their customer satisfaction level. The workforce culture of Wal-Mart is a customer oriented strategy which is motivated by monetary contribution as well as belief in the Wal-Mart culture. This tends to move faster in response and flexibility to the changing demand. Strong corporate culture is very much needed to apply this strategy. Wal-Mart pursued to search for technological competitive improvements. Recently, Wal-Mart set up an electronic data exchange with more than 3,600 retailers with the purpose of receiving orders as well as to interact electronically. The plan has been extended with the purpose of developing, forecasting, shipping and planning. Even though information costs are larger than competitors but the benefits of inventory cost reduction and also increased sales, compensate the cost appreciably as well as serve Wal-Mart with important competitive advantage. EDLP is a vital strategic tool for Wal-Mart. It can improve the customer satisfaction level by low prices. It can also improve the stability of the Wal-Mart supply chain management system. Question 2 How sustainable are those advantages? The distribution system of Wal-Mart is enormous and too tough to be replicated by the competitors, when anybody consider electronic connection of sales as well as inventory information across the world. The EDI system of Wal-Mart is very much advanced and their competitors will pursue to copy them. The company has developed certain proficiencies regularly to upgrade this system. Building a culture is a daily effort on management’s part and this involves careful focus on communication that takes place in company. Question 3 Which of Wal-Mart's advantages are transferable overseas? Why? Wal-Mart is one of the world’s largest companies. It is also considered as world’s largest private employer with 1.4 million employees. Wal-Mart is one of the largest discount retailers in the United States. The strategy followed by Wal-Mart is generally low cost and that of high volume. The strategic advantage of Wal-Mart generally focuses on providing customer satisfaction by using their low prices in products and also their comparatively superior customer service. These strategies used by Wal-Mart can be very useful in overseas locations where there is a sizeable amount of people who are of middle class income group and also population growth at a substantial amount. For these overseas locations these advantages are quite appealing. Wal-Mart generally employs a mature market strategy in which they use their low cost related advantages to their benefit. Their strategy of focusing on neighborhood market can be used in overseas market. These neighborhood markets generally focuses on items like grocery, but it also offers other items like photo processing, drug store items and general merchandising. The Electronic Data Interchange (EDI) can also be implemented for planning, forecasting, shipping of applications and replenishing. This can be useful in global market. The EDLP (Every Day Low Pricing) strategy of Wal-Mart is also a very innovative strategy which can help in improving the business in the other parts of the country. The supply chain management system with real time information related to demand chain management analysis also helps faster data warehousing facility. This will help in reducing the problem related to stock out. Question 4 Which of Wal-Mart's advantages are not transferable overseas? Why? Wal-Mart has got certain advantages which could not be transferred overseas. Their advantage of relationship along with their vendors has helped them in faster supply chain facility. Basically, this can help any business to grow quicker as the amount of loss; due to lack of product in the inventory can be avoided. Therefore, this scenario can be avoided by implementing the strategy of Wal-Mart which calls for valuable relationship with the suppliers and other stake holders. The management of any business organization has got a vital role to play for the success of the organization. They need to provide all the support necessary for the growth of the organization. In case of Wal-Mart, they have a personal style of management in place which has helped them grow as a successful organization. Wal-Mart’s business system has made them a successful company. The supercenter which constituted a complete line of grocery and specialty departments caused an increase in traffic to the store. Wal-Mart with their offering for food and also with successful business structure was able to gain a substantial profit with their supercenters. The procurement facility, operational efficiency, and a sustainable distribution channel have made Wal-Mart tackle their competitors and be a globally recognized retail store. By and large, these existing advantages cannot be carried to any overseas stores and it has to be developed locally. These advantages are a result a successful management impact and also consistent effort from the employees of the company. These non transferable advantages have also helped in the growth of Wal-Mart as a brand name throughout the world. Though it might not be possible to transfer the advantages, but it is expected that with similar organizational structure, it can be developed in foreign countries as well. Bibliography Ghemawat, P. & Et. Al. Wal-Mart Stores in 2003. Harvard Business School, 2004. Read More