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Strategic Leadership - - Case Study Example

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By all accounts, Wal-Mart has been a remarkably successful company. Why? Has Wal-Mart chosen a particularly attractive industry? What are the key drivers of Wal-Mart's competitive advantage(s)? Wal-Mart has been a success because over time it has been able to change the way it deploys its resources to deepen its existing competitive advantage while developing new ones in tandem with the changes in the US retail industry…
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Strategic Leadership - Case Study
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Download file to see previous pages It will not be correct to say that Wal-Mart chose a particularly attractive industry because firstly it is evident that throughout Wal-Mart’s lifespan, the retail industry has been having intense internal rivalry among several major players. Secondly, in all areas of retail that Wal-Mart ventured into it began as an underdog for example to Price Club in Warehouse Clubs; to Meijer and Fred Meyer in Supercentres; and to King’s, Korvette’s et al in discount chains. The fact is that Wal-Mart developed unique competitive advantages to propel itself to industry leadership. Some of the key drivers to its competitive advantage are as follows. Putting good-sized stores into little one-horse towns which everybody else was ignoring (Bradley & Ghemawat 3), heavy investment in Information Technology (IT), the pushing-from-the-inside-out pattern of expansion and its human resource management – characterized by empowering its employees at all levels. How have Wal-Mart's strategy and source of competitive advantage changed over time? How do Wal-Mart's costs compare to those of the industry? Please be specific. Wal-Mart’s strategy at inception was to set up stores in those small towns that were being ignored by the other big retailers. To encourage the residents of these towns to shop locally instead of travelling to the big towns Wal-Mart provided goods at attractive prices. This strategy ensured that by mid-80s one-third of Wal-Mart stores were located in areas that were not served by its competitors (Bradley & Ghemawat 3). The organization then moved to a strategy that involved investing heavily in information systems (IS) and empowering its store managers with freedom to set prices to meet local market conditions (Bradley & Ghemawat 4). The IS increased the efficiency and effectiveness of its supply chain management system which enabled the company to reduce operational costs, increase efficiency and maintain their low price competitive advantage. As the Wal-Mart grew in size and market share it began using its huge buying power to influence the behavior of its suppliers. For example it set up vendor-managed inventory systems with key suppliers to replenish stocks at its stores and warehouses. When other competitors began catching up with the use of information systems, Wal-Mart implemented a diversification strategy which involved investing in the development of supercenters and international expansion. Wal-Mart’s prices were typically 2 – 4% lower than their competitors in most markets. How sustainable is Wal-Mart's source of competitive advantage at the time of the case? Identify the main threats to Wal-Mart's competitive position. Put yourself in the role of CEO of one of Wal-Mart’s rivals: How would you attack Wal-Mart? Wal-Mart’s has been exploiting the low pricing strategy for a long time such that it has an effective organization design that ensures that it operates like a well-oiled machine. As lastname (118) states, Wal-Mart has coherent and logical strategies in place to maximize on its ...Download file to see next pages Read More
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