Wal-Mart Case Study
- Competitive Advantage
Wal-Mart may only have a competitive advantage. The reason is due to the reported remarkable growth rate that was experienced since its inception. Also, the retail giant has ambitious plans to improve international business operations through increased store openings. The premise of this argument is that Wal-Mart may still have the capability of driving sales even if not at the same rate as it has done in the past.
As for sustainable competitive advantage, the retail giant may not have this merit on its side. With complaints ranging from the transference of job opportunities overseas to single-handedly sabotaging the wage growth in America as well as facing stiff community opposition in opening up stores. The company is facing external environmental pressures, but it is also sabotaging its internal environmental pressures. It includes having competition within its stores with the newly opened stores offering better discounts compared to the existing stores.
Wal-Mart has to address a plethora of issues to restore its competitive advantage. Among them include the provision of maturing markets and resolving the aggression that its competitors are using to gain clients through imitations. Also, the company can offer up limited international expansion and focus on its primary market, which is America, and since the communities are waging wars on the retail giant, thus, it is pivotal to refocus on its strategy back home.
- Resources
The resources that Wal-Mart controls key to competitive advantage is organizational resources. According to the case study report, the value of branding in the industry. The ability to control pricing allowed companies such as Walmart to control a large proportion of customers in different market segments. Walmart is primarily a discount center that can only be offered through massive investment in technology. On top of this, the company has reliable and sustainable distributors who can only gain profits through its products’ large-scale supply.
The temporary competitive advantage resources that its competitors have is the discount factor. Some competitors are reported to utilize online trading opportunities, which has low overhead costs. For comparison purposes, online retailing clients can compare prices and establish that it is better to purchase online than a Walmart store.
As for sustainable competitive advantage, Walmart’s competitors offer value, imitability, and organizational structures that are more suited for the modern market, unlike Walmart. It is reported that Walmart’s suppliers shift to other retail sellers, including Target and Kmart, who are known to offer discounted prices. Also, for organizational purposes, competitors are engaging in extensive investments in technology that aids in determining inventory data and accounting on discounts.
- Through its initial investment, Walmart converted its physical spaces to offer self-help convenience stores, which was not the norm before the Second World War. As a result of this, investment in the expansion of stores within a range of 25 years permitted Walmart to own more sales stores than Kmart and earn over $ 469 billion in revenues. The investment in a chief executive officer allowed Walmart to have a sustainable management platform that catapulted its success by applying discounted prices for its clients. Through its management, Walmart has been able to manage inventory through accurate forecasting as well as invest in technology such as point-of-sale, which enables it to gain information on purchase trends. Ultimately, the company’s management has focused on an everyday low-price strategy, which permits it to reduce advertising costs and labor costs.
- Walmart’s capabilities in providing discounted prices due to the reliability and sustainability of its suppliers. It is reported through the case study that the retail giant can retain the majority of its suppliers, who account for more than $ 1 billion in sales (15%). Due to this forum, Walmart’s resources on capital and technology are another added advantage for international expansion. To diversify into the international markets, Walmart should consider strategizing on its value branding as showcased in the pricing strategy. Competitors are overriding the company due to the variety of brands, whether high-end or low-end. Walmart should also refocus on technology use, including the internet, which most customers prefer over physical shopping.