Wal Mart
There are some external factors assisting in creating competitive advantage for Wal*Mart in the discount retailing industry. These external factors create opportunities for Wal*Mart profitability. However, sustaining such competitive advantage is a result of Wal*Mart ability to deploy its internal resources and capabilities. At the beginning we will discuss what are the sources for Wal*Mart competitive advantage?Despite the unattractive, high threat, and low opportunities of the industry that Wal*Mart operates in, Wal*Mart could have a return on sales and net sale of 3.5% and 48,620, which is higher than the industry of 3.05% and 18,730 respectively. This would be a result of the cost leader strategy Wal*Mart is following. It lowered the overall cost and increased its profit. From the analysis of the industry we found that the net profit margin of Wal*Mart for the past 12 month in 1993 was 24.9% that is lower than the average profit margin of its direct competitors (27.2%). So, how Wal*Mart is successfully lowering its cost compared to its competitors? The Key elements of its cost leader strategy are:Accomplishing the superior operating efficiency, how? Through controlling input cost. Wal*Mart does not think of lowering the pr
On the other hand, we can see that its COGS are accounting 75. Wal*Mart corporate culture of respecting associate, serving customers, and striving for excellent is another capability that is deployed from its resources. Walton strategy of analyzing competitors gave Wal*Mart the chance to learn from competitors and to increase its profit by pricing lower than its direct competitors carrying the image of "Always low prices, Always". Fourth, operating inbound logistic efficiently, accordingly Wal*Mart operated its distributions efficiently; it lowered its cost by having its suppliers store its merchandise and by applying the cross-docking technique. This partnership relation provided timely deliveries at low prices. ices at the end value chain- its consumers -through pricing lower than competitors - this could lead to a loss in the long run - but they usually cut cost at every transaction of the retail process. 8% to the industry, why? Because of its need to have a high turnover ratio; Wal*Mart depends on high turnover of goods to generate high profits, they generate small profits on each sale, but have several sales per unit of inventory carried in the stores. Finally, sharing the numbers with associates and Wal*Mart human resource management. First, through its vendor relationship, Wal*Mart installed the EDI with its 3,600 vendors that on the long run reduced the inventory costs and increased sales; decreasing cost to vendors decreased cost to Wal*Mart eventually. Moreover, Wal*Mart advertising expenses is 1. 5% that is lower than the industry of 2.
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