How sustainable is Wal-Mart’s competitive advantage in discount retailing in 1990?
Wal-Mart’s competitive advantage in discount retailing in 1990 is very sustainable, because they follow the two competition principles – the key to a firm’s success in competition is its competitive advantages; and how sustainable a firm’s success is depends on how sustainable its competitive advantages are.
Competitive Advantages are what customers’ value and what a firm is better than its competitors in. Wal-Mart’s customers value the value of the dollar and being able to buy brand names at low discount prices. Sam Walton’s philosophy was that he believed in the value of the dollar and keeping prices below everybody else’s. He made providing value part of the culture of Wal-Mart. Competitive advantages can be considered to be price, quality, design, convenience, good brand image and reputation associated with products and services and many other factors. Customers determine what competitive advantages are relevant to them and price, quality, convenience and brand image were what Wal-Mart customers considered to be the competitive advantages of Wal-Mart versus other discount stores.
Competitive advantages come from two sources external and internal sources. External sources can be classified as technological changes, changing customer demand and changing prices. Internal sources are the most important sources of competitive advantage because they are the firm’s resources and capabilities. These resources can be HR, financial, physical and brands. The capabilities are organizational routines – consistent, coordinated parts and performance – among departments and individuals in an organization through which tasks and activities are performed. External sources that have influenced competitive advantage in Wal-Mart include its heavy investment in technology. Using information systems they tailored merchandise to i...