Wal-Mart

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 extern

. . .

View the whole essay, without interruption

There were interactions among departments and individuals were ideas and suggestions were shared on how to improve the business, and this included everyone from the bottom to the top of the ladder. They also developed a “Buy American” program were they replaced foreign-sourced goods with American-made ones. These associates participated in management seminars, and programs were instituted to involve the associates in the business. Information systems made this possible through “traiting,” a process which indexed the product movements in a store to over a thousand store and market traits. Its operation capability consisted of its stores and its warehouses where the inventory was stored. Some of the stores, including the supercenters were open 24 hours a day. Local store managers using inventory and sales data, could choose which products to display based on customer preferences, and allocated shelf space for a product category according to the demand at their store.

Wal-Mart sustained its competitive advantage by aiming to excel through empowering their associates, maintaining technological superiority and building customer loyalty among associates, customers and suppliers. Wal-Mart leases about 70% of its stores and owns the other 30%. They were known for their national brand strategy, and the majority of its sales consisted of nationally advertised branded products, but private label apparel made up about 25% of apparel sales at Wal-Mart. They priced products to meet local market conditions so that they could maximize sales volume and inventory turnover, while at the same time minimizing expenses. External sources that have influenced competitive advantage in Wal-Mart include its heavy investment in technology. Wal-Mart focused a lot on cross-functional capabilities such as customer support capability and quality management capability, which supported what Wal-Mart’s culture was supposed to be about – serving the customer.

Approximate Word count = 1027
Approximate Pages = 4 (250 words per page double spaced)

Simply subscribe to view this paper, and 100,000 others.