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Walmart Case

1. What is Wal-mart’s competitive advantage?

Wal-mart possesses 3 distinct competitive advantages. Wal-mart’s first competitive advantage is that they have developed an efficient low cost hub-and-spoke distribution network. In addition to generating purchasing economies of scale, its automated distribution network has enabled Wal-mart to increase its delivery schedule. Thus cutting down the amount of storage space needed for excess inventory and making each store more productive (more sales per square foot).
Wal-mart’s second competitive advantage stems from its market position. Wal-mart has been able to position itself as a market leader by creating local monopolies in small rural towns throughout the country. By doing so, they have pushed out many of the mom and pop shops and in most cases, compete only with neighboring Wal-mart stores. Wal-mart’s brand strategy of “everyday low prices” has enabled Wal-mart to maintain a step ahead of its two main competitors, Target and Kmart.
Wal-mart’s final competitive advantage is its superior culture/human resource management. Employees of Wal-mart are committed to the success of Wal-mart. Wal-mart’s shrink incentive plan, profit sharing, and stock options breed a sense of ownership amongst its employees. Because of the impact that a Wal-mart store has on its particular market, there is also a sense of pride about being a Wal-mart employee. The combination of profit sharing and the prestige of being a Wal-mart employee is why Wal-mart has been recognized as one of the 100 best companies to work for in America.

2) How do they create and sustain this advantage through their organization.

Wal-mart’s competitive advantage is directly tied to its “everyday low price” philosophy. Wal-mart is able to live by this low price strategy and thus create its competitive advantage by paying close attention to controlling its costs. Wal-mart keeps its payroll low by opening in rural areas (cheap labor), it spends minimally...