Wal-Mart Case Study Questions


To what extent is Wal-Mart’s performance attributable to industry attractiveness and to what extent to competitive advantage? Wal-Mart is a company which operates in the service sector, more specifically in the “Discount, Variety Stores/Retail” industry. The company’s superior performance is demonstrated through the fact that it was America’s largest company in 2002, and the reputation of the company is reflected in the opinion of “Fortune” who have identified Wal-Mart as one of the world’s most admired companies. In 2004 Wal-Mart had been hiring 1.4 million employees – making it the largest corporation in the world. Wal-Mart’s share prices have also been stable at time of stock market volatility. There are several reasons behind Wal-Mart’s breathtaking results, most of them coming from the fact that Wal-Mart had been able to combine industry attractiveness with its competitive advantages.

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Wal-Mart managed to implement correct strategies to utilize its resources to the maximum and thus be able to create superior value for its customers.The competitive advantages of Wal-Mart are demonstrated through:

  1. Their customized superior Distribution model -Diversity of retail stores
  2. Unique approach to retailing and a unique corporate culture – minimizing costs and maximizing customer satisfaction is what Wal-Mart’s philosophy is all about
  3. Their capacity for continuous improvement and innovation Most productive work force

The industry Wal-Mart is a part of is a fast-paced, turbulent, highly competitive environment and there is no guarantee of continued success. The industry had been developing and growing and so had Wal-Mart with it.2. In which of Wal-Mart’s principal functions and activities do WM’s main competitive advantages lie? Identify the distinctive resources and capabilities in each of these functions/activities.

Purchasing and Vendor Relationships Wal-Mart’s cost cutting philosophy started at the supply/purchasing part of the value chain. Suppliers have described negotiating with Wal-Mart as a tough experience, because Wal-Mart imposed on its suppliers’ requirements that went a lot deeper than just low price and got involved suppliers’ employment policies. Other than that, Wal-Mart didn’t accept to negotiate with intermediaries and was reluctant becoming dependant on any single supplier. This is demonstrated through the fact that any single supplier could account for a maximum of 2,5% of the total purchases.Amazon. com – a company which demonstrates fully the capabilities of the rapidly developing e-business platforms. Wal-Mart had been a pioneer in most of the areas in which it realized competitive advantage. The interior organic structure reflects a turbulent environment.Wal-Mart continuously is changing and progressing in all aspects, and is thus setting a difficult example for the competitors to follow, since they are always at least one step behind Wal-Mart.

However as Wal-Mart is expanding, the corporation is facing, new, unknown challenges for which they are yet to develop strategies for gaining competitive advantages. Time will tell if Wal-Mart is able to cope with the growing outside pressure.5. Looking ahead, what measures does WM need to take to sustain its recent performance and defend against competitive threats?Wal-Mart faces two challenges in the future, regarding performance sustainability and these are:

  • Maintaining the existing corporate culture in the expanding company
  • Managing change, and being able to adapt and alter its policies when expanding internationally
  • Maintaining the strive for the most state of the art technology and methods for operating stores, and further cutting costs while offering customers more
  • Being able to open new formats of stores which are more competitive in specialized areas, where Wal-Mart is currently losing against firms that cover specialized onsumer needs
  • Develop Wal-Mart. com further, and take the business online.