How Was Wal-Mart Successful Early on? What Were Its Sources of Competitive Advantage?
How was Wal-Mart successful early on? What were its sources of competitive advantage?
Wal Mart was successful early by offering lower prices than the competition. They had effective distribution and supply chains which allowed them to capitalize on economies of scale. They paired their low prices with prime real estate locations. They built their stores in places that were convenient for low-income shoppers and in highly populated areas. Their store layout was large enough to offer diverse products such as home amenities and groceries. The consumer could buy all necessary items for adults, children, and the home by going to one store. They were successful in the international markets by adapting to the local culture and adjusting their stores to the shopping styles of the local consumers. In some countries they created joint ventures while in others they bought struggling companies and improved their operations. Wal-Mart’s sources of competitive advantage center around efficient supply chains that translates into lower prices than the competition.
o How did Wal-Marts costs compare with those of its competitors in around 1990? Be specific. What does that tell you about its historical drivers of competitive advantage?
The case does not mention Wal-Mart’s costs in 1990 specifically but it provides information about their costs in the late 90s and early 2000s. Their competition was not able to match Wal-Mart’s lower prices causing Kmart to file bankruptcy in January 2002. Wal-Mart began offering groceries at their stores in the late 1980s and by 2002, analysts calculated their prices to be 20% lower than typical grocery stores. The company’s lower prices would cause the competition to launch price wars but it did not have a major effect. The historical drivers of Wal-Mart’s competitive advantage have achieved a sustainable competitive advantage because consumers perceive Wal Mart to offer the lowest cost products and are willing to sacrifice some quality standards as a tradeoff.
How has Wal-Marts competitive advantage changed over time? What are its competitive advantages at the time of the end of the first case? How sustainable is that competitive advantage? Why?
Wal-Mart maintains competitive advantages in supply chain and distribution that allow the company to maintain its position as a low-price leader. This competitive advantage is not sustainable without continued investment in innovation and infrastructure, but Wal-Mart seems dedicated to maintaining this competitive advantage through supporting both innovation and employee education in best management practices. Additionally, Wal-Mart has created a competitive advantage by making its supply chain more efficient, thus lowering costs. Another competitive advantage is size. Wal-Mart is a large enough, high enough revenue company that it has been able to expand into other countries