Walmart Case Essay

1519 Words Mar 5th, 2016 7 Pages
Walmart case 1. To what extent is Wal­Mart’s performance attributable to industry attractiveness and to what extent to competitive advantage? Wal­Mart´s performance is not attributable to industry attractiveness due to the high internal rivalry within the retail sector. Such rivalry results in margin compression and lower growth for Wal­Mart.
By using Porter's 5 forces, we see that supplier power for Wal­Mart is weak because many of Wal­Mart's suppliers are consumer product companies. These companies are commodity companies since their product has little differentiation. As a result, they have little bargaining power against retailers with large market share
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Identify the distinctive resources and capabilities in each of these functions/activities. Wal­Mart’s main competitive advantages lie in its cost advantages, which are brought by its economy of scale. The large economy of scale allows Wal­Mart to have lower prices for purchases and

maintain

special vendor relationships,

independent of a single large supplier, and have vendors competing for its shelf space, instead of Wal­Mart seeking merchandising itself. The economy of scale also allows the company to have the most store space, supported by the largest distribution and warehouse network of any retailers, allowing 24­hour delivery turnovers, overnight delivery and cross­docking. This fundamental competitive advantage cannot survive without the supporting functions and activities that help to organize and manage such a large company. These functions include a marketing program that reflects the benefits of economy of scale, “Everyday Low Prices”; state­of­the­art IT systems; and quick, personal communications between management levels. The distinctive resources and capabilities in each of these functions/activities are as follows:­ ❖ Purchasing and vendor relationships
❖ Low prices resulted from large economy of scale

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