1. WAL-MART
Why didn’t I buy ?!?
IPO 100 x 16.50 $ = 1,650 (70’s)
In 2011  55-60 $
X 3,5 in 40 years  not so good considering inflation
 Share were splitting : 100 shares in 70’s would be 204,400 today = 12 million $
 Dividends today of this investisments : 300 000/year
1 share of J&J in the 40’s would be 400 000 $ today (not counting dividends)
How did they do it?
Is it the industry? The business company? What did they do?
How attractive was the business when Walmart started?
Industry Strategy Source of costs Copy?
Fairly competitive (less Lower price than Bargaining power YES
profit if high competitive competition : compare Logistics YES
industry): market W is to competitors but there IT YES
competitive : many players, is no competitors Inventory management YES
; hard to differenciate you actually, this is natural Low/no advertising
end up competed monopoly and this Overhead YES
(commodity-lik; means high prices : is Low wages YES
standardized products); low that relevant? Every part of the value Any of these
barriers in entry (even if chain, of the business advantages have
there is few competitors process ! been copy by
now, there could be others How to keep the competitors
entries now); price sensitive competitive advantage
customers
EXCEPT
Discounting in rural area’s:
there is fewer customers so
why? What’s more
attractive? because no
competition; we should look

2. at potential, could there be
anybody else? “there is
nobody there” is not
satisfying (Mars); the
market is not big enough for
two (natural monopoly) =
NICHE = NATURAL
MONOPOLY
A step ahead time in comparison with the competitors  is that a FMA?
FMA should introduce asymmetry  you haven’t adavantage the next one can get in Wal-
Mart strategy!
In mass market : can we keep improving?
Competetitive advantage of Wal-Mart is to come up with the next adavantage
Wal-Mart are in “improving retailing business”  corporate culture
To be unique, to be indispensable = strategic advantage
A clear objective : improvement
Industry
If you are first have you a “First-mover advantage”? notnecessarly FMA means there is an
asymmetry that we have an advantage that the second one doesn’t have. FMA is misused and
abused in most of the case.
Minimum efficient scale (MES)
Unit cost
Scale
MES

3. MES correspond to the relevant market
How can we quantify the relevant market? There are potential customers
“We look at the local market, not on the US market” is fundamental in Walmart Strategy 
The US market doesn’t exist for real thing  the relevant market was the local market for
Wal-Mart.
Small market are attractive if I am the first and if there is barriers on the entry for the next one
= niche strategy; when the niche is more attractive because you are more protected from
competition = protection strategy. Wal-Mart discovered a niche.
“Natural Monopoly” is a monopoly based on the business rather than the licence or
regulation. Electricity transmission,… = Infrastrutures businesses
Good part of strategy :alamys the search of some kind of monopoly
Strategy
“We are pricing to the market and there is a lot of markets so the price today may be another
tomorrow. The price is not the price.” Pricing autonomy in local markets
Wal-Mart PER ratio is lower than Colruyt and the share price will be too expensive.
Adaptation of the price to the local market; we advertise we have low price. Why to have
three stores in the same city if there is not three different markets. Fundamental insight :
flexibility to the local managers is needed
Big mac index: sophistication of the adaptation to the local market of McDonald  not
necessarily currency measure! Same brand with several value proposition and several local
markets. Big Mac Index is ignoring differenciation.
Why don’t we have Starbucks? Look at the EU market; the big countries first (Germany, UK)
 where is the market, the country? Where are the big cities? In the process they ignore
markets. This concept is wrong one, the market is local; top down approach you miss
opportunities. And there is no franchising…
Assumption that every business is local

4. The granularity of growth; need of de-averaging : look what really happens
Everybody can be the lower price for 1 day  you need to be consistent, if you are
How should we expend in more competitive area?
If you move from niche to the competitive market implies different.
If you believe this industry structure, moving from the niche, stick to what you know.
But W-A still manage to do better then his competitors  use niche as stepping stone,
window opportunity, using their competitive adavanteg, corporate culture to attack more
competitive areas.
Are we benefiting from the environement or the industry? In th best way both but
conceptually they are different.
Where do you think where your competences are? In the position (monopoly),…
Where can we easily capture?
Pharmasectors : patents; Brand like Coca  Strategic assets
Wall-Mart have a brand name but what’s the value? Not a lot… Marketing: to make it look
cheap (I’m saving money)
Point :
in low price strategy : if they are not the lost anymore, it lasts still several days or
weeks (price discrimination : « à la tête du client »)
brand value: aloud to charge more
coke stop advertising: profits will be higher the first quarter and the next quarter and
so on go down
pharma molecule : patent but time-limitation
a brand is only as good as they can deliver
recipe for successful strategy : give the customer what they want
cost innovation : different from cost cutting programs (restructures,…) : low price
strategy is cost improvement; cost cutting is not a strategy for companies which are in
trouble and ruins the strategy
chapters 3, 5 ? 8

5. ryanair& caterpillar
caterpillar = good question for exam!!!