“ Most managers describe strategic positioning in terms of their customers: ‘Southwest Airlines serves price- and convenience-sensitive travelers,’ for example. But the essence of strategy is in the activities - choosing to perform activities differently or to perform different activities than rivals. Otherwise, a strategy is nothing more than a marketing slogan that will not withstand competition.” Michael E. Porter
“ No question asked” Return Policy Computer-Aided Store Design Frequent performance Check Reduce “Shrinkage” More Incentives Improving Logistics Wired Merchandise Requests Direct Connection With Vendors Building Distribution Center (150~300 -mile radius) Diversification Small town ↓ Large town It’s Own Trucks and Trailers Quick Delivery & Using Return Trips Much less Inventory Satellite Network Measuring the success of Promotions Marketing On Lowest Prices Efficient Store Operations Focus on Increasing Awareness of New stores Takeover Specialty Departments Bargain-Basement Acquisition More Hard goods Increase in Sales per average ft 2 More Available Selling Space UPC at the Point of Sale Administration More SKUs Human Resources Management Testing Different Mixes Locating VPs in Same Area Everyday Low Prices Reduce Wage Expenses
Wal-Mart’s Activity System Store merchandise In distribution center Providing “ Everyday Low Prices” Buy in volume at Attractive prices Centralized purchasing Inventory control Efficient Distribution network Low operating expenses Central computers Linked to vendors Hub and Spoke Distribution network Lease stores $20 million Satellite system Computer aided Design for Merchandise mix Regional vice Presidents live in Bentonville and Flown to stores Employee Salaries “ We care about Our people” “ No questions Asked” Return Policy Increased store Size and increase In the number of Store locations Computerized System in each store UPC at point of sale Store manager Salary. Autonomy in Ordering stock and Setting displays Efficient Inbound Logistics
Wal-Mart was able to assess each facet of their business and made every link in the value chain as lean and efficient as possible. Collectively, this is what made them successful with a sustainable competitive advantage. With the use of their new technologies they were able to better communicate internally with their management and distribution warehouses as well as externally with their vendors to rejuvenate their products/inventory. Additionally, Wal-Mart was able to capitalize on a growing target market (Sunbelt) when no other competitors did, they were able to leverage their weight with vendors dictating lower pricing, kept overhead costs low with employee wages and simple store fixtures, achieved high revenues per square foot with their strategic product mix, and capitalized on running fewer advertising campaigns. All of these actions in tandem with one another makes it difficult for competing discount stores to encroach on their market share.
Walmart's Business logic Everyday low prices More customers More goods sold Lower prices from suppliers Lower operating Costs