• Company Background
• Industry Analysis
• Competitive Advantages On Principal Functions And Activities
• Performance On Retailing Sector And Format Overseas Countries
• VRIO Analysis
Sam Walton opened his first WalMart in 1962.
According to Sam Walton
“Our strategy was to put good-sized stores
into little one-horse towns
that everyone else
was ignoring. ”.
• In 1970, WalMart opened 30 discount stores in Arkansas, Oklahoma,
• In 1974, WalMart was the first retailer to use computers for inventory
• In 1977, WalMart initiated EDI (Electronic Data Interchange) with its
• A few years later, WalMart introduced bar code scanning.
• In 1980, there were 330 stores in 11 states.
In mid-1980s Sam’s Clubs which is main
distribution center was opened.
What lies behind of opening Sam’s Club?
• To maximize economies in purchasing, minimize operating costs, and
pass the savings on to members through very low prices.
• To take advantage of having own distribution channel.
• To demonstrate its ability to transfer its retailing capabilities to a very
different distribution format.
• In 1984, WalMart started using their own satellite.
• In 1990s, WalMart was pioneering the use of data-mining.
• Since 1992, WalMart started to internationalize.
• In 1995, WalMart was in all 50 states in the US.
In 2007, WalMart became the world’s biggest retailer.
To what extent is Wal-Mart’s performance attributable to industry
attractiveness and to what extent to competitive advantage?
Rivalry among Existing
- High barriers of entry.
- Existing companies established
strong and stable supplier networks.
- Low number of company that
can sell their products at lower
- Buyers are price-sensitive.
- Rural domination of WalMart..
- Own distribution channel.
- Strong negotiation with
According to this analysis
• WalMart has competitive advantages in
• New Threats
• Substitutes Products
In which of WalMart’s principal functions and activities (namely:
purchasing, distribution and warehousing, instore operations,
marketing, IT, HRM, and organization and management systems/style)
do WalMart’s main competitive advantages lie?
Identify the distinctive resources and capabilities in each of these
• Commitment to “everyday low prices”
• Matchless responsiveness to customer needs
• Logistics supported by leading-edge IT
• Commitment to employees
• Unremitting cost cutting
- Electronic Data
- Real time store-
- Economies of
- Direct import
- Hub and spoke
- “Store of the
- Point-of sale data
- “Everyday Low
- Patriotism and
- Bar code scanning
- High expectations
- Flat organizational
To what extent has WM been able to transfer the competitive
advantage it established in discount retailing in the US to other
countries, to other retail sectors and formats? Why has WM’s overseas
performance to date been so patchy?
WalMart’s first format was discount store.
They changed their discount stores to supercenters
which are equal to
Discount stores + Grocery süpermarket.
• They transferred their competitive advantages into
• Distribution/Logistics sector
• Manufacturing sector
• Retailing sector
• Service sector
Reasons for failure
• Stick so closely to the domestic culture
• Wrong market selection which is already dominated
• Less concentration on geographical differences
• Unable to respond customer needs and wants
To what extent is WM’s competitive advantage sustainable? Why have
other retailers had limited success in imitating WM’s strategy and
duplicating its competitive advantage?
Sustainable Competitive Advantages
Competency Valuable Rare Inimitable Organised Competitive
Information Systems Yes Yes Yes Yes Sustainable
Logistics System Yes Yes Yes Yes Sustainable
Culture Yes Yes Yes Yes Sustainable
Yes Yes Yes Yes Sustainable
Why cannot be imitated?
• Looking ahead, what measures does WM need to take to sustain its
recent performance and defend against competitive (and other)
• More advertisement and marketing activities
• More social responsibility activities
• More concentration on labor rights
• More focus on environmental issues
• More flexibility on culture
• Give importance on market research rather than start-ups