Wal-Mart has a highly integrated and efficient value chain. They focus on welcoming customers, low prices, and tailoring products to local communities. Wal-Mart collects real-time data on store inventories, sales, and supplier relationships to efficiently manage procurement, logistics, and operations across their large network. They invest heavily in technology and training employees to maintain low costs and drive profitability.

1. Wal-Mart Value Chain FIRM INFRASTRUCTURE Successful integration of activities in value-chain Maintain focus on brand and concept and bringing store-level concepts back to top Relied on balance scorecard PRIMARY ACTIVITIES SU P PORT ACTIVITIES SERVICE Welcoming environment with “ Greeters” High focus on customer service MARKETING & SALES “ Always Low Prices. Always. ” Community involved Tailor product assortment by community and store layout Only “big-box around OUTBOUND LOGISTICS Trucks never return with an empty truck PROCUREMENT Real-time connection with store inventories and suppliers Direct contact with suppliers, by-passing middle-man “ Best Retailer to do Business With” – could provide greater operating efficiencies by supplying real-time data Cross-border relationships with China TECHNOLOGY DEVELOPMENT Leading-edge, highly developed IT systems completely integrated with entire supply chain Automated distribution sites Real-time access to sales information from all stores HUMAN RESOURCE MANAGEMENT Focus on the individual employees – empowering them as “associates” and equal feedback Competitive benefits and wages and great training program INBOUND LOGISTICS Real-time data of inbound and in-progress inventory data Conveniently location of all highly automated distribution facilities Majority of inventory flows through dist. Centers Own trucking fleet – largest in US Mastered large-scale “cross-docking” Scan ‘N Pay’ model OPERATIONS Easily replicable model Flexible floor-plan Similar operating concepts Only real-time inventory and sales tracking system High sales per square foot PROFIT PROFIT

2. The Porter Value Chain FIRM INFRASTRUCTURE SERVICE MARKETING & SALES Can’t compete with low prices Target – larger private label presence Higher advertising-to-sales ratio OUTBOUND LOGISTICS TECHNOLOGY DEVELOPMENT No store-level real-time access HUMAN RESOURCE MANAGEMENT PROCUREMENT Can’t compete in terms of scale Behind IT curve in determining demand INBOUND LOGISTICS Higher % of DSD High portion of operating expenses OPERATIONS Lower sales per square foot Lower sales growth