Page 1 of 7Wal-Mart’s Core CompetenciesDefinition ofCoreCompetencyA narrowly definedfield or task atwhich a companyexcels. A firmscore competenciesare difficult for itscompetitors tomimic, allowing thecompany todifferentiate itself.Most corecompetencies willbe applicable to awide range ofbusiness activities,transcendingproduct and marketborders.Investopedia explains CoreCompetencyA core competency for a firm is whatever it doesbest. For example, Wal-Mart focuses on loweringits operating costs. The cost advantage that Wal-Mart has created for itself has allowed the retailerto price goods lower than most competitors. Thecore competency in this case is derived from thecompanys ability to generate large sales volume,allowing the company to remain profitable withlow profit margin.
Page 2 of 7Wal-Mart is a company that has taken its core competencies, whichare the capabilities the firm emphasizes and performs especiallywell while pursuing its vision and turned them into competitiveadvantages. Core competencies must satisfy four characteristics inorder to be a competitive advantage. These advantages, accordingto our text, include:*valuable,*rare,*difficult to imitate,*non-substitutable.Wal-Mart’s Core Competencies:1. Culture- One core competency Wal-Mart has is its culture.Wal-Mart’s employees are hardworking, efficient, and processoriented. In the video “The Age of Wal-Mart” it pointed out thatSam Walton, founder of Wal-Mart, called his employees associatesand treated them as partners. He wanted their input and ideas onhow to make the company better. Also, no matter what Wal-Martyou go into across the country, Walton wanted you to know you willALWAYS receive low prices, excellent customer service, and feel athome. From door greeters to big charity contributions, this type ofculture is rare and difficult for competitors to imitate.2. Low Cost Operations- As the video pointed out, Sears was aleading retailer during the 70’s, but was greatly affected by therecession. They targeted middle class families, expanded theiroverhead, and developed in larger cities. Wal-Mart focused on
Page 3 of 7small towns and lower overhead during this time. As the economyworsened, people began looking for lower prices and moving tosmaller towns and suburbs. Today Wal-Mart can generate bigsales volume which allows the company to gain profits with lowprofit margin giving it an advantage over its competitors.3. Distribution- Wal-Mart operates an unrivaled global network of146 distribution centers. Because of this, the trickle-down effecthappens. Trucks do not have to travel long distances to makedeliveries which helps to reduce lead times for the...***************************************************************************You see it everywhere in magazine articles and advertisements, but what exactly is acore competence? At its simplest, a core competence is a unique capability thataffords some type of competitive advantage. It corresponds to a business process, andinvolves underlying skills, functions, systems and knowledge. To determine ifsomething is of core competence, one must ask, "Does this thing give the company aunique advantage over its competitors and help make the company profitable"?Capabilities, on the other hand, refer to a firm s skill at effectively coordinating itsresources. In other words, resources are the source of a firms capability; andcapabilities refer to a firm s ability to bring these resources together and to deploythem advantageously. Every organization possesses many capabilities that enable it toperform the activities necessary to provide its products or services. Some of theseactivities may simply be performed adequately, while others may actually beperformed rather poorly. However, successful organizations conceivably possesscertain capabilities allowing them to perform key activities exceptionally well.Moreover, these are the distinctive capabilities that support a market position that isvaluable and difficult to imitate.At Wal-Mart, its major competitive core competence is its superior logistics system.Wal-Mart is one of the biggest global retailers in the world, operating in severaldifferent countries around the world, with multiple formats, all tied together by astate-of-the-art retail distribution system known as a Retail Link. No other massretailer or trading community - domestic, foreign, or global - has developed a systemeven close to Wal-Marts capabilities in supply chain and distribution management
Page 4 of 7and optimization. However, the possibility of competitors having allocated significantresources to developing state-of-the-art data warehouses that, like Wal-Marts, goesbeyond collecting point-of-sale data to drive replenishment, exist. In looking at Wal-Mart more closely...+++++++++++++++++++++++++++++++++++++++++++++++++++++++++Campbell Soup Company has a capability set that centers on convenience , unsurprisingly,considering its business focus is convenience food. That focus is realized throughcapabilities in research, customer relationship management, and sales force management,among other capabilities.For example, to make it easy for supermarket shoppers to buy Campbell soups, the companyhas created an in-store display system that shelves each variety of soup in rows on a slopedrack. When a shopper takes one unit, another slides handily to the front. While seeminglysimple, the system actually was the result of a series of insights into both consumer andretailer needs. Campbell consumer researchers discovered that a shopper who wants to buylow-salt cream of mushroom soup and doesn’t see it on the shelf will hunt behind the creamof broccoli and the chicken noodle, shuffle the adjacent rows, and leave frustrated if thedesired product can’t be found. The disarray creates difficulty — and cost — for the retailer,who must restore order to the shelves. Campbell’s solution solved the problem for both theretailer and the consumer. People see what they’re looking for immediately or theyimmediately see that it’s out of stock. Because there’s no more rooting around at the back ofdeep shelves, the retailer keeps a tidy display and has a reliable indicator of stock level.Getting this concept to work also required additional training of the retail force and adedicated effort to get retailers’ “buy-in” on the new shelf.…Capability plans should be unique,+++++++++++++++++++++++++++++++++++++++++++++++++++++++++A core competency is defined as something unique that anorganization has, or as something unique it can do. A company thatdevelops a unique core competency can create long lastingcompetitive advantage.
Page 5 of 7A core competency will typically meet all rules on the followingchecklist: it provides benefit to the customer it is difficult to imitate it can be leveraged widely to create many products (or operatein many markets) it will uniquely identify the organization it will be difficult to pin down, because it seems to be acombination of things such as technology, process, and know-how.Now that we know what core competencies are, and we’re armedwith a checklist to check for one, let’s look at some corecompetency examples…Core Competency Example 1: AppleThe core competency of Apple can be said to be “making userfriendly user interfaces and design”. Let’s examine this statementagainst our checklist:Criteria Yes/NoCustomer benefit? Yes. The customer clearly benefits from great user interfacesDifficult to imitate? Yes. Companies have been trying for years and not yet succeeded.Can be leveraged?Yes. This core competency has been rolled out to the iPod, theiPhone, and most recently, the iPad.Uniquely identifies theorganization?YesDifficult to pin down? Yes – it’s not just design, but marketing, software, hardware etc
Page 6 of 7Core Competency Example 2: WalmartThe core competency of Walmart can be said to be “Groceries at alow cost”. Let’s examine this statement against our checklist:Criteria Yes/NoCustomer benefit? Yes. The customer gets their goods cheaper than anywhere elseDifficult to imitate?Yes. A company would require huge scale to replicate, and thatis obviously not an easy thing to achieve.Can be leveraged? Yes. Walmart sells all kinds of goods using the same modelUniquely identifies theorganization?Yes, I think in the US at least, most consumers would identifyWalmart as being amongst the cheapest in this space.Difficult to pin down?Yes – it’s scale, but also supply chain management, and highinventory turnover etc.Core Competency Example 1: DellThe core competency of Dell can be said to be “custom made PCdirect from manufacturer at a low cost”. Let’s examine thisstatement against our checklist:Criteria Yes/NoCustomer benefit? Yes. The customer gets a PC at a inexpensive price point.Difficult to imitate? Marginal – and this could be Dell’s downfallCan be leveraged? Yes. They have rolled the model out to laptops, printers etcUniquely identifiesthe organization?Yes. Dell would certainly be identified by consumers as one of the mostaffordable in this space.Difficult to pin down?Yes (but probably the easiest to identify of all 3 examples) – it’s acombination of just in time manufacturing,low cost sales channels(Internet), outsourced R&D etc.SummaryA core competency is defined as something unique that anorganization has, or as something unique it can do. A company thatdevelops a unique core competency can create a long lasting
Page 7 of 7competitive advantage. If you are working in a project or programmanagement environment then you should understand how whatyou’re working on leverages or adds to your organization’s corecompetencies. This will enable you to understand how the projectoutputs will compete in ….+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++Let me cite Wal-Mart as an example. Their core competency is logistics. Theyknow how to buy train cars full of product and move it to the locations where itis needed. They can even intercept a shipment in progress to reroute it where ashortage has occurred.If you doubt that logistics is their core competency - a few years ago Amazonattempted to hire one of Wal-Marts executives. Wal-Mart sued. They declaredtheir logistics strategy as a trade secret and sued to make sure that thisemployee didnt reveal any Wal-Mart secrets. They understand the value of theircore competency.Everyone wants to run their company effectively and efficiently. If you canmake your mission critical process more efficient and more effective, then youcan expect lower costs, increased revenues, and improved customerrelationships. Make BPM your core competence.+++++++++++++++++++++++++++++++++++++++++++++++++