Walmart Case Study

Case Analysis: Wal-Mart

Wal-Mart has been confronted with how to sustain the company's phenomenal performance. After going through its history and analyzing this article, you can see there are some opportunities by which Wal-Mart can propel itself in the promising future.

 Analysis of advantages in terms of Operation Management, HR and Culture

I. Operation Management

 By the year of 1994, Wal-Mart had built 40 nation-wide warehouses. These warehouses, later on used as distribute centers together with 4253 (by 2012) stores dotting all over the world enabled Wal-Mart to buy bulk goods at lower prices. This built a base for "low price" strategy. Afterwards, these distribute centers rendered Wal-Mart's competitively short delivery time realized, for example, Two-step hub-and-spoke distribution network.

This is a sustainable competitive advantage. It's valuable and imperfectly imitable because it will need a quite long time and fund to build such widespread warehouses.

 Wal-Mart is generally organized with 36 departments offering a wide variety of merchandise. These multiple choices meet customers' needs furthest. Besides, Wal-Mart offers "satisfaction guaranteed" policy, which means that merchandise can be returned to any Wal-Mart store with no question asked.

It's sustainable competitive advantage. It's valuable and inimitable because, in order to be so, the competitors need a long time to build a compatible supply chains.

 Wal-Mart's marketing slogan "Always low prices - always" shows Wal-Mart is very competitive in terms of prices. Moreover, it gives store managers more latitude in setting prices than did "centrally priced" chains such as Caldor and Venture. Wal-Mart's price setting is flexible. That means the prices are just a bit lower than other competitors who are nearby.

It's sustainable competitive advantage. "Always low prices - always" is the image of the Wal-Mart to customers, which was established by Walton. It originated from a specific historical time, embodies in its culture and features a high social complexity.

 Wal-Mart has a strict budget for the construction of new stores. It controlled the construction costs within $20 per square foot - a very low cost in this industry.

It's not a sustainable competitive advantage, because it's not imperfectly imitable, but when we analysis this advantage, we know that the other advantages that lead to this strict budget management, such as the frugal culture, maybe be sustainable competitive.

 Wal-Mart first introduced IT to its stores in 1983. It has been exploiting IT to optimize the process of management in terms of sales, HR, inventory management and scheduling.

It's not sustainable competitive advantage, because with the development of the technology, the barrier of exploiting IT strategy has been decreased, and the other competitors have followed up and applied such technology.

 Wal-Mart's business diversification embodied in different formats of stores such as retail stores, discount stores, Sam's Clubs and supercenters. These diversified business formats brought Wal-Mart the maximum market share.

It's not sustainable competitive advantage. Because it's not rare, many competitors also developed many different formats of stores too.

 International expansion brought Wal-Mart a great increase in sales.

It's not sustainable competitive advantage, because it's not rare, many competitors have focused to develop the international market.

 Wal-Mart had ventured into e-commerce, online classified services, auto and tire maintenance, vacation planning.

It's not sustainable competitive advantage, because it's not rare, many competitors have begun the e-commerce and developing very fast.

 Wal-Mart vowed to become an environmentally responsible, "green" company.

It's not sustainable competitive advantage, because it's not inimitable and rare, other competitors can also claim to be environmentally responsible.

II. Human Resource

 Wal-Mart is a lean operation managed by extremely committed people. Employees live to work for the glory of Wal-Mart.

It's sustainable competitive advantage. This is the Wal-Mart's organizational culture and imperfectly imitable because of its social complexity.

 Training at Wal-Mart was decentralized. For example, new associates were trained by 10 or 12 assistant managers brought in from other stores rather than by traditional training programs.

It's not sustainable competitive advantage, because the other competitors can also imitate it and applicant it.

 Managers and supervisors were compensated on a salaried basis, with incentive compensation based on store profit. Profit sharing was available to associate after one year.

It's not sustainable competitive advantage, because the other competitors can also apply such sale compensation system.

III. Culture

 Walton had a philosophy that drove everything in the business: he believed in the value of the dollar and was obsessed with keeping prices below everybody else. This constituted the base for the profitability of "low price" policy. More

It's sustainable competitive advantage. "Always low prices - always" is the image of the Wal-Mart to customers, which was established by Walton. It originated from a specific historical time, embodies in its culture and features a high social complexity.

 An idea was instilled in Wal-Mart employees by Sam Walton that Wal-Mart had its own way of doing things and tried to make life at the company unpredictable, interesting and fun.

It's a sustainable competitive advantage. Because it reflects a high social complexity, other competitors can't exactly imitate it.

 The most important ingredient in Wal-Mart's culture is the way it treaded its associates because Sam Walton believed that taking care of the people in the stores could make them serve the customers better. Specifically, Wal-Mart aimed to excel by empowering associates, maintaining technological superiority, and building loyalty among associates, customers, and suppliers. All mentioned is supposed to