Wal-Mart can attribute most of its accomplishment to competitive advantage rather than trade attractiveness. Since they enlarge their product line they become more capable to give tough competition to reputable players like pharmacies, groceries, and other health services. In addition, the market is by now extremely saturated as very hardly any untouched markets were left. Furthermore, the single thing that differentiates Wal-Mart from its competitors is its scale. In 2010 and 2011 the gross margin of the company was lower than the target. The current ratio is not quite 0.9 for both years which is a different area where Wal-Mart is considerably lagging (Martínez, Galván & Alam, 2017).
However, the huge size has sanctioned the company to generate economies of scale and provide them incredible bargaining authority over their dealer. According to the case, P& G obtain 18 percent of their returns thus far their merchandise is just 3 percent of Wal-Mart’s profits. The company controls their warehousing and supply which provides several benefits and tough competition to the major players in the market. Also, thrift and the value of money are on delivering to small communities. It has yield remarkable importance for the organization. All these factors revealed that the threat of new entrant is weak which help Wal-Mart to attain competitive advantage in the most effective manner.
Warehousing and distribution: Wal-Mart is a leader in distribution logistics. Furthermore, there is two main resource asset of an organization. The first resource is that most of their goods being transported by Wal-Mart trucks. The second is the value that the products of the company
Purchasing: the tremendous size of the company allows it to lean on numerous suppliers and purchase the products at low costs. Also, many suppliers depend mainly on Wal-Mart’s business (Hunt, Watts & Bryant, 2018). This provides an additional advantage as the purchasing agent is isolated from his own organization possibly allowing the company's executives to place additional pressure on them. In addition, it also provides the ability to put extra pressure on the suppliers. This helps the company to enjoy strong barraging power with suppliers.
The company possesses resources and capabilities which are hard to duplicate. Furthermore, the company adopted a continuous improvement attitude which helps to provide several competitive advantages as compared to the competitors. Continuous development makes the company even more advanced. Due to the high cost of developing the other players cannot copy the strategies of Wal-Mart. In addition, little information is available about how Wal-Mart exactly implemented its distribution technological improvements (Verma, Potluri & Mahere, 2019). It is clear that the company has put more emphasis on using technologies and effective innovations which provides long terms benefits and competitive advantage in the most effective manner.
One of the external threats for Wal-Mart is that it had to deal with huge competition. Furthermore, environmentalists, anti-globalization activists also affect the day to day operations of the company. The company is highly pressurized by non-profit organizations, labour unions and politicians to adapt its image and business practice. The increasing gap between the management and employees revealed that the employees are engaged with the work. However, the company has faced difficulty in providing job satisfaction to employees. In addition, the company has also taken different steps like internal promotion, training to increase the level of commitment (Muñoz, Kenny & Stecher, 2018).
Furthermore, Wal-Mart has also faced criticism as they had not fully compensated former employees and failed to ensure that employees received legally mandated rest breaks. These unethical activities may affect the long term profit or goodwill of the company. One of the major challenges for the company is to compete with Amazon. In order to compete with Amazon the company tried to imitate its strategy that focuses on offering free two-day shipping. Also, the company collaborates with major technological players to use artificial intelligence capabilities. All these efforts indicate that the company faced some challenges in 2018. But effective strategies helped the company to cope up with a challenging environment.
Hunt, I., Watts, A., & Bryant, S. K. (2018). Walmart’s international expansion: successes and miscalculations. Journal of Business Strategy.
Martínez, A. B., Galván, R. S., & Alam, S. (2017). Financial Analysis of Retail Business Organization: A Case of Wal-Mart Stores, Inc. Nile Journal of Business and Economics, 3(5), 67-89.
Muñoz, C. B., Kenny, B., & Stecher, A. (Eds.). (2018). Walmart in the global south: Workplace culture, labor politics, and supply chains. University of Texas Press.
Verma, A., Potluri, R., & Mahere, S. (2019). An incisive assessment of Walmart’s supply chain management.
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