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.