Essay
Walmart Assignment 2 UvA Strategy and Organisation Case Study
Walmart Assignment 2 UvA Strategy and Organisation Case Study
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S&O Wal*Mart Stores, Inc Essay Assignment 21. To what extent is Wal-Mart’s performance attributable to industry attractiveness and
to what extent to competitive advantage? Use Porter’s five forces to motivate your
answer. (2 points)
Looking at Porter’s Five Forces: Threat of new entrants and substitutes, bargaining power of
the supplier and buyer, and of course competitive rivalry, we could say that the retail industry
was not really attractive. The threat of new entrants was quite large, new entrants could
capture small towns and establish their brand there were the big retail merchants haven’t
established yet. Suppliers delivered to many retailers so there wasn’t much bargaining power,
the name of the game in this industry is to be the cheapest, the only main differences here are
location and price. There was not really a threat of substitutes there was no Amazon or eBay
at the time, substitutes were small retailers and local grocery stores that were generally more
expensive than the superstores of Walmart.
I think Walmart’s success came from the competitive advantage that they took by
countering the competitive rivalry by building their business in the small towns far away
from the big city stores and trying to have the lowest costs in the industry, so they could have
the lowest prices and continually working on the store operations to make it function better,
make it more cost-efficient and thus create more value for customers. From the success in the
small towns, Walmart grew bigger and gained more bargaining power with suppliers and got
even better deals and therefore could offer even better prices. Adding the fact that Walmart
outgrew it’s competition and could even buy and integrate, for example, the complete
Benjamin Franklin variety stores organization, which he used to work for himself.
Therefore I think its fact that Walmart’s success was attributable for the largest part to
its competitive advantage and to a lesser part of industry attractiveness.
2. In which of Wal-Mart’s principal functions and activities (namely: merchandising,
store operations, distribution, vendor relationships, human resource management, and
management) do WM’s main competitive advantages lie and why? Please select ONE
of the functions and elaborate on the distinctive resources and capabilities within that
function. (4 points)
Store operations were definitely the main competitive advantage in Walmart’s strategy. To
begin with, Walmart builds its stores in locations where the competition was far away (4
hours drive), and with that their only competition became the small mom and pop retailers
that could keep up with Walmarts discounted pricing. Growing its stores to 36 different
departments they were competing with almost every retailer in the region of the store. On top
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