Wal*Mart Hbr Case Summary

Wal*Mart Case Summary

WalMart’s competitive advantage is a result of several key strategic actions.

First, WalMart’s choice of geographic location in small town locations that were not being served by competitors allowed it to establish itself as the only discount retailer in these areas. This key strategic choice of location was completely different from what competitors had done and gave WalMart a first-mover advantage in markets that had not previously been served by discount retailers.

A second key strategic feature is WalMart’s inventory management strategy. WalMart has been a leader in implementing new and cost effective methods to manage inventory. Merchandise was tailored to local market demand via “traiting” where products movements were indexed over a thousand store and market traits. Also, store managers were empowered to define which items to display based on customer preferences and how to allocate shelf space according to local demand. Therefore, each store was directed to meet local needs rather than follow a general corporate policy.

Another key part of WalMarts competitive advantage is its vendor relations. WalMart had a great bargaining power, which minimizes costs and maximizes efficiency.

Furthermore, WalMart’s competitive advantage was feasible due to technological innovations that were implemented earlier than the competitors did (two years ahead of Kmart). Universal Product Code scanners track inventory electronically at the point of sale. Product information is transferred to the stores computerized inventory system, allowing maximal efficiency in inventory tracking. Automated inventory management decreases inventory costs, allows replacement of goods and better meets local demand. Information regarding sales data is collected and analysed via satellite network, which was the unique one (the competitors don’t have it).

Moreover, WalMart’s pricing strategy allowed more local control based on local demand. Store managers priced products to...