Walmart Stores Inc

Competitive advantage is achieved not when a company performs better than its competitors, but by performing similar activities in different ways. From its inception in 1962, Wal-Mart has done many of the principle activities required of those in the discount retailer industry, not just better, but different.

Wal-Mart has been able to maintain its leadership position in the market place competing almost exclusively on price. It has achieved such low prices largely due to Wal-Mart’s tenacity for efficiency and low costs within its principle activities, which lower the company’s variable costs, and thus giving it a cost and competitive advantage over its rivals.

The primary activities that present the greatest competitive advantage for Wal-Mart’s are: Purchasing and Vendor Relationships, Warehousing and Distribution, and its In-Store Operations. Largely, these activities were done so efficiently because many of the support activities that Wal-Mart uses to enhance the principal activities.

Purchasing and Vendor Relationships. One area that Wal-Mart has achieved a significant competitive advantage is in the area of its Vendors and Purchasing Relationships. Wal-Mart has established significant buyer power from its vendors, being the most coveted and most feared by manufacturers. Wal-Mart maintains this power over vendors by establishing “asymmetric bargaining power” from the largest of vendors and companies to the smallest—its biggest supplier only representing about 3% of Wal-Mart’s total sales. Because of this power, Wal-Mart is able to achieve lower vendor margins—“anywhere from 5% to 25% lower for identical goods” offered at competitors. Wal-Mart also leveraged its power to impose other requirements such as policies on employee hours, workplace safety and other EEOP and OSHA standards.

While Wal-Mart clearly holds the upper-hand in its relationships with its vendors, vendors significantly benefit from being able to put their...