Sustainable Competitive Advantage of Walmart

1264 WordsMay 19, 20136 Pages
Case 8: Sustaining Competitive advantage Question 1: What are the isolating mechanisms preserving Wal-Mart’s competitive advantage in the US market? (use readings case 7) Sam Walton was the founder of Wal-Mart. Sam had the idea of reaching small towns in rural areas where the people had to travel many miles to do their shopping. This was a big market that was initially ignored by the major players before Wal-Mart. Eventually Wal-Mart grew to become market leader among the US discount department stores. The core of their success was defined by their technological superiority and the way Wal-Mart treats her associates (customers, employees and suppliers). According to the resource-based theory of a firm, there are two…show more content…
F.e. giving their store managers more latitude in setting prices empowered their managers to sell at their optimal price instead of following a general price for every store. This way employees develop a certain expertise, know-how that is very specific to Wal-Mart and can’t be imitated easily by direct competitors. b Dependence on Historical Circumstances: A firm’s history of strategic action comprises its unique experiences in adapting to the business environment. These experiences can make the firm uniquely capable of pursuing its own strategy and incapable of imitating the strategies of competitors. Wal-Mart started as the underdog in small towns in rural areas. This was a very tough position to start in, but with the dedication of Sam Walton and its associates, Wal-Mart became US leader in discount stores. With that, Wal-Mart cumulated a lot of experience. c Social Complexity: Socially complex phenomena include the interpersonal relations of managers in a firm and the relationship between the firm’s managers and those of its suppliers and customers. Wal-Mart has a very open culture regarding its associates. Employees are motivated to use the “YesWeCanSam” suggestion program give ideas to simplify, improve or eliminate work. Profit sharing accounts were available for employees after one year. Based on earnings growth, Wal-Mart contributed a percentage of every eligible

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