Wal-Mart's Competetive Advantage

824 Words Apr 18th, 2012 4 Pages
Wal-Mart’s competitive advantage is driven by its low-cost, high volume strategy which aims to increase profits and customer satisfaction. Sustainable competitive advantage indicates a company’s future success and is determined by different factors. These factors include organizational capabilities such as tangible resources, intangible resources and human resources. One main component of sustained competitive advantage is having superior returns sustained over a long period of time. Wal-Mart has had superior returns and has achieved competitive advantage in the market by making industry key success factors advantageous; they are committed to being cost-leaders and achieving ultimate customer satisfaction. However, their low-cost …show more content…
Although Wal-Mart’s distribution network is in place in the United States, it may be difficult to establish a similar system in other countries. Restrictions such as lack of infrastructure and government regulations may slow down the acquisition of volume and expansion of the chain. The company is well-aware of these challenges in other countries, thus they resort to acquisitions of other stores and partnerships with suppliers, to help their growth internationally. Wal-Mart’s relationship with its suppliers is also a sustainable competitive advantage. The company has already demonstrated its suppliers its commitment to their operations and prosperous returns over time. Competitors lack the volume of purchases that Wal-Mart can offer. Suppliers in this case have less bargaining power because Wal-Mart is able to negotiate based on the established relationships. This gives the firm the capability of making slow payments to suppliers since they would not dare to charge a late fee.
The company’s advance IT system provides it with capabilities to advance R&D. Wal-Mart’s innovative strategies maintain them ahead of the competition even though competitors are constantly striving to imitate them. Unfortunately, IT capabilities can be easily replicated and adapted by competitors; despite the firm’s expertise in this area, their competitive advantage can