1. Wal-Mart is in the discount retail industry and operates worldwide.

This short

industry analysis shows were Wal-Mart is within the industry. We will first start with

the Industry rivalry/competition. This has medium pressure due to the mature

industry life cycle. Rivalry amongst competitors has medium pressure in the

industry. The competition is Sears, K-mart and Target. Target has had growth

recently and is the only store that even comes close to offering all household items

that a consumer would want. They have also created a niche like Wal-Mart. Next,

we will talk about supplier power which is low to medium pressure. This has to do a

lot with Wal-Mart having so much of the market share which gives them a lot of

power with the small suppliers and can also provide economies of scale pricing.

Also, Wal-Mart could vertically integrate. The third force, buyer power, has low

pressure. The individual consumers have little power to the huge conglomerate.

There has been controversy over the pricing model but consumers still choose to go

Wal-Mart due to the convenience factor. The fourth force is substitutes, which is

strong because they have many options available such as pharmacies, grocery

store, and boutique stores. Lastly, the threat of new entrants is medium to high as

Wal-Mart has a great distribution system, many locations and the capital required to

fight off competitors. Wal-Mart also has a cost advantage.

2.
• Information technology- the book says “Wal-Mart is a pioneer in the

application of information and communications technology to support

decision making and promote efficiency and customer responsiveness (Grant

76)”.

• Human Resource management- all employees are paid relatively low but

were offered health care and retirement plans. A stock purchase plan is

also available and profit incentives.

• Purchasing and vendor relationships- Wal-Mart has full control and

purchasing power. They also involve themselves in the suppliers day to day

routines and employment such as employment policies, working hours, etc.

• Warehousing and Distribution- their efficiency resulted with their hub and

spoke system. They adopted the cross-docking, which is a system where

goods are unloaded and delivered and then trucks are reloaded without

having to be stored in warehouse inventory. They also implemented Radio

frequency identification (RDFI) and were the leading pioneer of this

technology.

• Company culture and in store operations-customer service: Sam Walton

requested employees that when they come within 10 feet of a customer to

greet them. Also, they would hire greeters for their customers. Made the

hours convenient as well. Decentralization of store management-meaning

that managers had decision-making authority within their stores regarding

products and pricing. Merchandizing-Wal-Mart provides diversity in their

products by also offering some high end brands.

 • Marketing- They prided themselves on customer appeal as the price leader

with every product. They relied on word of mouth advertising to cut cost.

• Wal-Mart’s Organization and management style are unique to the industry.

The founder of Wal-Mart was obsessed with undercutting competitor’s prices

and a goal of cost economies. He constantly traveled and went to the stores

himself to collect various information.

3. When analyzing whether Wal-Mart’s competitive advantage is sustainable or not,

we have to look at resources and capabilities and test their durability,

transferability, and replicability. I feel Wal-Mart’s competitive advantage is

sustainable as discussed below.

4. With a definite competitive advantage and the organization being

multidimensional it is hard for a competitor to know which part leads to superior

profitability. There is casual ambiguity associated which entails uncertain

limitability. They have key relationships in tact with vendors and have made a

reputation for themselves.