Wal-mart’s Competitive Advantages

1) What are Wal-mart’s competitive advantages? a. Large variety of products and services b. Extremely well known brand name c. Superior IT systems d. Volume purchasing power e. Lots of investment capital 2)How sustainable are those advantages? a. The ability to offer a wide variety of products and services is essential to their business model, however by expanding the number of product/services too much or too quickly, their variety can become a liability. Have a large variety of products/services is also expensive and can be unsustainable in an economy that is experiencing a recession. . Having a well known brand name is fairly sustainable advantage. However if the brand name is in some way tainted, for example how their name has been hurt by the idea that they mistreat their employees then having the well known brand name can be detrimental to the business. c. Superior IT systems can only provide a temporary competitive advantage on account of the fact that technology is always changing. Although Wal-Mart may have the best technology systems right now, this may not be the case in 5 years if they choose not to update their systems. Although Wal-Mart has the capital to continue to stay abreast with the newest and best technology, continual implementation of these systems can be cumbersome even for a company as big as Wal-Mart. d. Volume purchasing power is one of Wal-Mart’s most sustainable competitive advantages. This is due to the fact that given the large number of stores and variety of products that Wal-Mart carries they are able to better negotiate with manufacturers for discounts on large volume orders. e. Although Wal-Mart does have a lot of investment capital accrued, this capital advantage may be at risk given a few miscalculated expansions (stores, number of products/services, etc) and negative global economic trends (recessions, droughts, etc) 3)How transferable are those advantages as Wal-Mart moves into new formats and especially into new international locations? a. The variety of products/services that Wal-Mart is able to offer in other countries won’t be able to compare to the variety that they offer within the US. This is in part because of how expensive & potentially unprofitable (based on taste preferences) it would be to offer that many products from manufacturers based in the US. That being said Wal-Mart will undoubtedly continue to use this low-cost/large product variety model of business as they enter new markets where consumers aren’t used to being presented with so many options. b. Although they do have an international brand name, it is necessary that Wal-Mart builds brand name recognition in new markets. This has been accomplished in the past by buying out local companies and co-branding products/stores until the Wal-Mart brand is well recognized enough to sell products on its own. c. Superior IT systems are to some degree is a transferable in the sense that it shouldn’t be overly cumbersome to implement the new technology outside of training and system updates. However some new markets or different formats that Wal-Mart enters into will have different IT system needs and the availability of this technology may be locally based and thus susceptible to changing trends within the new location/industry. Again the changing dynamic of technology and Wal-Mart’s willingness to stay up to date with the newest/most efficient IT systems can limit their ability to transfer this competitive advantage to new locations. d. The competitive advantage of volume purchasing will be affected by the international location. In some places volume purchasing simply won’t be an option. Whether that is due to politics or cultural customs, Wal-Mart may not be able to maintain their volume purchasing power in all markets. Their investment capital is a transferrable resource however as noted above this is subject to changin

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