Q.2: What historically has been Walmarts key source of competitive advantage in discount retailing?

Discount Retailing
Discount stores emerged in the United States in the mid-1950s through supermarkets, which sold food at unprecedentedly low margin. Consumers had become increasingly better informed since World War II. Discount retailing burgeoned as a result, and many players entered the industry at the local, regional, or national levels.

Wal*Mart
Providing value was a part of the Wal*Mart culture from the time Sam Walton opened his first Ben Franklin franchise store in 1945. As they were newcomers, their only alternative was to build their own warehouse so they could buy in volume at attractive prices and store the merchandise. Two key aspects to Waltons plan for growing Wal*Mart: a. The key strategy was to put good-sized stores into little one-horse towns which everybody else was ignoring. b. The second element of Waltons plan was the pattern of expansion.

Overall Competitive Advantage

Another major advantage to Walmart stores was the memorial service of broadcast to every store over the companys satellite system. Also, the most important ingredient in Wal*Marts success was the way it treated its associates. Located stores in small towns since big retailers such as Kmart and Sears dominated large towns Kept overhead low Offered incentives - Profit-sharing for staff Partnerships for suppliers Large investment in IT To keep inventory low Customers got friendly service

Q.4: Evaluate the sustainability of Walmart's competitive advantage

Distribution Network- Sustainability

Economies of Scale Sustainable due to size and relationship with suppliers Some aspects can be replicated by competitors Hub and spoke model Buying directly from the manufacturer However difficult to replicate due to necessary capital and size

Hub and spoke model

84 distribution centres in United States Each center serves 150 stores within a 150 mile radius

Cut out the middle man

High store volume

Information System- Sustainability

Electronic Data Interchange Partly sustainable The technological system itself can be replicated/purchased Capabilities difficult to replicate Partnerships Superior supply chain

(EDI)
Retail Link Operating efficiencies

Ex: partnership with Procter

and Gamble Inventory turnover

management

Unique merchandise in stores

Local adaptation

Cost Control- Sustainability

Bargaining power with suppliers Disintermediation lower cost lower prices Longer accounts payable periods International Trade China Fewer employees lower labour costs Management techniques Exclusion of unions Sustainable Bargaining power is difficult to replicate Influence Disintermediation Ability to keep indirect costs low

Culture of frugality
Difficult to imitate Labor costs Exclusion of unions