Most managers describe strategic positioning in

terms of their customers: Southwest Airlines

serves price- and convenience-sensitive
travelers, for example. But the essence of
strategy is in the activities - choosing to perform
activities differently or to perform different
activities than rivals. Otherwise, a strategy is
nothing more than a marketing slogan that will
not withstand competition.
Michael E. Porter

More SKUs
More SKUs

Much less
Much less
Inventory
Inventory

Quick
Quick&
Delivery
Delivery
Using &
Using
Return
Return
Trips
Trips

Small
town

Large
town

Direct
Direct
Connection
Connection
With
With
Vendors
Vendors
Building
Building
Distributio
Distributio
n Center
n Center
(150~300
(150~300
-mile
-mile
radius)
radius)

More Hard
More
Hard
goods
goods

Efficient
Store
Operatio
ns

BargainBargainBasement
Basement
Acquisition
Acquisition

Takeover
Takeover
Specialty
Specialty
Departmen
Departmen
ts
ts

Locating
Locating
VPs in
VPs in
Same
Same
Area
Area

Reduce
Reduce
Wage
Wage
Expenses
Expenses
Reduce
Reduce
Shrinkag
Shrinkag
e
e

UPC at the
UPC
Pointatofthe
Point
Sale of
Sale

Increase in
Increase
Sales
per in
Sales per
average
ft2
average ft2

Everyd
ay Low
Prices

Wired
Wired
Merchandis
eMerchandis
Requests
e Requests

Satellite
Satellite
Network
Network

More
More
Available
Available
Selling
Selling
Space
Space

Diversific
ation

Improvin
g
Logistics

Its Own
Its Own
Trucks
and
Trucks
Trailersand
Trailers

Testing
Testing
Different
Different
Mixes
Mixes

Computer
Computer
-Aided
-Aided
Store
Store
Design
Design

Focus on
Focus on
Increasing
Increasing
Awareness
Awareness
of New
of New
stores
stores

Administr
ation

Frequent
Frequent
performan
performan
ce Check
ce Check

More
More
Incentiv
Incentiv
es
es

Marketin
g
On
Lowest
Prices

Measuring
Measuring
the
the of
success
success
Promotionsof
Promotions

Human
Resource
s
Managem
ent

No
No
question
question
asked
asked
Return
Return
Policy
Policy

Wal-Marts Activity System

Buy in volume at
Attractive prices

No questions
Asked Return
Policy

Employee
Salaries
We care about
Our people

Lease
stores

Computer aided
Store merchandise
Design for
In distribution center Merchandise mix

Providing
Everyday Low
Prices
Store manager
Salary. Autonomy in
Ordering stock and
Setting displays

Computerized
System in each store
UPC at point of
sale

Efficient
Distribution
network

Low operating
expenses

Regional vice
Presidents live in
Bentonville and
Flown to stores

Inventory
control

Increased store
Size and increase
In the number of
Store locations

$20 million
Satellite
system

Centralized
purchasing

Hub and Spoke

Distribution
network

Central computers
Linked to vendors

Efficient
Inbound
Logistics

Distribution Centers

Walmart state of the art supply

chain management systems
Walmart Map of the World

Outbound Logistics
2-3 stores served by one truck
Mdse. Delivered to the stores within
48 hours
Return merchandise picked up; trucks
60% full on return

Walmart store layout

Walmart Everyday low Prices

Wal-Marts Sustainable
Advantage
Wal-Mart was able to assess each facet of their business
and made every link in the value chain as lean and
efficient as possible. Collectively, this is what made them
successful with a sustainable competitive advantage.
With the use of their new technologies they were able to
better communicate internally with their management
and distribution warehouses as well as externally with
their vendors to rejuvenate their products/inventory.
Additionally, Wal-Mart was able to capitalize on a
growing target market (Sunbelt) when no other
competitors did, they were able to leverage their weight
with vendors dictating lower pricing, kept overhead
costs low with employee wages and simple store
fixtures, achieved high revenues per square foot with
their strategic product mix, and capitalized on running
fewer advertising campaigns. All of these actions in
tandem with one another makes it difficult for competing
discount stores to encroach on their market share.

Walmart's Business logic

Everyday low prices

Lower prices
from suppliers

More customers

More goods sold

Lower
operating