Business School

COURSEWORK Session 2020/2021

Module title Influencing Organisational Strategy

Module Code
Submission date and time
Weighting of assessment 90% of total mark.

Instructions to Candidates

Attached are case study materials concerning Walmart. Use the case study
materials and your own research to answer the attached questions. Attempt
all four questions (please note the marks awarded for each question).

Response must be word-processed, your work should be proof read. Please

reference any sources or models used. Diagrams and tables can be used in
the main parts of your answers or put in as appendices. Answer each
individual question using the questions as sub-headings rather than
attempting to write one answer that covers the questions.
Evidence of further reading will be marked accordingly.

A minimum of 3,000 words is expected and a reference section.

This coursework assesses the following learning outcomes

L1. Develop a critical knowledge of strategy and strategic management.

L2. Critically evaluate the influences on organisational strategy development.
L3. Develop organisational strategies that take cognisance of external and internal influences
and acknowledge the complexities and ambiguities surrounding such decisions.

Submission instructions

Your attention is drawn to the University’s policy on Plagiarism and Collusion which apply to this assessment.
Details are available in your Student Diary.

You should also be aware that late submissions will be penalised in line with University regulations.
Please see your Handbook for details.
Module:Influencing Organisational Strategy

1. How well is Walmart performing? Your answer might consider to what extent its performance is
attributable to industry attractiveness and to what extent to competitive advantage?
(100 marks)
2. In which of Walmart’s principal functions and activities (namely: purchasing, distribution and
warehousing, in-store operations, marketing, IT, HRM, and organization and management
systems/style) do its main competitive advantages lie? Your answer should identify the distinctive
resources and capabilities in each of these functions and activities.
(100 marks)
3. To what extent is Walmart’s competitive advantage sustainable?
(100 marks)
4. What challenges does Walmart currently face and what measures does it need to take to sustain its
recent performance and defend against competitive (and other) threats?

(100 marks)

Question 01:
1. To what extent is Wal-Mart’s performance attributable to industry attractiveness
and to what extent to competitive advantage?

Wal-Mart can attribute most of its success to competitive advantage rather than
industry attractiveness. As they expand their product lineup they bring themselves in
to more and more competition with business already established in these fields such
as grocers, pharmacies and other medical services. Additionally the market is
already very saturated with very few untapped markets. Population growth in the US
slowing and urbanization is increasing 1 may lead to their strategy of putting good
sized stores into one horse towns running in to trouble as many of these one horse
towns slowly cease to exist. This as I already alluded to would leave them in markets
where their main competitors are established or establishing. When we compare
certain financial indicators we find further evidence that the industry isn’t terribly
attractive. The only thing that really sets Wal-Mart apart from its competitor’s
numbers wise is its scale. It has gross profit margin is ~6% lower than either target or
Dollar General for both the years 2010 and 2011. Comparing other margins reveals
similar results with Wal-Mart actually lagging behind their main competitors. Their
current ratio is not quite 0.9 for both those years, another key area where Wal-Mart is
significantly lagging.

What Wal-Mart does have is some incredibly strong competitive advantages. Their
immense size has allowed them to create economies of scale and gives them
tremendous bargaining power over their suppliers too. As stated in the text, P&G
derives 18% of their revenue from Wal-Mart yet their products are only 3% Wal-Marts
revenue. Their sales forecasting techniques and EDI extended to all of their vendors
make allow them to keep inventory on hand low and product mix finely tuned to the
respective markets creating, as close as you can get in their business, just-in-time
inventory management. This means that despite having more than 6 times the sales
revenue of their nearest competitor they have only 5 times the inventory. Wal-Mart
controls its own warehousing and distribution, an outcome of their original business
model when they focused mainly on supplying small communities and developing
that became a priority for them. It has yielded impressive results as they are a world
leader in distribution logistics. It’s fair to say that what advantages they have are a
result of competitive advantage but to what extent beyond scale are they really
performing better than some of their main rivals?

2/3. In which of Wal-Mart’s principal functions/ activities do Wal-Mart’s main

competitive advantages lie and what are the distinctive resources and capabilities in
each of these functions/activities?

Purchasing: Wal-Mart’s tremendous size allows them to lean on any suppliers and
make them provide their products at as low a cost as possible. In fact many suppliers
rely so heavily on Wal-Mart’s business that they have purchasing agents at the Wal-
Mart HQ. This comes with the additional distinct advantage that the purchasing agent
is isolated from his own organization possibly allowing the Wal-Mart executives to
place additional pressure on them. It also gives Wal-Mart the ability to pressure their
suppliers on environmental and labor policy. In short: All of their suppliers dance to
their tune, a HUGE advantage.

Warehousing and Distribution: In a word: efficient. Their enormous distribution

centers rely on a hub and spoke system not dissimilar to the one in effect for airlines.
They have optimized this system well enough that even returning trucks are 60% full
on backhauls. The use of third party logistics means that they can operate on a five
day cycle which is much faster than their competitors. Incremental improvements
mean inventory turnover continues to increase and trucks are being packed more
tightly. This begs
Costco wholesale corp. (2016) Annual Report 2016. Available at:
http://quote.morningstar.com/stock-filing/AnnualReport/2016/8/28/t.aspx?t=:COST&ft=10-
K/A&d=8f89ee2fda437c3bd114e430beb02f9e (Accessed: 10 June 2017).

Dollar General Corp. (2017) Annual Report 2017. Available at:

http://quote.morningstar.com/stock-filing/Annual-Report/2017/2/3/t.aspx?t=:DG&ft=10-
K&d=22d8b9766fd4e16c2f2f335d5a45b280 (Accessed: 10 June 2017).

E. Dobbs, M. (2014). Guidelines for applying Porter's five forces framework: a set of industry
analysis templates. Competitiveness Review, 24(1), pp.32-45.
Grant, R.M. (2011). Contemporary strategy analysis: Text and cases edition. John Wiley &
Sons.
Finne, S. and Sivonen, H. (2008). The retail value chain: How to gain competitive advantage
through Efficient Consumer Response (ECR) strategies. Kogan Page Publishers.

Hennig‐Thurau, T. and Klee, A. (1997). The impact of customer satisfaction and relationship
quality on customer retention: A critical reassessment and model development. Psychology &
marketing, 14(8), pp.737-764

Kaplan, R. and Norton, D. (1992), “The Balanced Scorecard- measures that drive
performance”,Harvard Business Review, January-February, pp. 71-79.

Kaplan, R. S., and Norton, D. P. (1995). Putting the balanced scorecard to work.Performance
measurement, management, and appraisal sourcebook, 66.

Kaplan, R.S. and Norton, D.P. (2001). The strategy-focused organization: How balanced
scorecard companies thrive in the new business environment. Harvard Business Press.

Landin, A., and Nilsson, C. H. (2001). Do quality systems really make a difference?. Building
Research & Information, 29(1), 12-20.

Möller, A., and Schaltegger, S. (2005). The Sustainability Balanced Scorecard as a

Framework for Eco‐efficiency Analysis. Journal of Industrial Ecology, 9(4), 73-83.

Porter, M.E. (1985). Competitive Advantage: Сreating and Sustaining Superior Performance.
N.-Y

Thomas, J.S. (2001). A methodology for linking customer acquisition to customer retention.
Journal of Marketing Research, 38(2), pp.262-268.

Thompson, A. (2016) Walmart: Human Resource Management. [Online]. Available from:

http://panmore.com/walmart-human-resource-management-hr-management [Accessed 04
June 2017].

Wal-Mart Stores Inc (2017) Annual Report 2017. Available at:

http://quote.morningstar.com/stock-filing/AnnualReport/2017/1/31/t.aspx?
t=:WMT&ft=&d=3bda542d4bf904bf1ffe63d50f72dbcf (Accessed: 10 June 2017)
Yeng, W.F. and Yazdanifard, R. (2015). Opportunities and Challenges in the World of
Retailing and the Importance of Adaption to the New Markets. International Journal of
Management, Accounting and Economics, 2(9), pp.1110-1121.