Walmart Inc

- Isolated stores in rural areas - own warehouses built there —> everybody else was
ignoring these stores + discontinuing in such small towns

- Keeping prices down

- Open door policy

- Tailoring each store to its individual demand - market, store (merchandising)

- Very competitive regarding prices - setting not centrally - in each store based on local
market conditions

- National brand strategy - nationally advertised brand products

- Private label - 25% - Sam’s choice - premium line

- Satelite system installed - sales data updated daily

- Hub and spoke distribution

1.     What are the key sources of competitive advantage of Wal-Mart.

- Low prices: providing good quality products at lower rates

• efficient and smart cost structures that enabled low prices for everyone

• locating warehouses near their stores led to increased cutting of transportation costs

• using electronic means and technology also allowed Walmart to reduce the prices of
its products

• Walmart's history of pressuring vendors to sell to Walmart at unfair prices

- Supply Chain Management: exceptionally structured and state of the art supply chain
management and inventory system for efficiency and cost

• working directly with the manufacturers rather than depending on other retailers
helped them with cost effectively and better management

- Market Expansion Strategies: expanding their networks, innovating and moving to

different parts of the globe, becoming multinational and reaching new markets (South
America, Mexico, Canada)

• plans to dominate every sector it where it does business

• building more stores in every state, moving international and even making the
existing stores bigger

- Workplace Culture: aims to improve its human resource practices to establish some
competitive in the labor market along with improvement in the quality of products

• needed to increase both profit and sales to satisfy the market and to satisfy the
expectations of its employees

- Diverse portfolio: lot of SKUs, private labels

2.     Describe the logic of Sam’s Clubs, COSTCO etc. concepts. More specifically
the reasons for their existence, sources of competitive advantage etc.

- Saving money buying in a bulk (higher transaction costs for costumers though - storage, etc)

- You buy more over all, but spend less per unit

- Great for small entrepreneurs

• Very low price: purchasing items in bulk quantities directly from manufacturers - massive
discounts from manufacturers, lower price per individual item, drives the price down on each
item, benefiting the customer —> Sells Bulk Items At Low Prices - offering large sales to
customers buying higher quantities

• Loyal customer base: instead of earning profits by marking up the prices on products, earning
profit through yearly membership fees.

• Strong partnerships with suppliers:  retail chains buy from suppliers in bulk quantities,
suppliers offer discounts,

3.     Elaborate on the Wal-Mart approach to competitive strategy using Delta model
perspective.

- The delta model of business strategy is a model that involves the customers in the management
process.

• Wal-Mart Corporation is to give the best services to customers - the management of the
Corporation involves the customers in their innovations to ensure that customers are satisfied

- Best product (differentiation ?) — rivalry, market share, —> low cost

4.     Suggest ways how can Wal-Mart (or other chain) increase the loyalty of its
customers.

- Cash back cards - improvement already

- Rewards card

- Added service - shipping, online pick up

- To appeal to more upscale shoppers, specifically women

5.     Are the same principles used by Wal-Mart employed by other retail chains?

- Isolated stores in rural areas - LIDL, ALDI

- Private Label - Tesco, Ahold

- Sams club - Costco, Makro,…

6.     If you are about to attack Wal-Mart from the market follower position, what
“weapons” you would use in this competitive fight?

- Frontal attack - better quality products, advertising,

- Developing a new unrelated product

- New services, expanding into new geographical market

- Missing segment - taking it over

7.     What were the reasons for market failures of Wal-Mart on different markets?

- Consumer preferences are different around the world for a variety of factors

• Super low prices - cheap = low quality

- Operations

• Lower buying power, lower negotiating power