Walmart Case

walmart value chain

Wal Mart

What, historically, has been Wal-Marts key source of competitive advantage in discount retailing?

WalMart's competitive advantage is a result of several key strategic choices.

• First, WalMart's choice of geographic location in rural/small town locations that were not being served by competitors allowed it to establish itself as the sole discount retailer in these areas.

• WalMart's inventory management strategy. From the onset, WalMart has been a leader in implementing new and cost effective methods to manage inventory. Merchandise is tailored to local market demand via "traiting" where a product's movements are indexed over a thousand store and market traits.

• WalMart's operations strategy. WalMart's operations activities fit well together to achieve maximal efficiency and lower costs. By having multiple distribution centers, WalMart is able to lower a store's square footage that is devoted to inventory . This allows higher efficient use of store floor space for displaying more goods

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and generating greater sales volume.

• WalMart's vendor relations. WalMart has made specific supplier choices along the way that are geared towards minimizing costs and maximizing efficiency. Buying is centralized at headquarters which keeps purchasing costs down

• WalMart's culture. From the onset, Sam Walton led by example and emphasized frugality, customer service, and an open book policy. WalMart's culture focuses on building loyalty among associates, suppliers and customers.