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1. Why is Wal-Mart successful in the US?

What are Wal-Mart's competitive


advantages and its sources?
Key Success Factors in US:
Cost Controls:
Wal-Mart demanded lower price, high quality, efficient bookkeeping and punctual
delivery from their suppliers
Helped suppliers improve inventory management and efficiency by weeding out extra
costs
Forced its suppliers to search hard for ways to eliminate the inefficiency in their own
processes in order to drive costs to a minimum and to improve the quality of their
products
Logistics Management:
Target was to have inventories at half the rate of sales and to have any required delivery
arriving on the shelved within one day
No store was more than a day's drive from its distribution centre
Use of technology gave Wal-Mart great efficiency in the supply chain arrangement and
was a distinct competitive advantage, started using electronic data interchange (EDI),
satellite technology: able to connect all stores to home office
Enabled it to offer its customers the right product mix at the right time while keeping
inventory and associated costs as low as they could possibly be
Benefits to Workers:
Started profit sharing plans for rank and file workers, 2/3 of the American workforce
owned stock in Wal-Mart
Cross Training: people switched jobs to enable them to understand different parts of
the company's operation, which gave them more variation int heir jobs
Financial numbers were also shared with every employee
Position against unions, would rather close a store than allow it to be unionised
Promotes open door policy so that employees could channel complaints
Employees were motivated, happy, and passionate about their job
Creative barriers to entry (rural locations)- small town:
Avoided direct competition from stronger players
Due to small populations it served once Wal-Mart opened a store, the town could not
support another store of similar size
Rural backwaters also reduced costs due to lower land and real estate prices
Customer Service:
3 cardinal beliefs: (1) providing great customer service, (2) showing respect for the
individual, and (3) striving for excellence
these beliefs were translated to 10 specific business rules for every executive/ associate

Sundown rule required for employees to answer requests from customers by the end of
business hours

Competitive Advantage of Wal-Mart: Quality of merchandise


assortment of goods
price level
store environment
customer support
store hours
availability of free parking
Wal- Mart focused on two major drivers: Price and Service
each Wal-Mart store monitored the prices of about 1500 items in their competitors' stores
objective: to offer same merchandise at other local stores but at 20% less
on-going program to lower prices even further when there was the opportunity to do so
roll back
Special Buy: a product with a special tag that offered everyday items bundled with
additional amounts of the same product or another product for a limited time