Wal-Mart Summary Wal-Mart is the largest company in the world.

Wal-Mart management would have to address issues of store format, technology deployment, human capital, and internationalization as well as the executive decisions on how to manage a company. Wal-Mart have original discount store format. Growing demand caused Wal-Mart to introduced supercenters. Recently, many original discount stores had been closed and supercenters opened in their place where supercenters were nearly double size of the discount stores and also featured specialty shops. Wal-Mart had also looked for expansion opportunities in urban locations in order to opening a number of neighbourhood markets with smaller footprint and offered limited drugs and groceries. It also continued to run SAM's CLUBS, a ware house club which compete directly with Costco and BJ's warehouse. Wal-Mart use IT systems strategically for their operational strength. Wal-Mart had used bar coding and electronic data interchange (EDI) tools to share information within stores, across stores, and with suppliers. EDI used for forecasting, planning, replenishing, and shipping applications. Wal-Mart wanted to lead the retailing world into the next generation technology of radio frequency identification (RFID). It had launched e-commerce operations with initial online strategy to create a separate Walmart.com venture had faltered. For the aspect of human capital, Wal-Mart known as low pay and heavy reliance on part-time and temporary help which reduced expenses associated with benefits packages, particularly health-care coverage and it had no unions. However, Wal-Mart emphasized its commitment to good working conditions and publicized its philanthropic efforts aggressively where the public image remained favourable. Besides, Wal-Mart expanded into a number of foreign markets and it adapted store formats for its international divisions depending on the space constraints and consumer preferences. One of the closest competitors of Wal-Mart was target which courted a slightly more affluent clientele. Sears-Kmart would become the third largest retailer, behind Wal-Mart and Home Depot. Wal-Mart which has been an aggressive retailer ventured into various different kinds of retail categories, such as low-priced online music store, one-hour digital photo service, vacation planning, internet access, flower delivery, DVD rentals, and financial services. Wal-Mart does not only venture in lots different categories, but it also continued to expand the stores in nationwide.

What are Wal-Mart competitive advantages? Wal-Mart boasted nearly $260 billion in sales, managed over 5000 stores in 10 countries and employed over 1.5 million people worldwide. There are five competitive advantages which are distribution capabilities, partnership relationship with suppliers, advanced data-mining, workforce culture and everyday low pricing (EDLP). Wal-Mart has own distribution centres and has high efficient distribution. Wal-Mart also made use of a logistics technique which also known as cross-docking. In this system, the finished goods were directly picked up from the manufacturing plant, sorted out and then directly supplied to the customers. This system can help the company to reduce the handling and storage of finished goods besides saving costs from lower inventory levels. There are over 100 million customers visited Wal-Mart stores each week. Hence, cost saving can translate into lower prices and fulfil customers satisfaction and needed. Another competitive advantage is partnership relationship with suppliers. Strategic use of IT systems was one of the foundations for Wal-Mart. Every year, many small suppliers wanted to contracts with Wal-Mart and required to cut the prices. So, Wal-Mart integrates suppliers via IT and treats them well in terms of pricing. This can improves supply chain and lowers the distribution costs. The company involves integrated IT system and can have more effective communication internally and externally in order can access to sales and inventory info for third parties. Wal-Mart also advanced in data-mining where it is a powerful new technology with great potential to help company focus on the important collected information about the behaviour and potential of customers. It can provide useful and accurate data for suppliers so that can improve customer satisfaction through accurate forecasting of demand. Data mining system are crunching through point-of-sale data to aid analyst in understanding consumer behaviour and promotional strategies. It also can reduce the costs in the future through reduced inventory and shrinkage. Workforce culture also is one of the competitive advantages where customeroriented workforce motivated through generous monetary participation and belief in

Wal-Mart culture. Meeting challenges requires new thinking about the workforce and new strategies about managing human resources. The key strategies to maintaining an adequate workforce by number and skill are to redesign the work processes and introduce new technologies to increase efficiency and effectiveness. Good customer service is not compromised by self-service and low cost structure, thereby increase loyalty of customers. Then, stores can respond more quickly and flexibility to changing demands of customers. Wal-Mart has 42 year of operation and continued to draw price-conscious shopper with everyday low prices and convenient store hours. EDLP is a pricing strategy that can promise customers with low prices without the need to wait for sale price events or comparison shop. EDLP matches volume-driven strategy and drives down the costs through less advertising.

How sustainable are those advantages? The distribution system of Wal-Mart has been lauded as one of the most efficient in the world and very hard to replicate by competitors. There are about 85 percent of all the merchandise sold by Wal-Mart was shipped through its distribution system to stores. Besides, the supplier partnerships also comprise a sustainable advantage. This relationship evolves over time and as the time passes, the level of integration will become higher. Wal-Mart has already demonstrated its commitment in the operations so that the relationship can become prosper and allowed to have a strong bargaining position with suppliers. Wal-Mart also beats the other discount retailers on compensation paid to suppliers because it reaps cost savings in the operation area. The IT systems of Wal-Mart are very advanced although data mining is still in its infancy. Through the Point-of-Sales (POS) system, Wal-Mart was possible to monitor and track the sales and merchandise stock levels on the store shelves. The company is able to upgrade the IT system constantly because it has developed expertise in this issue. By using pattern recognition technologies and statistical and mathematical techniques to sift through warehoused information, data mining helps company to recognize facts, relationships, pattern and exception.

Wal-Mart has created a corporate culture that is considered as one of the best in the U.S. Creating a workforce culture is one of the effort on the part of management and it involves focus on the interactions that occur in the company. The advantage of having motivated and proactive employees can be replicated by others and it is not an overnight thing. So, it is possible for another discounter to replicate Wal-Mart culture exactly but they can follow the same idea. The competitors of Wal-Mart cannot replicate Everyday Low Pricing strategy unless they can offer consistently low prices as Wal-Mart. These look quite simple but the key point to the successful is the retail model of Wal-Mart. Fair-and-square pricing can be a very alluring proposition to those who never attempted to implement it due to the approach simplicity and cost saving to the operations.

How transferable are those advantages as Wal-Mart moves into new formats and especially into new international location? Wal-Mart moves into new format which known as neighbourhood stores to analyze the transferability of Wal-Mart competitive advantages. Wal-Marts inventory and distribution system is a world leader. The neighbourhood stores can benefit from the existing distribution system. The strategic locations are chosen so that neighbourhood stores can be served as part of runs to supercenters. For the partnership relationship with the suppliers, the neighbourhood stores will continue the contract with current suppliers. Hence, there are no transfer issues among the suppliers. Based on the advanced data-mining, the IT capabilities of Wal-Mart can be easily adapted. The use of IT system has been an essential part of Wal-Marts growth. The assortment of Wal-Mart will be in different format and the customer demand also will be different. However, this entire problem will be easily manageable by IT system of Wal-Mart. A computerized system identifies each item sold, finds the price of the item in a computerized database, creates and accurate sale receipt for the

customers and then store the information for use in analyzing sales and reordering inventory. The workforce culture can be easily transferred to new formats because new employees are no harder to socialize at neighbourhood stores than at supercenters. These also can reduce waiting times of customers across a range of services as well as to enhanced productivity and costs saving. EDLP is difficult to implement on the new formats due to the high distribution cost. The everyday low pricing philosophy is internationally transferable to the point where it is being hindered by foreign laws, like in Germany. If the environmental conditions are suitable, everyday low price strategy can prove as a successful strategy. However, the conditions vary for different country. There also has to be the ability to expand rapidly in order to make it possible to reduce cost and can provide EDLP.

Which of Wal-Mart advantages are transferrable to overseas? Which are not? Why? The competitive of partnership relationship with supplier is transferrable to other countries. This is because Wal-Mart still cooperates with the current suppliers. Most retailers enter a new country through a partnership to increase the rate of success. This requires a mutual understanding and a fit between the two corporate cultures to work together effectively. The assortment is affordable to the population and fits with the local taste which means that western countries are preferable. The IT system of Wal-Mart is transferrable to overseas. Wal-Mart use telecommunications to link directly from its stores to its central computer system and from that system to the computer of suppliers. This allows automatic reordering and better coordination. Company can know clearly what item is selling well and coordinating closely with suppliers permits. Better coordination can reduce the cost as well as to pass some saving on to Wal-Mart and eventually to the consumers. Although Wal-Mart is the largest retailer in the world, but distribution capabilities of Wal-Mart are not transferable to overseas. This is because the distribution system is very massive. In order to get the competitive cost advantage,

volume is needed where the acquisition is a preferred tool from a cost perspective. Then, a decent infrastructure is needed so all goods can be transported efficiently. Besides, the workforce culture of Wal-Mart is not transferrable to overseas. The Wal-Mart culture is atypical and not all workforces might cope with it given their nations culture. So, the company might take some times to redesign the workforce since the customer service in other countries is different. If Wal-Mart grows organically in a new country, it can build its own workforce culture. However, this has proven to be difficult when it acquires a retailer and it has to convert the existing corporate culture. EDLP are not suitable to some countries with traditional business strategy. The huge Wal-Mart stores on the outskirts of small towns have overwhelmed many merchants. Wal-Mart sells products profitably at prices less than many small town merchants cost. So, Wal-Mart has killed the traditional business districts of some small towns.