Case Study 1-2
Wal-Mart Stores, Inc., in 2010 In 1979, Wal-Mart store was an unknown retailer compared to Kmart, the industry leader. “In less than 25 years, Wal-Mart had risen to become the largest corporation in sales,” (Barney & Hesterly, 2012, PC 1-13). Wal-Mart had many challenges to face in the discount trade. This case displays Wal-Mart’s competitive advantages, how they developed them, if they are sustainable and how they have battled with their competitors. Furthermore, through the VRIO Framework and Porter’s Five Forces Model, it helped analyze how Wal-Mart has strived passed its competitors and what keeps it the market’s frontrunner.
Competitive Advantages Wal-Mart has a competitive advantage over other discount stores. Competitive advantage is described as, “When it is able to create more economic value than rival firms,” (Barney & Hesterly, 2012, p 10). The most critical competitive advantages over their competitors would be pricing. “Large discount retailers such as Wal-Mart derived considerable purchasing clout with suppliers because of their immense size,” (Barney & Hesterly, 2012, PC 1-7). Due to the fact that Wal-Mart has so many stores, they can negotiate price. Competitors were not able to get their products pricing down as low as Wal-Mart’s, which in return allowed them to offer their customers lower prices. “Economic value is simply the difference between the perceived benefits gained by a customers that purchases a firm’s products or services and the full economic cost of these products or services,” (Barney & Hesterly, 2012, p. 10). Consumers are able to gain from Wal-Mart’s bargaining power. As times changed the wants and needs for consumers changes. Consumers wanted a place where they could buy everything in one place. “As demographics shifted to include more working mothers and longer workweeks, many