Being the successful multinational corporation it is, Wal-Mart Inc. has been subject to multiple case studies most of which focus on its strategies that have either contributed to its success or failure in different regions. Like any other business though, case studies have indicated that the exposure to the market is similar to other players in the industry. The difference lies majorly in the application of the VRIO framework which has in fact given the corporation an edge in the industry. Major questions asked revolve around the capability to work around their resources to take advantage of the available opportunities and to survive despite the many threats.
From the case study carried out, it is quite clear that the industry is set to favor the pricing by the companies. Thus, the industry structure is a major opportunity that WalMart has capitalized on. Among the strategies used by the company is the lower pricing compared to other industry players. The case study clearly outlines this giving the view that the company’s products are relatively more affordable due to the economies of scale.
Changing trends to adopt more healthy eating habits and a growing market are also viewed as great opportunities for Wal-Mart. From the case study, it is clear that the industry is directly dependent on the size of the market, where the more clients a company has, the more revenue they can generate. Given their brand, the large market base has allowed them to enjoy customer loyalty which also increases with the increase in the general market. Studies have shown that within a period of one year, the market has increased by 5% thus, growing their revenue as well Hayden, Lee, McMahon & Pereira (28). This has been backed by the euphoria to eat healthier which directly favors their products. It is therefore justifiable, to argue that the changing trends in eating habits and the increased market are great opportunities for Wal-Mart.
Among the threats that Wal-Mart has been exposed include entry of competitors to industry, rivalry and substitute products. Hayden, Lee, McMahon & Pereira (26) clearly indicate in the case study that the main products of the industry are readily available and with the right resources, any firm can start up. There is also the capability of variety to choose from that may split the market that is already loyal. However, the David W. Crain and Stan Abraham argue the ability to brand has largely shielded the firm from failure in most regions.
The value of the company has been a major shield given that it is well capable of handling the challenges by properly employing their resources. Hayden, Lee, McMahon & Pereira (23) further in their analysis elaborate how the value of the firm is always a priority since it is a clear indication of their capability to handle the potential challenges and threats. Further, this has enabled the firm to take advantage of available opportunities which smaller and less valued companies find expensive and difficult to effectively capitalize on. The company also has a value of quality and customer services. These value propositions serve as the central focus to enhance its image and competitive advantage in the market.
Rarity is also a great form of competitive advantage that Wal-Mart has taken greatly factored in. studies have shown that among the many suppliers in the industry, the firm has acquired buying power with the influential players so as to be ahead of their competitors. However, benchmarking and performance metrics can be used to further push Wal-Mart ahead of its competitors. The main competitive edge for Wal-Mart’s logistics lies in its low priced shipping costs. Due to its wide distribution chain, benchmarking can be applied to leverage its shipment prices with upcoming competitors who are likely to pose a big challenge in the long run. Given that there are readily available resources for the firm, both capital and labor related, there is the rare ability to maintain suppliers and ensure consistency. This ensures loyalty which flows back to their clients who prefer their products over those of their competitors.
Wal-Mart has set up structures and frameworks in the industry that have not been easy to imitate. These include their distribution methods, low pricing and the management policies. The study accurately outlines these features that cost money to come up with and have overwhelmingly positive results. The uniqueness of these features has become unbeatable keeping competition at a distance and allowing growth.
Imitation has been linked to the well organization of the company which takes time to ensure that strategies are well placed. This also works around having proper management that puts in place the resources available in a manner that allows maximized operations at minimum cost possible. According to Hayden, Lee, McMahon & Pereira (30), Wal-Mart undoubtedly has the ability to achieve this. Organization is very critical for Wal mart . From the benchmarking of Wal-Mart’s logistical operations, it is apparent that the secret behind its efficiency over that of its competitors is the flexibility in its supply chain. Organization has been extended to other aspects of the supply chain like timely delivery of goods to customers. This can be done by looking at the timing of the delivery of products as compared to that of their major competitors. Their competitors are more efficient in terms of timely delivery of products, unique mechanisms for enhancing timely delivery of products can be developed.
Part of their marketing strategies includes factoring in donations from their revenue and available resources to nonprofit organizations. As a result, they are able to reach their brand and spread awareness of their products to a larger group in more than one way. The employment of the VRIO (Value, Rarity, Imitation and Organization) framework has largely allowed Wal-Mart to thrive in their business in more than one country.
From the case study, there is clarity on the basics that a firm should focus on to make an impact in their market. Marketing should be key. As realized with Wal-Mart, the threats are easily curbed and barely affect the business because of the strategies they have used. Putting up frameworks that give them competitive advantage in the industry has ensured they always lead and have a stable market.
- Hayden, Patrick, Lee Seung, McMahon Kate, & Pereira Mike. “Wal-Mart” Staying on Top of the Fortune 500 A Case Study on Wal-Mart Stores Inc. 2002. Web. 8 February, 2014.
- Crain, David & Abraham Stan. “Using Value-Chain Analysis to Discover Customers’ Strategic Needs.” Strategy and Leadership. 2008. Web. 8 February, 2014.