Founded in 1962 by Sam Walton, Wal-Mart is now the largest discount store in the retail industry in the world. Currently, Wal-Mart has more than 6,500 stores in 14 countries. It is the perfect example of what we could consider a firm with sustainable competitive advantage. Competitive advantage is defined as the strategic advantage one business cooperation has over its rival companies within the same industry. In an easier way to explain this concept, competitive advantage is the way which a company manages to add more distinct value to their products, sustain its customers and stay highly profitable. Wal-Mart has achieved sustainable competitive advantage for a long period of time in the retail sector. In 2009, Wal-Mart was ranked number one in the Fortune 500 Companies while one of its competitors, Target, ranked 30th. Many would agree that Wal-Mart's competitive advantage would be their low price strategy and a wide selection of foods.
Although these are some of their most important strategies, there are more reasons why Wal-Mart stays on top of the industry.
Wal-Mart has achieved the cost leadership by offering the price sensitive customers low-price products. For example, by spending comparably less money on decorating their warehouses, which reduces a great amount of cost of operation, Wal-Mart can make sure to stay profitable while offering its customers low priced goods. In addition, Wal-Mart has great bargaining power with its suppliers due to its large number of stores worldwide. Many suppliers would even give in to Wal-Mart since they depend on the discount retailer for the majority of their sales
Efficient Distribution Infrastructure
Another main competitive advantage for Wal-Mart is its superior distribution infrastructure. By adopting the point-of-scale strategy, a single Wal-Mart store devotes only 10% of its space for inventory, compared...