Wal-Mart Stores Case Study (competitve advantages, sustainable, transferable?)

Essay by Texle1441College, Undergraduate April 2006

download word file, 2 pages 2.3

Wal-Mart is a lowest Price leader and they have a competitive advantage in pricing, distribution center, and store locations. Wal-Mart keeps its promise of everyday low prices, by having a smooth business cycle maintained by unbeatable distribution center supported by trucking networks, and excellent store locations. Wal-Mart maintains its slogan of "Everyday low prices", by keeping its merchandise's prices low. Through my analogy, Wal-Mart has a competitive advantage of having constantly low prices is through having a solid distribution center that keeps its storage fee low, cuts down items time retain on shelves, and since the distribution centers are always within a 48 hours reachable area resupplying the goods for two or three stores within one truck load is not a problem. This business cycle enables Wal-Mart to get its goods on time, and cuts down on storage expanses and gets higher product discounts from suppliers and also minimizes backorders by buying its goods in large quantities and store in huge distribution centers. All these cuts down from expenses allows Wal-Mart to gain greater bargaining power with its supplies which allow it to have a higher sales margin to play with against its discounters who rarely is able to catch up with Wal-Mart's low pricing and strategy. This fact makes Wal-Mart's pricing of its items and distribution center as a truly sustainable competitive advantage. Another competitive advantage is Wal-Mart's excellent store locations. Most of Wal-Mart's stores are located in rural areas where populations are hardly enough to allow huge discounter firms to gain a profit. However again through Wal-Mart's already solid foundation of able to set low pricing on their products and support from their giant distribution centers, Wal-Mart was able to still gain a profit in rural metropolitan areas where not many discounter stores...