Every company is trying to avoiding failure and the goal is to have a sustaining competitive advantage. But when do companies have a sustainable competitive advantage? It depends on three factors: the barriers to imitation, the capability of competitors and the dynamism of the industry development.
In the 1970s Wal Mart lost their competitive advantage. Sears had a better positioning like Wal Mart. Therefore Wal Mart distinguished the situation and improved its distribution system. It created new trade channels to save costs and invest in new information technology to improve their situation. Wal Mart found a way to change their strategies and structures to change their competitive conditions. Over time, Wal Mart got strong partnerships with suppliers. This was a key element to improve their performance on the market and it`s not easy to imitate. Those partnerships work now since a long time and other competitors might lack the volume of purchases Wal Mart can offer.
With some diversifications like Sam’s Club, a new way of supercenters or their plan for the international expansion Wal Mart was able to confine from their competitors. Wal-Mart was the first low price company and retailer which expanded around the world. The CEO of Wal Mart focused on small-town markets and ignored the national discounters. So, Wal Mart has huge distribution capabilities and this is very difficult to imitate from competitors.
The most significant advantage of Wal Mart is their using of the satellite system. They are using this system to compress their costs and get a distinguished communication system with all employees to every time.
The overall achieved employee satisfaction has the advantage of highly motivated employees. This is an overall management issue and when the employees are motivated, the customers are feeling good and well served.
In future, Wal-Mart was committed to find new ways to have the competitive advantage of the market. They invest in different strategies like trendy fashions, offering organic food and remodeling stores to achieve a high satisfaction during the shopping by customers. So, they were able to use the economic crisis to win new customers. A lot of people search after low price shopping possibilities. So investors cheered at Wal-Mart and the company outperformed both rival target and the S&P 500 index.
Wal Mart holds its quality due to the constant low priced policy. This EDLP is not easy to replicate unless you can offer consistently low prices.
On account of the points Wal Mart is able to secure a sustaining competitive advantage at the moment. They are reacting directly and design their company with the time and respond on their employees and customers. Their competitors are able to imitate their policies but this can`t happen within the next year because Wal Marts` advantages are way to complex. As long as Wal Mart is always developing its competencies and keeping on track with the environmental changes, they do have a sustainable competitive advantage in the US.
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Topic: Competitive Advantage of Wal Mart
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