In the world that we are living today, developing a product and forming a company out of it is not enough to move forward and become successful. A company’s business model which frames its competitive advantages is very important. Competitive advantages are those factors that give you an edge over your competitors.
Walmart’s Competitive Advantages
Walmart is a perfect example of a company which set its clear competitive strategy and converted it into its competitive advantages. Its competitive strategies have enabled it to become the greatest and strongest retailer throughout the world. Walmart’s success in the local and international market is purely due to its effective strategic planning. The ‘directed opportunism’ strategy has provided Walmart to take up all available chances and even flexibility through its effective strategies.
When talking about Walmart’s competitive advantages, one can point out more than a few:
Low Prices
Walmart’s “Every Day Low Price”, strategy of providing good quality products at lower rates has been a major competitive advantage over other retailers since decades. This was made possible by coming up with efficient and smart cost structures that enabled low prices for everyone. Locating warehouses near their stores led to increased cutting of transportation costs. Using of electronic means and technology also allowed Walmart to reduce the prices of its products.
Supply Chain Management
Supply chain management involves the products or goods to be transported to the right stores/ customers at the right time. A fast and efficient system is required. Walmart designed an exceptionally structured and state of the art supply chain management and inventory system for efficiency and cost. It started working directly with the manufacturers rather than depending on other retailers helped them with cost effectively and better management.
They placed their warehouses near the outlets that reduced costs and resulted in easier and timely transportation of products. Walmart also introduced technology and innovative processes in its system, like barcodes, really early on which made this a dominant factor in the global market.
Market Expansion Strategies
Walmart’s “saturation strategy”, where it focuses on expanding their networks, innovating and moving to different parts of the globe, becoming multinational and reaching new markets has been one of its greatest competitive advantages. Walmart plans to dominate every sector it where it does business. It outsells its competitors by building more stores in every state, moving international and even making the existing stores bigger.
The biggest competitive advantage Walmart has is its wide expansion throughout the world so it can use this strength to exploit the retail market for more opportunities as compared to its competitors like target or Costco.
It has also been working on its e-commerce expansion due high demand while cost co and other companies are still behind. The Walmart stores Inc. powerfully used explicit and systematic processes to evaluate the tangled set of elements involved in becoming a global player.
Since its first move to Mexico in 1991, Walmart pursued globalization aggressively so it had concentrated itself in the US. Expansion of the organization across borders to provide high quality products at lower prices in order to survive was the main goal after that. This growth was only possible by expansion in the global domain.
Workplace Culture
Walmart also aims to improve its human resource practices to establish some competitive in the labor market along with improvement in the quality of products. In order to grow it needed to increase both profit and sales to satisfy the market and to satisfy the expectations of its employees. It had developed strategies for both and it became one of the key factors through dedicated and committed work. Cultural diversity and work place culture also play a very important role. An environment where the employees feel safe and empowered, and where there is cultural diversity increases the cost profits and decreases employee turnover.
Fig: Comparison of the top 5 retailers in the world, 2021
Walmart
Amazon.com
Costco
Kroger
Carrefour
Revenue (in US$ billions)
559.151
294.034
163.220
132.498
87.55
Locations
11,443
576
795
2,742
7,193
Countries served
26
17
12
1
32
Employees
2.3 million
1,298,000
273,000
465,000
322,164
Frequently Asked Questions
Can there be only one competitive advantage for a company?
Answer: No, a company can have more than one competitive advantages, taking the example of Walmart itself.
What factors to consider while developing a competitive advantage?
Answer: In order for a company to develop its competitive advantage, it should first access; a) whether the product/service/ resource provides benefit to the company, b) Is the product/service/resource easily available to the company? c) Target market, d) Competitors.
Why is competitive advantage really important?
Answer: Competitive advantage distinguish companies from their competitors in the same market. It plays role in attracting employees and customers, both and also builds a brand name.
Conclusion
Walmart’s leadership in the retailer world was not by luck or any mere coincidence. It identified its competitive advantages and worked hard on them. Walmart also realized that in order to move forward, they should be working on two main factors; low prices (satisfying sales and profits), satisfied employees, and an efficient supply chain management system. When strategies are explicit, organizations know where to start expanding from.
Walmart’s Competitive Advantages
