Wal-Mart vs Honda

1. What are the sources of Wal-Mart’s competitive advantage in discount retailing?
Discount stores extended to general merchandise by charging gross margins 10% ~ 15% lower than those of conventional department stores. To compensate, discount stores cut costs to the bone. In this way, Wal-Mart had two key aspects of initiating their business. First, they were locating stores in isolated rural areas and small towns. The other element was the pattern of expansion. They were always pushing from the inside out.
As for operating business, Wal-Mart had their own way of doing things. First, they built their own warehouse so they could buy in volume at attractive prices and store the merchandise. Second, their useful information systems made flexibility among stores to operate their own strategy like “everyday-low-prices”, “satisfaction guaranteed” policies. Also, a two-step hub-and-spoke distribution network was used to reduce costs. It made Wal-Mart and their vendors benefited from reduced inventory costs and increased sales.
In spite of some legal conflicts with competitors, they kept focusing on diversification and international operations with a strong relationship between the management and employees.

2. What is the strategy that allowed Honda to be so successful in the motorcycle industry?
Beginning in the 1950s, Honda focused on superior productivity. First, they offered a multiproduct line. Second, they took leadership in product innovation and exploited opportunities for economies of mass production by gearing designs to production objectives. Embarking on a bold campaign to exploit these advantages, they acquired a plant, and over the next two years they developed enough manufacturing expertise to become a fully integrated producer of engines, frames, chains and other ancillary parts crucial to motorcycles. With these gambled