Wal-Mart’s competitive advantage is driven by its low-cost, high volume strategy which aims to increase profits and customer satisfaction. Sustainable competitive advantage indicates a company’s future success and is determined by different factors. These factors include organizational capabilities such as tangible resources, intangible resources and human resources. One main component of sustained competitive advantage is having superior returns sustained over a long period of time. Wal-Mart has had superior returns and has achieved competitive advantage in the market by making industry key success factors advantageous; they are committed to being cost-leaders and achieving ultimate customer satisfaction. However, their low-cost strategy alone does not give them complete advantage over its competitors.
It distribution capabilities, supplier relationships, advanced R&D, and culture, added to their low prices, make up the core of Wal-Mart’s competitive advantage. Their efficient distribution, aided primarily by the company’s own distribution centers, creates economies of scale which mesh with the high volume strategy. Wal-Mart’s impressive supply chain management involves dealing directly with suppliers and integrating them into their strategy. This eliminates the middleman, reduces distribution costs and strengthens their relationship with their partners. Wal-Mart’s innovative processes, along with their active collection of customer purchase behavior aid their R&D and are used to improve both supplier and customer satisfaction. The company’s customer-oriented culture goes along with their “everyday low prices” strategy, which has created strong customer loyalty. These components of Wal-Mart’s competitive advantages have contributed to their success in the industry and are creating sustainable competitive advantage for the future.
Wal-Mart’s immense