Walmart Case

1. Wal-Mart most critical competitive advantage is known as the "cost advantage", which means they do the same things for less. One of the main ways that they do this is through a highly advanced purchasing and inventory system that automatically purchases items as they start to run out of them. Walmart also gets better prices because they buy in bulk. They buy so much that they end up practically dictating prices to their suppliers and the suppliers have no choice but to sell it to them for the price they are asking or they lose that sale; which they cannot afford. 2. Wal-Mart use of telecommunications is important in obtaining their competitive advantage. They use this to link directly from its stores to its central computer system and from that system to its supplier's computers. This allows automatic reordering and better coordination. Knowing exactly what is selling well and coordinating closely with suppliers permits Wal-Mart to tie up less money in inventory than many of their competitors. 3. Wal-Mart’s ability to consistently outperform Kmart and other discount retailers is based on a business system that responds quickly and effectively to changes in demand and competition. By using inventory and sales data, the local store manager decides which products to display, and assigns shelf space for a product category according to the demand of his or her store. In term of competition, Wal-Mart does not centrally set the price. At places when Wal-Mart and Kmart were located next to each other, Wal-Mart’s prices were roughly 1% lower. When Wal-Mart, Kmart and Target were separated by 4-6 miles, Wal-Mart’s average prices were 10.4% and 7.6% lower. In locations where there is no direct competition from large discounters, its price was 6% higher than where it was next to Kmart. Wal-Mart’s flexibility with customers demand and pricing