Contents Introduction: 3 1. Degree of Walmart’s performance attributable to industry attractiveness and competitive advantage. 3 Porter’s Five Forces of Competition Framework: 3 PESTEL Analysis: 5 Competitive advantage for better performance: 6 Balanced Scorecard: 7 ADL matrix: 8 2. Walmart’s competitive advantage originating from principal functions and activities. 9 Emergence of competitive advantage: 10 VRIO analysis to detect source of competitive advantage.
11 Value Chain Analysis: 12 Resource and capability importance / strength matrix of Walmart: 13 3. Sustaining Walmart’s competitive advantage. 14 Isolation Mechanism: 14 BCG Matrix to justify sustainability: 16 Porter’s Generic Strategy: 17 4. Challenges of Walmart and measures to sustain performance and defend against threats. 18 SWOT analysis: 19 Porter’s National diamond: 20 Strategic option for shrinking industry: 21 Blue Ocean strategy: 21 Conclusion: 22 References: 23 Introduction:Strategyis the set of planned actions programmed towards specific goals underconditions of uncertainty. The study that continuously formulates andimplements initiatives and tactics to assess the internal and externalenvironmental analysis to lead to the long term organizational goals isStrategic management. As world advances to the utmost competitive business era,different organizations strive to hold on their positions and sustainabilitythrough their resources, capabilities and performance. A company can not retainits position without effective strategic management and this assignmentconcentrates on how “Walmart Stores Inc.
” has sustained through internal andexternal pressures in various aspects and on suggesting an optimum strategy forits further continuation of performing remarkably. 1. Degree of Walmart’s performance attributable toindustry attractiveness and competitive advantage. Walmartbeing world’s biggest company in terms of revenue, represents the phenomenalrate of growth and profitability over years until 2015. The market performanceof Walmart without any failure gives the indication that it has always strivedthrough situations like economic recessions, war, political crises and more.Unlike every other business organizations, it was recently facing few majorchallenges including lack of online presence, brutal competitions, growingcriticisms etc. Its role to being very much attributable to industryattractiveness and to competitive advantage, is analyzed and discussedafterwards.
Porter’s FiveForces of Competition Framework:Four of the five factors that determine competitiveenvironment and analyze an industry’s attractiveness and likely profitabilityaccording to Porter’s framework which connects to the case of Walmart isdiscussed below.Competition fromsubstitutes:The number ofcompetitors has the ability to threaten the profitability and growth of acompany.Intense rivalry can give birth to opportunity to attract customers withaggressive price cuts and high-impact marketing campaigns. Walmart and itscompetitive rivals with their competency is shown below: Degree of rivalry SL Company Core competency 1 Walmart Cost leadership 2 T.J. Maxx Design focused 3 Wholefoods Quality focused 4 Lowe’s Service oriented 5 Best Buy Broad product range Table 1:Rivalry situation in retailing.
Source: (Roberts and Berg, 2012)Close competitors offering substituteproducts and relative performance reflects the degree of attractiveness of an industry;but Walmart’s competitive advantage of price leadership enabled the company toperform better (Dess, 2012). Power of suppliers: Walmart’s centralized purchasing power and negotiating ability wasastonishing. After Walmart involving itself in its supplier’s employment, by2012, efficiencies were achieved. Moreover, it’s “retail link” enablessuppliers to tract real time information when needed.
Power of customers: Walmart could be seldom beaten where their strategy remained tolead on price. It was based upon satisfying customers by combining low pricesas undercutting competitors’ prices was an obsession of the founder “SamWalton” and the collaboration allowed Walmart to achieve faster replenishment,lower inventory and product mix tailored right into customers need. Threat of new entrants: People’s ability to enter yourmarket can affect the position of an organization. The retailing businessindustry requires some barriers to overcome like huge capital requirement,designing distribution channel, economies of scale operation, differentiationor cost advantage and these factors made the industry difficult to enter fornew entrants (Ansoff, 2014). In the case, the high barriers preserve afavorable position and fair advantage for Walmart, making new entriesdifficult. PESTEL Analysis: Competitiveadvantage for better performance:In a brutally competitivemarket, an organization cannot thrive without an advantage or uniqueness whichis totally different from the other competitors. The competitive anddifferentiation advantage set a milestone for the customers grabbing theirattention and influencing them to purchase. As Walmart is so far selling thecheapest products with no compromise to quality, it is no wonder how Walmart isdoing such an astonishing performance.
Moreover, having a very well planned,speedy and responsive management, attention to detail, proper resourceallocation, inspection of customer satisfaction, adaptability, structuralmaintenance, and many more; contributes greatly to its overall growth. Walmart’s sales of $288 billion in 2015 and operatingmargin of 7.4% was made to happen by cost leadership strategy and the newtagline “Save money, live better”. Thus, it can be saidthat the core reason of Walmart’s performance is the competitive advantage ofcost leadership in the market and the attractiveness of the industry.
Here is a view of its consistent performance over theyears. Walmart’s performance in numeric form Parameter 2012 2013 2014 2015 Sales ($ billion) 264.2 274.4 279.4 288 % change in Sales 1.5 3.
9 1.8 3.1 OP Income 20.3 21.1 21.
8 21.3 Operating margin % 7.7 7.7 7.
8 7.4 Table 3:Performance of Walmart. Source: (Roberts and Berg, 2012)BalancedScorecard:Forfurther analysis of the performance of Walmart, balancing scorecard is anappropriate framework to look into the big picture of the organization.FinancialPerspective: The company is doing great financiallyover the years while maintaining the growth and profitability at the same time.Its profit margin, revenue, sales, cost management and other measures are veryefficient and indicates great success and further potentiality.
Learningand Growth Perspective: The company has been learning andgrowing ever since as we can see. The adaptability and flexibility to changeaccording to its