Walmart Competitive Advantage Essay Example

sales, Sam's club sales, and US stores sales, indicating a continuous growth in Wal-Mart's annual sales since 2001, with a growing contribution from international sales (Gilmore, 2012).

Both figure 2 and 3 depict the improvement of Walmart over the past decade, highlighting its competitive advantage in enhancing sales. Walmart's supply chain management and store location strategy are the two main factors contributing to this advantage. In Figure 3, titled "Walmart Annual Sales Growth 2001 to 2011" (Supply Chain digest, 2012), it showcases how Walmart has effectively managed its supply chain. This includes various aspects such as purchasing, operations, distribution, and integration (University of San Francisco ,n. d.).

Walmart achieved great success in supply chain management through three main strategies: vendor partnership, cross docking, and advanced technology (University of San Francisco ,n. d. ). By establishing vendor partnerships, Walmart was able to negotiate lower prices from suppliers due to their large volume of purchases (University of San Francisco ,n. d. ). This enabled Walmart to offer its customers lower prices and fulfill its commitment to them. Another cost-saving strategy employed by Walmart is crossdocking (University of San Francisco ,n. d. ).

Crossdocking is a method of transferring goods from suppliers to customers without entering the warehouse or storing in distribution centers for a long period of time (Kulwiec, 2004). This approach helps save transportation and storage costs. Another strategy employed by Walmart in supply chain management is the implementation of advanced technology. Walmart has made significant investments in technology to predict consumer demand and effectively manage inventory levels to prevent overstocking (University of San Francisco, n.d.). Another important aspect is Walmart's store location

strategy.

The two important factors for Walmart are the location and the price of lands. Walmart is very careful in choosing their locations. The first store that opened in 1962 was situated in a small rural town where competition was less compared to urban and suburban areas (Gerdeman, 2012). Walmart patiently waited until they had enough resources before opening a new store (Gerdeman, 2012). To enhance the accessibility of their stores, Walmart prefers to have their big box stores located near a convenient highway exit (Holmes, 2011). See Figure 4 for the diffusion of Wal-Mart stores and general distribution centers.

The figure in Fettiq's (2006) study demonstrates the extensive network of Walmart stores. This network, combined with the distribution centers, plays a crucial role in reducing logistic costs and facilitating the transfer of skilled personnel and managers (Fettiq, 2006). Walmart's strategy includes purchasing land rather than relying solely on leases, aimed at decreasing rental expenses (Halkias, 2012). The company also benefits from subsidies and reduced-cost land provided by local government authorities to construct new stores and distribution centers (Mattera ; Purinton, 2004).

Therefore, Walmart is able to maintain its competitiveness in the market by acquiring lands and receiving subsidies. Additionally, Walmart has various advantages in the retail industry. By implementing crossdocking, Walmart reduces the cost of carrying inventory and obtains lower product costs. With a wide range of products available in its stores, Walmart caters to different consumer demands. Furthermore, Walmart offers competitive prices to uphold its mission of “Save Money, Live Better”. Moreover, Walmart benefits from its strategic location, which reduces distribution costs and operational expenses.