“Most managers describe strategic positioning in terms of their customers: ‘Southwest Airlines serves price- and convenience-sensitive travelers,’ for example. But the essence of strategy is in the activities - choosing to perform activities differently or to perform different activities than rivals. Otherwise, a strategy is nothing more than a marketing slogan that will not withstand competition.”

Michael E. Porter

“No question asked” Return

Policy

Computer-Aided Store

Design

Frequent performance

Check

Reduce “Shrinkage” More

Incentives

Improving Logistics

Wired Merchandise

Requests

Direct Connection

With Vendors

Building Distribution

Center(150~300 -mile radius)

Diversification

Small town↓

Large town

It’s OwnTrucks and

Trailers

Quick Delivery &

Using Return Trips

Much less Inventory

Satellite Network

Measuring the success of

Promotions

MarketingOn Lowest

PricesEfficient

Store Operations

Focus on Increasing

Awareness of New stores

Takeover Specialty

Departments

Bargain-Basement Acquisition

More Hard goods

Increase in Sales per

average ft2

More Available

Selling Space

UPC at the Point of Sale

Administration

More SKUs

Human Resources

Management

Testing Different

Mixes

Locating VPs in Same

Area

Everyday Low

Prices

Reduce Wage

Expenses

Wal-Mart’s Activity SystemStore merchandise

In distribution center

Providing “Everyday Low

Prices”

Buy in volume atAttractive prices

Centralizedpurchasing

Inventorycontrol

EfficientDistribution

network

Low operatingexpenses

Central computersLinked to vendors

Hub and SpokeDistribution

network

Lease stores

$20 millionSatellite system

Computer aidedDesign for

Merchandise mix

Regional vice Presidents live inBentonville and Flown to stores

Employee Salaries

“We care aboutOur people”

“No questionsAsked” Return

Policy

Increased storeSize and increase In the number of

Store locations

ComputerizedSystem in each store

UPC at point of sale

Store managerSalary. Autonomy in Ordering stock and

Setting displays

EfficientInboundLogistics

Distribution Centers

Walmart state of the art supply chain management systems

Walmart Map of the World

Outbound Logistics• 2-3 stores served by one truck• Mdse. Delivered to the stores within

48 hours• Return merchandise picked up; trucks

60% full on return

Walmart store layout

Walmart “Everyday low Prices”

Wal-Mart’s Sustainable Advantage

Wal-Mart was able to assess each facet of their business and made every link in the value chain as lean and efficient as possible. Collectively, this is what made them successful with a sustainable competitive advantage. With the use of their new technologies they were able to better communicate internally with their management and distribution warehouses as well as externally with their vendors to rejuvenate their products/inventory. Additionally, Wal-Mart was able to capitalize on a growing target market (Sunbelt) when no other competitors did, they were able to leverage their weight with vendors dictating lower pricing, kept overhead costs low with employee wages and simple store fixtures, achieved high revenues per square foot with their strategic product mix, and capitalized on running fewer advertising campaigns. All of these actions in tandem with one another makes it difficult for competing discount stores to encroach on their market share.

Everyday low prices

More customers

More goods sold

Lower prices from suppliers

Lower operatingCosts

Walmart's Business logic