According to Hisrich and Kearney (2014), a competitive advantage is successfully developed through using innovation and entrepreneurship. It is from this that we define competitive advantage as means through which companies are able to keep saving money; add value to their company by providing their customers with distinct portfolio of products and or services; and sustaining its position in the market against its competitors. Wal-Mart Stores Inc. is one such company that is in the retail sector, but has achieved competitive advantage (Lichtenstein, 2011). Wal-Mart started off as a small discounting store in Rogers, Arkansas but has achieved sustainable competitive advantage over time. The founder, Sam Walton was a man who considered frugality as a competitive strategy and this is evident on the positive approach they had towards entrepreneurship.
Sam and his brother started the entrepreneurship journey by washing windows and sweeping floors and saved their earnings. The two did their own accounting, handling, services, stock management and everything else. Sam was always on the lookout and found ways of saving money. Such entrepreneurship skills were translated into Wal-Mart and he never allowed the business to buy a jet until their sales approached the $40 billion mark (Lichtenstein, 2011). The business trips saw him sleep in Holiday Inns, Ramada Inns and this was a habit he passed on to his executives, where they could sleep two in a room. He managed to spread his frugality in all parts of the company and all employees at Wal-Mart ensured that the expenses of the company were down. Moreover, product prices were expected to be below those of their competitors. According to Sam, frugality was to be viewed as a growth strategy by so doing, he was aiming at cutting down on the use of resources and thus, lower the product cost. Moreover, at the heart of Walmart’s competitive strategy is its “Ability to Innovate,” which was made possible through its integrated experimentation process. The experiments conducted at the company managed to help them refine their value proposition, shared its core competencies and also fashioned its customer service.
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The Organizational leadership philosophy on innovation
Wal-Mart has also managed to sustain competitive advantage by adopting cost leadership strategy and differentiation strategies. The leadership philosophy at Walmart is one that fosters low-cost leadership strategy and this has appealed to larger markets than its competitors. The inbound and outbound logistics of the company has seen them retain a cost-saving culture and opportunity. This is attributed mostly to the fact that the company owns the supply chain. Therefore, they have been awarded superior bargaining power over their suppliers. Since Walmart has a large team of drivers, it ensures that merchandise is moving in a sustainable and responsible manner by giving focus to efficiency and reducing empty miles (Mathews & Brueggemann, 2015). It is through such optimization techniques that Walmart has managed to maximize on its efficiency. Technologically, the supply chain at Walmart is considered to be most advanced and efficient because they have a direct relationship with their manufacturers. This has resulted in the company having smoother inventory meaning that it experiences minimal irregularities and availability of their products on shelves is maximized. This translates down to higher cost effectiveness and better savings meaning that customers are able to enjoy lower product price. The backward expansion strategy at Walmart has seen them extend their geographical reach as it is known to enter small, rural towns. It then saturates those areas before it decides to enter the larger metropolitan areas (Lichtenstein, 2011). The leadership at Wal-Mart is also keen to ensure that all stakeholders are involved and thus, their employees are referred to as “associates.” It is from this that down-the-line people count has been mirrored in all the company’s activity.
Activities at Walmart to sustain competitive advantage within its industry
Walmart also offers its customers a broad array of financial services that has generated for the company about $1.6 billion in revenue. This figure is does not include the revenues made by Walmart partners such as Synchrony Financial, Green Dot, Jackson Hewitt, and MoneyGram. The role of Walmart of financial services has seen them boost their store traffic. Walmart is also working on diminishing waste and achieving 100% renewable energy by challenging its suppliers to implement those policies that touch on reducing environmental impacts (Lichtenstein, 2011). The joint ventures Walmart has attained continue to sustain their competitive advantage. Walmart has also made other acquisitions that comprise of smaller online players as a way of countering its major competitor, Amazon.
R&D initiatives the organization is involved in for long-term competitive advantage
Upskilling is Walmart’s latest trend in employment practice and continues to be their strong pillar of innovation and efficiency. For Walmart, listening to their associates helped the implement new employment practices that include higher wages and training. The intention of the exercise is to improve the morale of their associates, improve customer service and increased the productivity of their associates. By so doing, they will be reducing the turnover of their employees thus; all associates will be given valuable skills that can be applied in their future careers. Walmart also looks at improving their customer in-store experiences and wants to become more efficient both in an out of each of their stores. This is achievable through merchandise flow, availability of zero waste facilities, and transforming its supply chain, mostly its transportation. The other initiative being proposed by Walmart is that of Save Money, Live Better where several components have been considered (Lichtenstein, 2011). They include price leadership, consumables, private label, integrated brand communication, and leverage selling general and administrative expenses (SG&A).
References
Hisrich, R. D., & Kearney, C. (2014). Managing innovation and entrepreneurship . Thousands Oak, CA: SAGE Publications, Inc.
Lichtenstein, N. (Ed.) (2011). Wal-Mart: The face of twenty-first century capitalism . New York, NY: The New Press.
Mathews, C. H., & Brueggemann, R. (2015). Innovation and entrepreneurship: A competency framework . New York, NY: Routledge.
