Wal-Mart Stores in 2003

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Wal-Mart Stores in 2003 Identify the issue Wal-Mart stores, one of the most successful retailing chain in the world, has gain competitive advantage over its competitors. Thanks to his unique set of features, like its powerful IT system, its way of manage suppliers or its logistic system, Wal-Mart is able to responds quickly at demand changing, maintain low costs and satisfy its customers. Framework used in analysis The analysis will be conducted using the value chain framework in order to analyze the situation and activities that Wal-Mart currently faces. The different resources and capabilities will be organized and categorized according to the value chain. Therefore, it will be possible to find out the unique set of competitive advantage that permits Wal-Mart leadership in retailing industry. * D.C. : Distribution centre Primary activities Distribution is one of the most important activities of Wal-Mart. The company decided to build his own warehouses in order to buy in volume at attractive prices. Wal-Mart’s distribution centres are huge(One million square feet in size), highly automated, near to stores and operate 24 hours a day. Goods are delivered to stores usually within 48 hours of being ordered. The percentage of merchandise flowing through distribution centres are higher for Wal-Mart (compared to competitors). These features permit high efficiency (Wal-Mart inventory turns is 7.6 compared to 5.4 of Kmart and 6.1 of Target. Wal-Mart inventory cost accounts in 2003 only for 2- 3% of revenues compared to 4-5% of other retailers) The Scan’n pay system reduces the risks of unsold items for Wal-Mart and it’s an indication of its huge bargaining power . Innovation has always played a central role in Wal-Mart distribu... ... middle of paper ... ...ics of Wal-Mart paying less to its workers than industry average and its incentives are mainly for higher level of management people. We think it may be one of the reasons why Wal-Mart achieves cost saving in labor aspects. Although salary may be low and various employee benefits may be no better than its competitor, Wal-Mart put great effort to do training which benefits the employees’ future development. The IT system helps Wal-Mart attain high efficiency. IT system is utilized in lots of, if not all, Wal-Mart value chain activities and it helps the company achieve operation efficiency and cost saving. For example, RFID system reduces labor cost and IT system in operation increase the labor productivity to a great extent; MCAPS creates great value for supplier which in turn improve the bargaining power of Wal-Mart to its suppliers. These kinds of example are a lot.

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