Case Analysis Walmart
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Louisiana State University *
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3480
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Information Systems
Date
Dec 6, 2023
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docx
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Case Study #3: Walmart
1.
Use a value chain analysis to identify Walmart’s principal resources and capabilities.
Key Resources
Key Capabilities
Primary
Activities
Inbound
Logistics
Walmart’s large, and highly
automated distribution centers
are key in the inbound logistics.
Walmart also owns a large fleet
of trucks to transport goods to
the many stores.
A key Capability is their
Sophisticated logistical
system, in addition to their
information and
communication technology
systems, they use capabilities
to optimize their traffic flows
to their stores.
Operations
One of the key resources
Walmart has thrived on is the
use of technology. This includes
information and communication
technology to improve its
efficiency. In the 1980s Walmart
introduced bar coding and
electronic data interchange.
Walmart changed its store
format from smaller buildings to
much larger one-stop shopping
stores to meet large demands.
Supply and distribution are both
key elements to Walmart's
success. They have strong
alliances with thousands of
suppliers and distribution
centers are large, highly
automated warehouses that are
strategically mapped.
By interlinking different
levels of their production
chain, Walmart sets
themselves up for great
success. It gives them
capability for streamlining
processes.
By using the efficiency from
the bar coding and
combining it with the
efficiency found in having
much larger shopping
centers, Walmart enables
itself to get the product from
inventory to customer at an
expedited level not seen in
most other grocery store
companies.
Outbound
Logistics
With Walmart's established
technology systems and state-
of-the art distribution networks,
they were able to supply much
Walmart’s Cross-docking
capabilities play key roles in
moving goods to stores to get
stock in front of customers as
needed food for victims of
Hurricane Katrina before FEMA
could.
soon as possible,
continuously.
Marketing &
Sales
Though highly regarded for its
business success, recently
Walmart’s name haad come
under fire for some questions
concerning the ethics of its low-
cost production methods.
The huge brand name has
given Walmart a lot of added
value in the market and has
given them a lot of
bargaining power relative to
their suppliers and
customers.
However, recent allegations
have tarnished the name
slightly and have led to more
questions being asked about
their productions
Service
In 2014, Walmart appeared 28th
in the Fortune list of most
admired companies. They
follow the founders beliefs of:
service to customers, respect for
the individual, acting with
integrity and striving for
excellence.
Walmart’s reputation has since
been in question by critics of the
low-cost approach.
Walmart priding itself on
customer service adds to the
brand name and therefore
creates indirect value for the
company in the market. By
putting customers first,
Walmart becomes capable of
retaining their customer base
for a very long time. This
helps create a competitive
advantage for Walmart,
where other stores are
looking for new customers to
fulfill their needs, Walmart is
easily able to hold onto the
customers they currently
have which eases the search
for more.
Support
Activities
Firm
Infrastructure
One-stop shop is the idea and
model behind Walmart. They
include hair salons, opticians,
cafes and restaurants in the
store.
By becoming the ‘one-stop
shop’ for their customers,
Walmart creates the
capability for customers to
come in for something such
Extended store hours, wider
range of products, and generate
higher sales volume.
as an eye appointment and
end up leaving with a week's
worth of shopping.
HR
Management
Walmart’s HR management is
highly scrutinized as they are
accused of paying excessively
low wages, setting unattainable
goals for store managers as well
as providing barely sanctuary
and hardly safe working
conditions for its employees;
especially those in international
markets.
In order to combat this, Walmart
has given press releases
detailing the promotion of
250,000 workers as well as a
raise time given to current
employees.
This mis-management within
Walmart has led to them
having a massive amount of
turnover within their
workforce. This leads to
inefficiencies within their
training regimen and
therefore inefficiencies in the
store process.
However, with the amount of
capital they have available to
them Walmart has been able
to overcome these turnover
challenges by investing
millions and millions into
new employee training.
Technology
Development
Bar coding and electronic data
interchange (EDI) were
introduced.
RetailLink and Radio Frequency
Identification(RFID) are the
most recent additions to
Walmart’s Technology
Development
The employment of barcode
technology and EDI allowed
Walmart to increase
efficiencies at every level of
its supply chain, being able
to track items from
production to customer.
The same follows with the
employment of RFID
technology. It improves in-
store efficiency and adds to
the speed and ease with
which customers are able to
shop at Walmart.
Procurement
Walmart requires all suppliers to
adapt and use their systems and
processes in line with
Walmart’s, in order to fulfill
Walmart creates value for
themselves by streamlining
their supply chain, this
maximizes their capability to
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Walmarts orders.
Bargaining Power influences
suppliers to not raise/lower their
prices and adds pressure for
suppliers to increase their
quality and deliver products by
a schedule.
move product through
inventory incredibly quickly,
this minimizes the cost per
item and allows Walmart to
follow through on their
promises of ‘every day low
prices’.
2.
Does Walmart have a sustainable competitive advantage? Why/Why not?
In order to determine whether Walmart has a sustainable competitive advantage we
have to investigate 3 factors; durability, transferability, replicability. My main argument is
the sheer scale of Walmart’s operation; they operate 210 distribution centers on top of
9,000 semi-trucks in order to transport their product between distribution center and
storefront. The durability of this scale is very high as in today’s economy and
technological ceiling there is no way another firm could grow to that scale any time
soon.
This scale also affects the transferability of their competitive advantage. By running their
business differently at all of the different zones around the country, Walmart allows
themselves to create a competitive advantage in each of their regions. This is unable to
be transferred unto other companies due to their inability to match the scale and
financial flexibility that Walmart can.
Finally, we have to look at the replicability of the resources/capabilities that Walmart
possesses relative to their competitors. Again, this is where the size and scale of the
Walmart operation comes into play. With their operation being as big as it is, and having
the name brand presence that it does, any attempt to replicate the strategy would fall
hopelessly short of producing similar results or impacting Walmart’s competitive
advantage against the market.