Wal-Mart’s Competitive Advantage

The success of Wal-Mart is primarily due to the company’s pricing policy. First, the principle of “every day low prices” is declared. For the buyer, this means the opportunity to purchase cheap goods daily, not only at periodic sales. The second important element of the pricing philosophy is the so-called transit discount: any decrease in the purchase price leads to a decrease in the retail price.

Wal-Mart’s competitive advantage in the field of current activities is a set of several components. One of the determining factors in cooperation with suppliers for the implementation of operational replenishment of stocks. This is because Wal-Mart does not work with distributors, wholesalers, and representatives of the manufacturer. Taking into account the speed of end-to-end sales in Wal-Mart stores, it is not easy to meet the company’s needs for goods. Therefore, the efficiency of the timely replenishment process is significant for retailers to achieve one of the main current tasks — a full assortment range must always be presented on the store shelves. The presence of Walmart’s fleet of vehicles undoubtedly helps it to replenish stocks quickly.

The Wal-Mart distribution system, based on the hub-and-spoke principle, is one of the most significant competitive advantages of the company in the field of current activities. This principle is that the road from any store to the distribution center takes no more than one day. Thus, Wal-Mart places stores at the maximum distance from the distribution center while not forgetting the one-day rule. Then they fill this territory with stores at the state level and individual settlements until the maximum possible presence in the market is ensured. Due to this scheme, Wal-Mart managed to maximize the level of productivity and reduce the cost of products sold during storage, distribution, and logistics. Due to the strategically competent location of distribution centers and cross-docking, the company managed to reduce the amount of space required for storing stocks. As a result of such actions, the efficiency of using the store’s space increases since it becomes possible to expand the trading floor and reduce the cost of storing inventory.

Cross-docking is a method of acceptance by the distribution center of goods received from the manufacturer, in which it is sent to stores immediately, and there is no need to store this product in the distribution center. The purpose of this reception is to reduce the cost of loading and unloading operations and storage costs by reducing the duration of the goods in the walls of the distribution center or due to the absence of any need for this. Due to cross-docking, the goods are not delayed in the distribution center — they are unloaded from one truck and loaded into another.

Removal Request
This essay on Wal-Mart’s Competitive Advantage was written by a student just like you. You can use it for research or as a reference for your own work. Keep in mind, though, that a proper citation is necessary.
Request for Removal

You can submit a removal request if you own the copyright to this content and don't want it to be available on our website anymore.

Send a Removal Request