In strategic management, there is a growing body of work that recognizes the significance of Resource-Based View (RBV) approaches. This paper attempts to find out Wal-Mart’s core skills by applying the VRIO framework and evidence from the “Wal-Mart Stores in 2003” case study, which supports RBV. According to RBV, each firm obtains a variety of talents that strategists may deploy to gain a competitive advantage (McGee et al., 2005).
In other words, a business may be framed as a set of resources that drive strategy and growth. A firm also develops a unique competence when creating a unique product (Mintzberg et al., 2009). Three checks were identified by Prahalad and Hamel (1990) as being useful in identifying core competence. First, the ability to provide access to multiple markets is essential. Second, the end product’s contribution owing to customers should be significant.
Prices start at $12
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Finally, a core competence should be distinctive and difficult to imitate. A resource would be a firm’s core competence in fulfilling the three criteria. Furthermore, Barney (1991) said that resources for a firm must include four features: (i) valuable in terms of adding value-generating strategy to the product rather than money, (ii) uncommon in light of the company’s current market position, (iii) imperfectly imitable, and (iv) non-substitutable.
Core Competencies of Wal-Mart Company
Over the years, Wal-Mart has used its core strengths to become the world’s largest retail company (Hayden et al., 2002). Core competencies, which can be defined as a company’s primary strengths or strategic advantages in terms of underlying talents, functions, pooled knowledge, and technological capabilities (Mooney, 2007), enable multinational corporations like Wal-Mart to maintain competitive advantage while entering new markets. Customers benefit greatly from companies with strong core competencies because they are less vulnerable to competition (Fishman, 2006).
Positive name recognition, which has undoubtedly aided Wal-Mart in establishing a presence while gaining a solid reputation and brand recognition (Hayden et al., 2012), is one of the company’s strongest fundamental strengths. Positive name identification has given Wal-Mart the best opportunity for continued growth and survival, with over 3500 discount stores in the United States alone, as well as over 4000 stores worldwide.
However, the company’s company culture is one of discounting and assortments, which may limit its ability to compete in some categories. Unlike Amazon.com, Wal-mart has been able to fully integrate all of its operations in order to deliver low prices to clients (Fishman, 2006).
Furthermore, critics and management practitioners claim that the logical and meaningful integration of several elements involved in running Wal-Mart stores has allowed the firm to automate its processes and technologies with the goal of maintaining effective communication and relationships with key suppliers and customers (Hayden et al., 2002). As a result, the streamlined systems and technologies serve as a company’s fundamental competence because they enable it to achieve and maintain competitiveness.
Moving on, it is now clear that Walmart has been able to use the just-in-time (JIT) approach and other technologies to improve its competitiveness in the international retail industry. The JIT inventory management method allows Wal-Mart to minimize product ordering costs by a significant amount, allowing it to reduce inefficient and ineffective inventory decisions and handling (Srivastava, 2005).
Last but not least, Wal-Mart’s employees are efficient, self-driven, and seek to satisfy the company’s clients to the greatest extent possible using the teamwork approach (Pryor et al., 2009). This is an important fundamental capability since workers are recognized as a vital asset for organizations in pursuing their objectives and mission.
Customization & Core Competencies
The customization approach is being adopted by modern businesses in order to obtain competitiveness based on the marketing objective of matching customer needs with the company’s product offerings (Hegde et al., 2005). In Wal-Mart’s situation, product modularity and design have enhanced consumer satisfaction levels to the point that more consumers feel connected with Wal-Mart’s goods.
This strategy has helped to enhance company name recognition, resulting in a competitive advantage. Furthermore, it may be argued that the ability to personalize has allowed Wal-Mart to maintain its key competencies of low-cost production and employee efficiency.
The degree of modifications to product design and product representation on, for example, phone covers, mugs, cakes, blankets, and T-shirts sold in Wal-Marts is important since it influences customer satisfaction and repeats purchases. As a result of a large and ever-increasing client base that enables the company to provide low prices because to a significant and expanding market share.
Employee efficiency and productivity may be enhanced if employees know their customers are also enthusiastic about the goods and services they offer (Fishman, 2006), which is why customization connects to employee efficiency; that is, customization leads to high client satisfaction, which leads to increased employee efficiency and productivity.
Wal-Mart versus Walt Disney: A Comparison of the Core Competencies
Despite the fact that Wal-Mart operates in the retail industry, while Walt Disney is in the entertainment business, both enterprises have a strong brand that not only provides a distinctive customer experience but also ensures outstanding name recognition.
Both firms have a strong reputation in the field of marketing. Furthermore, owing to excellent name recognition, which is a key strength for both businesses, Wal-Mart now has over 3500 discount stores in the United States and 4000 outlets worldwide, while Disney has diversified operations in film production, amusement parks, and resorts as well as media networks (Kaplan & Norton, 2008).
The two firms’ ability to keep their systems and technologies streamlined not only to maintain good communication with their stakeholders but also to form strong connections with their consumers may be considered. This fundamental competence, combined with the capacity to develop a powerful brand, might explain why the two businesses are so well-liked across the world (Kaplan & Norton, 2008). Furthermore, because of its efficient employees and collaboration.
The two firms’ main difference is that while Wal-Mart has been able to integrate its operations and expand globally under the low-cost operations and low-price to consumers strategic banner (Hayden et al., 2002), Sam’s Club has not.
Walt Disney has yet to use this basic skill to integrate its operations and expand globally in order to provide a doorway for customers to purchase goods, advertise future entertainment releases, and test new product design options (Kaplan & Norton, 2008). As a result, Wal-Mart can command more competition as a result of its large client base, allowing it to offer lower prices on its items than Walt Disney could.
With a market of 69 different banners and 27 nations, Wal-Mart is one of the world’s major businesses. All of Wal-Mart’s success can be attributed to the company’s fundamental talents. Wal-Mart has grown to become one of the world’s most popular and cost-effective stores across the planet, which is just part of why it is one of today’s greatest corporations in our society and planet. The ability to contribute your success to your core abilities may help you better understand them.
Core competencies are talents that a company focuses on and excels in when pursuing its goal. Wal-Mart has a lot of core abilities, whether they’re big or little, however, the biggest ones are more apparent. Wal-Mart’s top five core competencies are:
- low-cost operations,
- logistics systems,
- environmental awareness.
Wal-Mart, with over 200 million customers and members every week, must have something the consumer and member want. With some of the lowest prices on everything from toothpaste to tires, Wal-Mart is on to something.
Sam Walton, the creator of Wal-Mart, has been attempting to lower prices in a variety of ways since 1950. Walton began by cutting costs by staying in less expensive lodgings. Even now, Wal-Mart executives continue to stay in cheap hotels and share rooms as part of their effort to reduce expenses. This was started to help lower Wal-Mart’s expenditures, which lowered the price of their goods.
Increasing labor efficiency is another one of our favorite topics. We’ve previously discussed how the founder of Walmart, Sam Walton, believed that by lowering prices at his suppliers, he could then reduce or eliminate them entirely for customers all around the world. He was right. The industry maintains a low pricing level through constant collaboration and coordination with its suppliers to achieve more efficient processes and lower costs. By cooperating with its manufacturers to decrease costs, Wal-Mart may likewise help maintain their inexpensive everyday charges for shoppers all across the globe.
Wal-Mart has been able to cut distribution costs and delivery time by using 140 distribution centers across the world. When it came to shipping their items from warehouse to store, Wal-Mart recognized how costly and time-consuming it was, so they attempted to reduce costs. To lower distribution expenses, Wal-Mart built new distribution centers that made it easier and faster for products to reach shops.
With over 5.5 million cases of goods moved in a single year, Wal-Mart has 160 distribution centers to its name. With items selling for low costs and with minimal distribution expenses, Wal-Mart can keep to its principle of offering low prices and cheap goods.
From the company’s founder, Sam Walton, to its lowest-paid workers, culture is in place. The culture of Wal-Mart, developed by Walton, was based on treating each employee as a partner within the firm. The Wal-Mart culture is one that is nearly impossible to duplicate. Not only does Wal-Mart demonstrate culture among their employees; it has also made significant contributions to numerous charity groups.
To build “people systems,” Wal-Mart utilizes logistics. With these methods, Wal-Mart is able to comprehend and create various human organization systems all around the world to collaborate on cost-cutting technologies, ideas, and customs of life for themselves as well as their suppliers. With a service-based global economy, Wal-Mart has been able to profit by offering low prices and low costs. Some people would even claim that Wal-Mart remains one step ahead of technological advancements.
Wal-Mart has also been able to reduce costs and help the world through its environmental initiatives. Wal-Mart has concentrated on three key environmental improvements in order to make our world a safer place environmentally. The goals of being supplied by 100 percent renewable energy, generating no waste, and selling items that sustain people and the environment are all part of Wal-Mart’s sustainability efforts.
Working to become more environmentally friendly, Wal-Mart is also able to provide cheaper prices for consumers. Wal-Mart’s core strengths have aided in the building of a business unlike any other that we’ve ever seen. Low-cost operations, distribution, culture, logistical systems, and environmental awareness have all helped build a company that has flourished on every level. Despite all of the controversy about Wal-Mart and its competitors, Wal-Mart is unquestionably the leader in the industry.
I am certain that Sam Walton could not have imagined how big Wal-Mart would become when he founded it, but now, after all these years, Wal-Mart continues to hold the ideals of its founder and former CEO, Sam Walton, and with these essential skills no one can form a better or more successful company.
Wal-Mart’s Competitive Advantages Wal-Mart has developed competitive advantages by taking its key capabilities, which are the skills the organization prides itself on and excels at while pursuing its goal (Ireland, Hoskisson, Hitt, 2008), and turning them into competitive advantages. To be a competitive advantage, core competencies must fulfill four criteria. The following characteristics are among those that make an advantage valuable, rare, difficult to imitate, nonsubstitutable:
Culture- One of Wal-Mart’s major strengths is its culture. Wal-Mart employees are hardworking, efficient, and process-oriented. According to the documentary “The Age of Wal-mart,” Sam Walton, founder of Wal-Mart, referred to his workers as associates and treated them as partners. He encouraged them to contribute their ideas for improving the company.
Finally, no matter where you go shopping at Wal-Mart across the country, Walton wanted you to know that you will always receive cheap rates and excellent customer service. This sort of culture is unusual and difficult for competitors to imitate, from door greeters to large charitable contributions.
Low-cost Operations – The video noted that Sears was a prominent business in the 1970s, but it suffered greatly due to the recession. They focused on middle-class families, built up overhead, and expanded to bigger cities. During this time, Wal-Mart concentrated on small towns and reduced overhead. People began looking for lower costs and relocating to smaller cities and suburbs as the economy worsened. Today, because of the huge sales volume generated by Walmart, the firm is able to achieve profits with low-profit margins, giving it an edge over its competitors.
Walmart is well-known across the world as a huge store, with more than 138 million customers visiting its stores every week. (Wal-Mart Real Estate 2006) Walmart has grown to be an essential part of people’s daily lives all throughout the world, and its motto “We save clients money so they may live better” has served as a catchall phrase to attract customers from various countries. The aim of this paper is to show how Walmart has expanded over time while still failing to provide adequate incentives for employees to succeed and bring consumers greater value.
The world’s largest bargain store. The business began as a small chain of outlets in rural communities. Companies identify organizational capabilities, as well as those that are important for recruiting. Core competencies at an organizational level vary considerably depending on company size, industry, human capital, and company management methods. Buying power, supply chain management, and logistical supremacy are Walmart’s fundamental competencies.
The company’s ability to sell its products at lower costs than most of its rivals is aided by these core skills. In 2014, Walmart topped the Fortune 500 rankings. According to Fortune, Walmart had sales of $473.1 billion in 2014 (Wal-Mart Stores, 2014). How Stuff Works claims that one of the reasons for Walmart’s success is its efficient supply chain.