This report should call attention to the success story of Wal-Mart and reveal by using
appropriate strategic framework why they are one of the most controversial companies.
Subsequently, the goal of this strategic analysis is to examine Wal-Mart’s quest to dominate international markets. In addition Wal-Mart’s corporate identity will be discussed and several solutions to the challenges will be proposed.
Table of Contents
1. Introduction
2. The Wal-Mart Success Story - Overview of the Business
3. SWOT-Analysis
4. Retail Industry Analysis - Porter’s Five Forces
4.1 Bargaining Power of Buyers
4.2 Bargaining Power of Suppliers
4.3 Threat of New Entrants
4.4 Threat of Substitutes
4.5 Intensity of Rivalry
5. Competitive Advantage
5.1 Causal Ambiguity
5.2 Wal-Mart’s Business System
6. Internationalisation
6.1 Wal-Mart International
6.2 Wal-Mart Germany
6.2.1 Why is Wal-Mart not successful in Germany?
6.2.2 The Strategy Of Wal-Mart in Germany - and why it failed
7. Wal-Mart’s Corporate Identity
7.1 Workforce Conditions
7.2 Unionisation Difficulties
7.3 Expansion in Other Sectors
8. Conclusion: Strategy Advices
Objectives and Topics
This strategic case study analyzes Wal-Mart’s growth trajectory, business model, and the factors contributing to its international success and failure. The primary objective is to evaluate why, despite domestic dominance, the company faced significant challenges in international markets like Germany, and to propose strategic improvements.
- Strategic analysis using Porter’s Five Forces and SWOT framework
- Examination of competitive advantages through cost leadership and logistics
- Assessment of internationalization strategies and specific market failures
- Evaluation of corporate culture, workforce relations, and unionization
- Recommendations for future global expansion and public relations strategies
Excerpt from the Book
5.1 Causal Ambiguity
What creates competitive advantages and what prevents Wal-Mart from being imitated? The value of a resource or capability remains only durably high, if it is difficult to imitate and substitute. Only under these conditions the competitive advantage can be permanently defended. A competence is generally the more difficult to imitate, the more rare it is. (Hungenberg, 2002) Even if no scarceness exists, it might be difficult to diminish a competence-based competitive advantage through imitation.
Above all this is the case if it is not clear for competitors, on what competences a competitive advantage is based or how it results from the complex combination of different competences. According to Lippman and Rumelt, this phenomenon is called "Causal Ambiguity". (Grant, 2005, 235)
Wal-Mart’s outstanding competitive position is based on the unique interaction of its logistics and distribution system, the corporate culture, superior information and communication, but also on a special leadership of their employees.
For competitors it might be very difficult to catch up this competitive advantage, since the competences tend to be deeply fixed in the value chain. Only by the complex coaction of different resources and capabilities Wal-Mart gained its “tacit knowledge”. (Cummings; Wilson, 2003, 152)
Chapter Summaries
1. Introduction: Presents the success story of Wal-Mart and outlines the report's goal to examine the company's internationalization and corporate identity.
2. The Wal-Mart Success Story - Overview of the Business: Provides a historical overview of Wal-Mart's growth into the world's largest retailer and describes its core business divisions in the USA.
3. SWOT-Analysis: Identifies the internal strengths and weaknesses, as well as external opportunities and threats, characterizing Wal-Mart's strategic management.
4. Retail Industry Analysis - Porter’s Five Forces: Applies Porter's framework to assess the industry attractiveness, highlighting Wal-Mart's power over suppliers and ability to deter new entrants.
5. Competitive Advantage: Discusses the sources of Wal-Mart's success, focusing on Causal Ambiguity and the efficiency of its unique business and logistics system.
6. Internationalisation: Examines Wal-Mart's global expansion, with a detailed focus on why the strategy in Germany ultimately failed due to cultural and market differences.
7. Wal-Mart’s Corporate Identity: Reviews the company's treatment of its workforce, issues regarding unionization, and its expansion into various retail sectors.
8. Conclusion: Strategy Advices: Proposes strategic recommendations for future international success, emphasizing localization, E-Commerce, and improved labor relations.
Keywords
Wal-Mart, Strategic Management, Retail Industry, Porter’s Five Forces, SWOT-Analysis, Competitive Advantage, Causal Ambiguity, Internationalisation, Corporate Identity, Business System, Logistics, Supply Chain, RFID, Workforce Conditions, Unionisation
Frequently Asked Questions
What is the primary focus of this case study?
The study examines Wal-Mart's corporate strategy, exploring how it achieved global dominance and identifying the strategic failures that hindered its international expansion, particularly in Germany.
What are the central thematic fields covered?
Key themes include strategic management frameworks (SWOT, Porter's Five Forces), global supply chain efficiency, corporate culture, human resource management, and the challenges of international market entry.
What is the core objective of the report?
The objective is to reveal why Wal-Mart is a controversial yet successful company, analyze its quest for global dominance, and provide strategic advice on how to improve its international standing.
Which scientific methods are employed in this analysis?
The report utilizes standard strategic management tools such as SWOT analysis and Porter's Five Forces model, alongside an investigation into Causal Ambiguity and comparative market analysis.
What topics are discussed in the main body?
The main body covers the history of the business, its competitive advantage based on logistics and technology, the failed German market entry, and its controversial corporate identity regarding employee treatment.
Which keywords best characterize this work?
The work is defined by terms such as retail strategy, competitive advantage, logistics management, international expansion, and organizational behavior.
Why did Wal-Mart struggle in the German market?
The failure is attributed to a "one-size-fits-all" approach, ignoring local culture and consumer preferences, restrictive German labor laws, and inefficient acquisition strategies.
How does Wal-Mart maintain its low-cost advantage?
Through highly automated distribution networks, proprietary satellite communication systems, RFID technology, and strict expense control, allowing it to maintain high margins at low consumer price points.
What is the role of RFID in Wal-Mart's operations?
RFID technology is used to identify items across the supply chain, significantly reducing out-of-stock incidents and excess inventory, thereby contributing to overall cost reduction.
- Quote paper
- Dipl.-Kfm. (Univ.), B.A. Christian Kneer (Author), 2005, The Wal-Mart Success Story, Munich, GRIN Verlag, https://www.grin.com/document/134367
