Competitive Advantage Flashcards
Walmart Competitive Advantage (list)
culture and HR management
relationships with suppliers/command supplier book of business
store locations
Walmart Culture
Culture of frugal / low-cost through empowered managers, low-wages, covering employee trips etc.
Relationship with suppliers
–Quantity: large volume (large consumer base)
–Access to store data (technology)
–Efficient distribution system (lower cost)
–Close relationship with Walmart (feedback)
Store locations
Located primarily in rural America to avoid direct competition, stores are also in proximity to distribution centers
Walmart Value Creating Activities
Infrastructure
HR
Procurement
Tech
Walmart Tech
Tech enables real-time market research and insights
Walmart HR
Managers have real control – product mix, prices (Store within the store); Frugal culture
Walmart Procurement
Centralized purchasing
How Walmart Achieved Cost Leadership
–Relationship with suppliers –Economies of scale –Economies of scope –Economies of density –Learning curve
Walmarts Competitive Advantage
Cost Leadership
Definition of Competitive Advantage
Superior profits within its industry compared to rivals
–Through doing something unique and valuable
–Through an integrated set of choices that is distinguishable from its rivals
Sources of Competitive Advantage
Cost-leadership
Differentiation
Differentiation
–A firm tries to gain a competitive advantage by increasing the (perceived) value of its products relative to the value of other firms’ products
–By increasing the perceived value of its products, the firm can charge a higher price than it would otherwise
–A firm mainly focuses on developing value drivers
Cost Leadership
–A firm tries to gain a competitive advantage by decreasing the cost of its products relative to the cost of other firms’ products
–A firm mainly focuses on developing cost drivers
Cost Driver List
Scale Scope Learning Curve Input Costs Vertical Integration Best Practices
Vertical Integration
–For tasks that are (not) specialized to the firm, coordination costs are lower (higher) within the firm than with a market supplier
Drivers of WTP
Product design Sale / delivery Post-sale service / complementary goods Brand perception Supporting activities
Supporting activities
Hiring, training, compensation of employees
Disadvantages of Differentiation
Value determined by producers
Value goes beyond quality and is multi-dimensional
Ambiguity
Undermine costs of producing high-value product
Barriers to imitation
Property rights (patents)
Dedicated assets
Investment requirements
High customer switching cost
How to sustain competitive advantage
Become un-inimitable
Dangers of imitation
–Collective inertia
–Causal ambiguity
–Management myopia
