Core Competencies of Wal-Mart Company
Over the years, Wal-Mart has been able to leverage its core competencies to become the largest retail chain not only in the United States but also globally (Hayden et al., 2002). Core competencies, which can be described as main strengths or strategic advantages of a business in terms of underlying skills, functions, pooled knowledge and technical capacities (Mooney, 2007), allow global organizations such as Wal-Mart to sustain competitive advantage, expand into new markets as well as provide a substantial benefit to customers (Fishman, 2006).
Perhaps one of the strongest core competencies for Wal-Mart has been its positive name recognition, which has inarguably assisted the company to establish a footprint while gaining a concrete reputation and brand recognition (Hayden et al., 2012). Positive name recognition has provided the best chance for Wal-Mart’s continued growth and survival as it now operates more than 3500 discount stores in the United States alone, and over 4000 stores worldwide.
Wal-Mart has also been able to fully integrate its activities to achieve low-cost operations in the United States and abroad, hence generating the capacity to provide low prices to its customers (Fishman, 2006). Additionally, scholars and management practitioners argue that the logical and meaningful integration of various elements involved in managing Wal-Mart stores has enabled the company to streamline its systems and technologies with the view to maintaining effective communication and relationships with major suppliers and customers (Hayden et al., 2002). Consequently, the streamlined systems and technologies act as a core competency for the company as they enable it to achieve and sustain competitiveness.
Moving on, it is now common knowledge that Wal-Mart has been able to apply the just-in-time (JIT) approach and other technologies to leverage on its competitiveness in the global retail sector. The JIT inventory management strategy allows the retail giant to minimize its product-ordering, thereby substantially reducing the costs associated with inefficient and ineffective inventory decisions and handling (Srivastava, 2005). Lastly, Wal-Mart’s employees are efficient, self-driven, and always work towards achieving optimal satisfaction and loyalty of the company’s customers using the teamwork approach (Pryor et al., 2009). This, according to Mooney (2007), is a major core competency since employees are considered a core asset for the organization in pursuing its dreams and vision.
Customization & Core Competencies
The customization strategy is increasingly being pursued by contemporary organizations to gain competitiveness based on the marketing desire to attain a superior fit between customer needs and the organization’s product offerings (Hegde et al., 2005). In Wal-Mart’s case, the customization of retail products through such processes as product modularity and product design have increased customer satisfaction levels to a point where more customers are now identifying with Wal-Mart’s products. This orientation has served to strengthen positive name recognition for the company, hence achieving a competitive advantage.
Additionally, it can be argued that customization has enabled Wal-Mart to maintain its core competencies of low-cost operations and employee efficiency. The degree of changes to product design and product representation on, for example, phone cases, mugs, cakes, blankets and shirts sold in Wal-Mart stores facilitates customer satisfaction and repeat purchases, implying that the company can offer low prices for its products due to a huge and ever-increasing customer base.
Extant research demonstrates that employees are likely to become more efficient and productive if they know their customers are also highly satisfied with the products and services provided (Fishman, 2006), hence the link between customization and employee efficiency; that is, customization brings high customer satisfaction, which then positively impacts employee efficiency and productivity.
Wal-Mart versus Walt Disney: A Comparison of the Core Competencies
Although Wal-Mart operates in the retail sector while Walt Disney is in the entertainment industry, the two companies have a strong brand that not only delivers a unique customer experience but also ensures positive name recognition. Owing to the positive name recognition, which is a major core competency in both companies, Wal-Mart now operates over 3500 discount stores in the United States and over 4000 stores worldwide, while Disney has expansive businesses in studio entertainment, amusement parks, and resorts, media networks as well as consumer products (Kaplan & Norton, 2008).
Additionally, it can be argued that both companies have been able to streamline their systems and technologies not only to maintain effective communication with their stakeholders but also to build strong relationships with their customers (Kaplan & Norton, 2008). This core competency, along with the capacity to create a strong brand, perhaps explains why the two companies are very popular globally. Furthermore, the two companies can achieve a competitive advantage due to their efficient employees as well as teamwork (Pryor et al., 2009).
A major departing point of the core competencies involving the two companies is that while Wal-Mart has been able to integrate its operations and expand globally under its strategic banner of low-cost operations and low prices to customers (Hayden et al., 2002), Walt Disney is yet to leverage on this core competency to integrate its operations and expand globally to provide a gateway to sell their customers, advertise upcoming entertainment releases, and avail an exploratory setting that could be used by the company to test new consumer products or explore new product design options (Kaplan & Norton, 2008). Consequently, Wal-Mart can leverage more competitiveness due to huge customer numbers, hence able to offer low prices for its products than Walt Disney would.
References
Fishman, C. (2006). The Wal-Mart effect: How the world’s most powerful company really works and how it’s transforming the American economy. New York, NY: Penguin Press.
Hayden, P., Lee, S., McMahon, K., & Pereira, M. (2002). Wal-Mart: Staying on top of the Fortune 500 – A case study on Wal-Mart Stores Inc. Web.
Hegde, V.G., Kekre, S., Rajiv, S., & Tadikamalla, P.R. (2005). Customization: impact on product and process performance. Production and Operations Management, 14(4), 338-399
Kaplan, R.S., & Norton, D.P. (2008). The execution premium: Linking strategy to operations for competitive advantage. Boston, MA: Harvard Business Press.
Mooney, A. (2007). Core competence, distinctive competence, and competitive advantage: What is the difference? Journal of Education for Business, 83(2), 110-115.
Pryor, M.G., Singleton, L.P., Taneja, S., & Toombs, L. (2009). Teaming as a strategic and tactical tool: An analysis with recommendations. International Journal of Management, 26(2), 320-333.
Srivastava, S.C.V. (2005). Managing core competence of the organization. The Journal for Decision Makers, 30(4), 49-63.