Introduction
The business world today is highly competitive as more organizations continue to join the market and strive get their share of the market. For a business organization to make it in today’s market, it needs to have a competitive advantage that will put it in a step ahead of its competitors. The term competitive advantage can simply be defined as a benefit that a business has over its competitors (Porter, 2008).
The term competitive advantage describes the attributes that give a business an opportunity to perform better than the other organizations in similar ventures. There are some factors that can give businesses a competitive advantage. Among the factors include the natural resources available to the firm, human resources, geographical locations, access to technology, as well as the strategies that the business has in place for achieving its goals (McGrath, 2013).
The level of competition in different industries differs due to the nature of business conducted and the number of players in the industry. For instance, the electronic industry is highly congested, and the level of competition is too high.
An organization like Walmart is a retail company operating in a high competitive industry as well. However, Walmart has been able to apply some strategies that give it a competitive advantage. This article will analyze the competitive advantage of Walmart and explain how the company has achieved a sustainable competitive advantage through knowledge and resources.
Walmart’s Competitive Advantage
Walmart is one of the largest enterprises in the world regarding revenue and is ranked among the fastest growing companies. The company, which is based in the United States of America, has branches all over the world. Walmart boasts of about 2 million workers globally.
The company has been able to succeed in an industry that is characterized by a high level of competition (Keller & Price, 2011). There are factors that have been unique to Walmart, which have given the company a competitive advantage over its rivals. The company has been able to effectively and efficiently utilize its competitive attributes to achieve a sustainable competitive advantage.
First, Walmart has vast resources, which have helped it attain a step further compared to its competitors (Kneer, 2009). Its resources can be categorized as financial resources, human resources, knowledge resources, as well as physical resources. As mentioned earlier, the company is ranked among the largest in the world in terms of financial strength. This has been the primary resource that has helped Walmart remain top of the competition and sustain its competitiveness over the years.
Walmart can be able to invest in profitable ventures with the financial strength that the company holds. The company can also take advantage of any opportunities that come its way. For instance, the financial strength can enable Walmart to invest in the latest technology and position itself better to boost innovation and invention. As a consequence, Walmart can sustain its customer satisfaction for a long time and the customers can be willing to buy from the company all the time.
Besides, technology will help the company reduce its operational costs and lead to an increase in its profit margin. Walmart has been able to open new branches all over the world as a result of its financial ability. This has further helped the company to sustain its competitiveness because the expansion has increased its customer base.
Secondly, Walmart’s human resource has been essential for the sustained competitiveness of the firm (Kneer, 2009). It is important to note that human resources are the most valuable resources in any organization. The performance of the personnel has a direct influence on the performance of the organization. If the performance of workers is inadequate, it will be reflected in the poor performance of the business.
Walmart is the largest private employer in the world, which means that the company reaches in human resources. The firm has enough employees who help it work towards achieving its objectives. The employees at the enterprise are skilled; hence, they bring in the aspect of knowledge. The company’s employees led by the senior management can make policies that they then execute in a manner that puts the company in a strategic position regarding competition.
Also, the qualified staff can solve problems proactively, making Walmart to always be a step ahead. Further, it is the people employed in the corporation who are responsible for innovation and invention. Innovation is the lifeblood of business organizations today as it is responsible for the satisfaction of consumer changing needs (McGrath, 2013).
The fact that the needs of customers keep on changing means that business organizations should always be ahead of these changes to satisfy the customers. Otherwise, a company may find its products and services becoming obsolete. Walmart motivates its employees so that they can perform at their best, which further helps the company to sustain its competitive advantage.
Physical resources are another factor that has largely contributed to Walmart’s sustainable competitive advantage. The company has extensive physical resources in the form of assets (McGrath, 2013). Walmart has vehicles for transportation, which helps in improving the efficiency of its supply chain.
The company also has warehouses where it stores its goods. This ensures that there is a constant supply of goods in its stores and customers get what they need at all the times. The efficiency further improves customer satisfaction, thereby giving Walmart a competitive edge. The vast physical resources are an indication of the company’s economic strength. Walmart can easily get funding from financial institutions to further its investments.
Knowledge is the other factor that has helped Walmart to sustain its level of competition for a long time. Knowledge is power; having knowledge of a certain subject is always a powerful tool when it comes to making decisions, as well as judgments (Betz, 2011). Walmart has been in the market for an extended period.
During this period, the company has gained experience and knowledge that helps it in decision making and predicting the future of the market. As a result, the company can take a step ahead of its competitors. Walmart can implement policies that will give it an advantage over the rest of the market players. Its decisions are well advised and reflect the situation in the market or the future market possibilities.
Finally, Walmart has been able to devise a strategy that has worked for it in the market. Strategic positioning is an essential factor in the competitiveness of any organization (Kneer, 2009). Business needs to have strategies that will help them edge out competition from their rivals. Regarding Porters strategies, Walmart has adapted both the cost leadership and the differentiation strategies.
As such, it can reach low-income earners and at the same time, it reaches middle and high-income earners. Under cost leadership, the company has goods that are of low prices (Porter, 2008). These are goods that can be afforded by people who do not have a high level of income. However, despite the low-cost goods, Walmart does not compromise the quality of its products. It is imperative to note that customers are always willing to pay the lowest possible price for a product but at the same time they need quality for their money.
Lowering the cost of goods and maintaining quality makes Walmart win the trust of many customers. The corporation has created a brand image that further helps it in its competitiveness. Under differentiation, the company targets a class of clients that likes high-quality goods despite the cost (Porter, 2008).
This class of clients is more concerned about the quality of the product as opposed to the cost. Adopting these two strategies makes Walmart to reach the mass market through low-cost goods and the high-end market for differentiated products. Consequently, Walmart covers a massive consumer base a factor that adds to its sustained competitiveness.
Conclusion
As the business environment continues to become more turbulent due to the high level of competition, business organizations should establish ways of surviving and attaining their objectives. Over the years, more business organizations have joined the market competing to get a share from the market. To survive, companies have been coming up with competitive strategies that give them an advantage over their rivals.
Technology is one of the factors that have helped in boosting business competitiveness by helping the businesses in innovation and cost lowering. Walmart is a retail store that has grown to become the largest in the market. It has some competitive advantages that have helped it sustain its competitiveness. Among the competitive advantages include resources and knowledge.
References
Betz, F. (2011). Managing technological innovation: Competitive advantage from change. Hoboken, N.J.: Wiley.
Keller, S. & Price, C. (2011). Beyond performance: How great organizations build ultimate competitive advantage. Hoboken, N.J.: Wiley.
Kneer, C. (2009). The Wal-Mart success story. München, Germany: GRIN Verlag.
McGrath, R. G. (2013). The end of competitive advantage: How to keep your strategy moving as fast as your business. Boston, MA: Harvard Business Review Press.
Porter, M. E. (2008). Competitive advantage: Creating and sustaining superior performance. New York, NY: Free Press.