- How does Walmart create value?
According to Dess on (Page 77), value is created within the organization using value-creating
activities such as Primary Activities.
Primary activities consist of inbound logistics, operations, outbound logistics, marketing and
sales, and service—which contribute to the physical creation of the product or service, its sale
and transfer to the buyer, and its service after the sale. - Inbound Logistics (Page 77), is associated with receiving, storing, and distributing inputs to
the product. It includes material handling, warehousing, inventory control, vehicle scheduling
and returns to suppliers.
On (Page 4) of the case, Walmart operated in a “hub-and-spoke network of distribution centers,
which allowed the location of distribution facilities to minimize shipping times and lowered
costs. - Operations
Not private label - Outbound Logistics
distributing - Marketing and Sales On (Page 78) Dess states another primary activity known as M&S as
“activities are associated with purchases of products and services by end users and the
inducements used to get them to make purchases. They include advertising, promotion, sales
force, quoting, channel selection, channel relations, and pricing”
On (Page 2) Walmart pursued promotional strategy which “pursued everyday low-price strategy
(EDLP), eschewing promotional sales to save on advertising. Walmart’s strategy was simply to
put good-sized discount stores into little one-horse towns which everybody else was ignoring”. - Service On (Page 80), Dess states service as “actions associated with providing service to
enhance or maintain the value of the product, such as installation, repair, training, parts supply,
and product adjustment”
Support activities consist of procurement, technology development, human resource
management, and general administration—either add value by themselves or add value
through important relationships with both primary activities and other support activities - Procurement
- Technology Development (Page 82) is described as “activities associated with the
development of new knowledge that is applied to the firm’s operations”
On (Page 4) of the case, David Glass implements the hub-and-spoke network of distribution
centers for Walmart’s supply chain. But by doing this, it reduced the number of varieties of
some items in order to simplify stock-keeping.
As a result, Walmart began using DATA MINING in order to customize the selection at each
store, which showed the development of new knowledge being brought in with Walmart’s
operations. - Human resource management
- General Administration
(Page 81), dess states general admin as - Identify an example from within Walmart for each of the types of tangible resources as
defined by Dess.
According to Dess on (Page 88) tangible resources is described as “organizational assets that are
relatively easy to identify, including physical assets, financial resources, organizational resources,
and technology resources.
Physical assets – On (Page 88 from the text), Dess states physical tangible resources as “the
company’s plant, equipment, and machinery as well as its proximity to customers and
suppliers”. I want to focus more on Walmart’s close relationship with its suppliers and how that
created value.
What I found on (Page 4) of the case was how Walmart “implemented data mining to
customize the selection at each store, which required close coordination with suppliers” which
assisted both parties to analyze new product and market opportunities while gaining trust and
relationship with its suppliers.
Financial resources – On (Page 88 from the text), Dess lists examples of financial tangible
resources as a firm’s cash, accounts receivable, and its ability to borrow funds. In the case on
(Page 6), Walmart launched basic financial-services offerings such as “check cashing, wire
transfers, money orders, and a branded pre-paid payment card). By implementing this service,
Walmart had reached the goal of obtaining organizational assets which allowed it to create
value for its customers.
Organizational resources – On (Page 88), Dess states organizational tangible resources as “the
company’s strategic planning process and its employee development, evaluation, and rewards
systems” (promotions?) Doug McMillon’s future for Walmart was for the “investments in
people” and the way he implemented this was on (Page 10) on the case from his strategies to
“build deeper digital relationships with our customers. McMillon saw opportunities to grow
much stronger relationships with customers using digital information on their buying habits.
Walmart’s store-plus-online customers spent over $2,500 per year with the company, compared
to $1,400 for store-only customers and $200 for the online-only.
ANOTHER, organizational resource in which Walmart created value to its customers was on
(Page 10) form the case Walmart’s Neighborhood Markets which brought convenience among
its customers in which they appreciated it. N.M. “enabled fast top-up shopping. Customers
could also order online and pick up from the store without leaving their cars (click-and-collect)”
Technology resources –
On (Page 90) Dess states “for a resource to provide a firm with the potential for a sustainable
competitive advantage, it must have four attributes. First, the resource must be valuable in the
sense that it exploits opportunities and/or neutralizes threats in the firm’s environment.”
“Organizational resources can be a source of competitive advantage only when they are
valuable. Resources are valuable when they enable a firm to formulate and implement
strategies that improve its efficiency or effectiveness.”
On (Page 9) of the case, Doug McMillon “continued to invest in online retailing during a time
where industry growth in the U.S. was est. at 12.7% in 2015. Four years after the formulation of
@WalmartLabs, Walmart had bought 14 Internet companies and added 600 e-commerce
personnel each year. In 2014, Walmart’s online sales figures were $10 billion, a 30% increase
over the previous year and was the fourth-largest Internet retailer in the US. In 2015 with a
3.0% market share. By McMillon’s actions on believing in online retailing, he increased the value
of Walmart’s market share and overall percentage.
Is the Resource Valuable?
On (Page 90), Dess states that “resources are valuable when they enable a firm to formulate and
implement strategies that improve its efficiency or effectiveness. The SWOT framework suggests
that firms improve their performance only when they exploit opportunities or neutralize (or
minimize) threats”
On (Page 6) of the Case, Lee Scott was passionate on discovering Walmart’s unlimited growth
potential… An example from the case was when Scott was focused in widening Walmart’s
product offering in order to drive up sales. In 2002, Walmart launched basic financial-service
offerings such as check chasing, wire transfers, money order, and a branded pre-paid payment
card, In 2003, announced online DVD rental service which eventually partnered with Netflix in
2005. - What are the resources/capability sources of Walmart’s competitive advantage? (hint – low
prices is a result, not a resource nor capability) - How sustainable is Walmart’s competitive advantage?
On (Page 90), Dess states that “in some cases, a resource or capability helps a firm to increase
its revenues or to lower costs, but the firm derives only a temporary advantage because
competitors quickly imitate or substitute for it”
For a resource to provide a firm with the potential for a sustainable competitive advantage, it
must have four attributes. - The resource must be valuable in the sense that it neutralizes threats and exploits
opportunities
On (Page 90) Dess states “for a resource to provide a firm with the potential for a sustainable
competitive advantage, it must have four attributes. First, the resource must be valuable in the
sense that it exploits opportunities and/or neutralizes threats in the firm’s environment.”
“Organizational resources can be a source of competitive advantage only when they are
valuable. Resources are valuable when they enable a firm to formulate and implement
strategies that improve its efficiency or effectiveness.”
On (Page 9) of the case, Doug McMillon “continued to invest in online retailing during a time
where industry growth in the U.S. was est. at 12.7% in 2015. Four years after the formulation of
@WalmartLabs, Walmart had bought 14 Internet companies and added 600 e-commerce
personnel each year. In 2014, Walmart’s online sales figures were $10 billion, a 30% increase
over the previous year and was the fourth-largest Internet retailer in the US. In 2015 with a
3.0% market share. By McMillon’s actions on believing in online retailing, he increased the value
of Walmart’s market share and overall percentage.
RESULT: LOW sustainable competitive advantage
BECAUSE: on (Page 9), Amazon’s prices for most popular items were 4% lower than Walmart’s
Also, on (Page 7) Walmart had online sales of $7.7 billion in 2012 whereas Amazon’s online sales
was $61 billion. Walmart had lost its pricing edge in many cases, and “most shoppers no longer
thought that Walmart offered the lowest prices. - The resource must be rare among the firm’s current and potential competitors
- The resource must be difficult for competitors to imitate
- The resource must have no strategically equivalent substitutes
