Core competencies are strengths that are unique to a firm that make them stand out from
the competition. According to chapter four of the text, core competencies allow a firm to
“differentiate their products and services from those of their rivals” which in turn create a
“higher value for the customer or offer products and services of comparable value at a lower
cost.” When reviewing the case, “Wal–Mart Store in 2003,” I noted two main competencies for
Wal-Mart, distribution and marketing. To further understand why distribution and marketing are
a part of Wal-Mart’s core competencies, it is important to apply the VRIO framework.
Core Competency 1 – Distribution
• Value: The distribution centers for Wal-Mart are designed to serve approximately 150
stores within a specific radius of 150-miles. They also receive hundreds of truckloads of
product daily to keep their stores stocked.
• Rare: The distribution is rare because the distribution centers operate 24 hours a day, 7
days a week and are run by a staff of approximately 700 employees. It is hard to operate a
business non-stop; however, it makes Wal-Mart who they are and ensures that stores will
receive their products to satisfy the customers.
• Cost to Imitate: The distribution centers are costly to imitate because the average size of a
center is 1 million square feet in size and take an initial investment of $70,000,000 to
create. With this investment, it would be hard for a competitor to enter the industry and
have enough money to compete with Wal-Mart.
• Organized: The distribution centers for Wal-Mart are organized like a hub-and-spoke
network, where most of the product is delivered from their centers to the stores within 48
hours of being ordered.
Core Competency 2 – Marketing
• Value: Wal-Mart plays a large role in the community which ensures their customers that
they care about the community instead of just trying to make a profit. They offer
scholarships and sponsor local charities, which help promote their brand as well.
• Rare: With Wal-Mart’s move to provide in-store television allowed them to be seen as