Wal-Mart Case Study
Executive Summary
• In 2005, Wal-Mart’s competitive advantages include their original everyday low prices, one stop
shopping store format, their willingness to embrace and invest in new, efficient technologies,
and a favorable public image back home.
• In their international expansion efforts, Wal-Mart found their most successful ventures were
born out of adapting their practices to better reflect the culture of the regions in which their
new stores would be located.
• While the competitive advantages Wal-Mart enjoyed domestically made them the largest
company in the world in 2005, their successful translation to international markets would
require a thorough understanding of the culture of the target populace.
In 2005, Wal-Mart had fended off its competitors to remain the largest company in the world by
focusing on accentuating its many competitive advantages and relying heavily on their US stores, which
accounted for roughly 72% of their locations in 2004 according to Exhibit 1 in the case study.
1
In order
to continue to grow their business, Wal-Mart would need to continue the process they began in the 90’s
by looking for opportunities in international markets. While Wal-Mart had found some success in these
new territories through a combination of acquiring or partnering with established companies, or in some
cases on their own, more often then not they found that to succeed they would need to adapt to better
fit the culture of each individual country. While each case would be different, Wal-Mart learned that
not all the competitive advantages it enjoyed on US soil would perfectly translate to international
markets, and it would require region specific cultural tweaks in order to continue their incredible
growth.
Before discussing the international expansion efforts, it is important to understand exactly what
competitive advantages 2005 Wal-Mart enjoyed. For starters, Wal-Mart’s discount store model had
proven to be a great success, as their every day low prices model proved to give them an edge over their
competition.
2
In addition to this, the roll out of the Wal-Mart Supercenters served to “meet the growing
1
David B. Yoffie, “Wal–Mart, 2005,” HBS 9–705-460 (Boston: Harvard Business School Publishing, 2005) p. 6.
2
Pratap, Abhijeet. “EDLP Pricing: Walmart’s Price Advantage.” Medium. Medium, February 16, 2020.
https://medium.com/@abhijeetpratap/edlp-pricing-walmarts-price-advantage-948ec1145ec5.
demand for one-stop, round-the-clock family shopping” as they would include additional services
ranging from tire shops and restaurants to vision centers and employment agencies.
3
Coupling their
pricing model and supercenter format with smaller, urban-centric neighborhood markets and the SAM’S
CLUBS warehouse stores designed to compete with wholesalers BJ’s and Costco, the Wal-Mart family of
stores had a strong claim to be the first and last stop for many American shoppers, as their brand
became synonymous with one-stop shopping for everything from car parts to groceries.
Another advantage in Wal-Mart’s corner is their willingness to embrace and invest in new
technologies dating back to their adoption of bar codes and electronic data interchange (EDI) tools back
in the 1980’s, which were used to enhance the flow of information in and between stores, as well as
suppliers, and ultimately turning EDI into a tool for better understanding the inventory needs of their
stores, as well as shipping and planning. Despite their comfort with EDI tools, Wal-Mart would take it
one step further investing $4 billion in Retail Link in 2002 to better arm their managers with data to
improve their stores. They would also be among the first retailers to look to go through the costly and
time consuming process of introducing radio frequency identification (RFID) in the hopes that the
