Wolmort Sustoinoble Advontoge

In: Social Issues

Submitted By aznpanther
Words 782
Pages 4
Competitive advantage is the advantage a firm has over its competitors and can be achieved in two ways: comparative advantage and differential advantage. In the case of Wal-Mart, it has achieved sustainable competitive advantage through comparative advantage by beating its competitors with the lowest cost structure. It has done so by valuing its employees, creating successful vendor relationships, and building an efficient operation management system. Walton believed that if the employees are treated well, then they would treat the customers well. Thus, Wal-Mart implemented several programs to motivate and empower their employees. For instance, in the “Yes We Can Sam” program, employees were able to provide suggestions to make processes more efficient. In 1993, Wal-Mart was able to implement 650 of these suggestions and it resulted in an estimated savings of over $85 million. In another program, Wal-Mart empowered department managers by allowing them to be store managers of their own “store within a store.” With this sense of responsibility, sales in some areas exceeded $1 million. There was also a shrinkage program that provided employees a bonus if the store had shrinkage below a certain percentage. Through this program, Wal-Mart’s shrinkage cost was estimated to be at 1.7% compared to 2% for competitors. Lastly, Wal-Mart had a profit sharing plan for employees after only one year of employment. Wal-Mart contributed a percentage of an eligible employee’s wage into their profit sharing account which the employee could take when they leave the company. With all these programs in place, employees felt motivated to work for Wal-Mart, which leads to higher productivity, and ultimately lowers operation costs for Wal-Mart. Wal-Mart also creates sustainable competitive advantage through its relationship with vendors by creating an efficient purchasing…...

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