Answer the following questions:

1. The sources of Wal-Mart's competitive advantage in discount retailing.

2. How sustainable their position in discount retailing will be in the future?
3. How effective their diversification into the food industry will be?

Answer 1.

The sources of competitive advantage for Wal-Mart in discount retailing are few geographical factors
and market strategy which were applied by Wal-Mart. The Wal-Mart stores were planned in the
places where there is no competition and such they become the early entrant to the market and
developed a customer base before competition can take over them. The pricing strategy used by
Wal-Mart was much more effective as it always used to buy products in bulk and store it in their ware
houses. This bulk purchasing with the producers provided more space for discounting as larger the
buyer lager the discounting and price negotiation on products. Additionally, to this the employees if
out on some purchasing trip the costs for the trip should be less than 1% of the purchasing made.
Wal-Mart applied various customer related programs which gave buyers a new attention of
purchasing goods at cheaper prices along with the various other benefits of life.

Answer 2.

They would be very much sustainable on their position in future as already they have earned position
in the minds of the consumers as the lowest everyday store.

The store is using various ways to reduce the pricing in order to sustain more competition pricing and
also provide support to environment. The Wal-Mart stores have been pushing to create eco-
friendlier solutions for energy for the stores like wind turbines and solar panels at its stores. They
have started to diversify into the food industry add sustainability. The Wal-Mart has done alliance
with many other stores which will help it to sustain its position. We can see that the technology is
used in Wal-Mart from the starting itself to attract customers and provide them increased 1-dollar
value. Wal-Mart has expanded its operations to other countries if the possibility is less it is taking
support through online selling platforms to capture the market and maintain its sustainability. It is
currently focusing on Renewal sources of energy, Reduction of waste and providing good customer
interface.

Answer 3

The diversification into the food industry will be effective as the customers are spending more time
at the stores and the possibility of people eating after shopping is always very high.

This would lead to more revenues to Wal-Mart as the almost 80% of the foot fall to stores will enter
into the Wal-Mart food points. People will prefer the Food industry diversification of Wal-Mart as it
has already instilled its image into consumer’s mind that it provides price friendly and genuine
products. This will lead towards the total growth of the Wal-Mart and will result as smart move to

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 diversify. The brand is renowned between customers and need very less promotion, this will also add
to the Wal-Mart profitability.

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