Case 3 Responses

1. Analyze Amazon.com and Walmart using the value chain and competitive forces
models.
Amazon used the acquisition of Whole Foods to make their grand entrance into the physical
retail industry. Even though the company had already started acquiring physical locations in
US for groceries and bookstores prior to owning Whole Foods, their performance was not
very convincing. But through this acquisition, Amazon is now able to expand their business
to many physical locations all over the US. This increased their efficiency and allowed them
to provide more value for a lesser cost. The many physical locations allow Amazon
customers to easily obtain and return orders, without the company needing to set up more
fulfillment centers. This would cut many costs in the long run and also bring more customers
into Whole Foods itself.
Walmart uses the value chain model in implementing their online presence as well. They
give the option of online order and pickup of grocery items, which consumers tend to overspend
on. Walmart and Amazon are fierce competitors, with both companies wanting to outperform
and expand into the other’s turf. Amazon and Walmart easily dominate their own spaces and
causes a big threat to any new market competitors. Both these companies are able to provide
goods at very competitive prices to consumers, with the convenience of delivering them to the
doorstep for a cheap cost. Not a lot of companies have this feature, making consumers want to
switch to this alternative.

2. Compare the role of grocery sales in Amazon and Walmart’s business strategies.
Grocery sales can make Amazon somewhat of a big bundle service, as they can provide services
and goods in almost every essential sector. This includes food, electronics, education, household
gadgets and many others. Selling groceries through the online platform would bring in more
customers, who would not have used Amazon previously for other purposes. Groceries could act
as a gateway into an enormous market of many other products. Walmart uses online grocery
sales as a part of their business strategy by encouraging customers to virtually shop for their
groceries. It is evident that the home grocery delivery system implemented by Walmart makes
customers overspend, thus increasing revenue for the company.
 3. What role does information technology play in these strategies?
The role that information systems play in these strategies would be to personalize the shopping
experience for customers. Data is collected by technology and used to study what each individual
customer regularly shops for and what they could potentially make use of and recommend it to
them. It could also study consumer behavior in each geographical location to help the company
make decisions on what to make available more or less of. Efficiency could potentially also be
increased by information systems, as customers can have detailed information of what exactly
they are buying. This would reduce the number of returns and other customer service related
problems that a company might face.

4. Which company is more likely to dominate grocery retailing? Explain your answer.
The company that is more likely to dominate grocery retailing is Walmart. Walmart has more
physical locations all over the United states and Canada. Even though online delivery of
groceries is a growing trend, many still choose to shop for their groceries themselves in person.
Walmart has also been the largest seller of groceries for many years. The brand is somewhat of a
common household name and has dominated this market for several years. Also, the price points
offered by Whole Foods and Walmart are very different. Whole Foods is targeted at more
wealthier families who give a greater importance to quality (buying organic vs. conventionally
grown). Whereas, Walmart focuses on giving their customers the best and lowest price possible
and would be the more apparent option for a lot more people. This is why Walmart will easily
continue dominating the grocery retailing business for many more years to come.