The long-term). One way in which Wal-Mart illustrates

The
textbook defines competitive advantage as the way “a firm creates more economic
value than its rival firms.” Competitive advantage can either be temporary (i.e
short-term) or sustained (i.e. long-term). One way in which Wal-Mart
illustrates a sustained competitive advantage is via 1st mover
advantage. According to the text, “first movers that move to tie up
strategically valuable resources in an industry before their full value is
widely understood, can gain sustained competitive advantage (50). Wal-Mart
utilizes a first-mover strategy by opening stores in cities where the market
has not been saturated. By doing so, Wal-Mart makes it harder for its competitors
to enter such a market. A second way in which Wal-Mart demonstrates its
competitive advantage is through a cost leadership strategy in which consumer
goods are provided at lower prices (100). More precisely, Walmart reduces the
cost of its goods to below those of its competitors thus, making consumers more
likely to purchase goods from Wal-Mart.

 

The
five environmental threats on the industry in which Wal-Mart resides in
include, (1) threat of supplier leverage, (2) threat from superior or
lower-cost substitute products, (3) threat from competition among existing
companies, (4) threat from new competition, and (5)threat from buyers’
influence. One environmental threat that threatens Wal-Mart the most is new competitors
that have recently entered the same market or industry. Companies such as
Amazon, directly threaten Wal-Mart due to the fact that Amazon offers consumer
goods from clothing to food products at even lower costs than Wal-Mart.
Furthermore, Amazon, in some cases, offers products in bundle packs. Another
significant threat to Wal-Mart are companies that offer superior or lower-cost
substitute products. Once again, online companies such as Amazon provide
low-cost goods and substitute goods for better quality. Thirdly, buyers’
influence is a significant threat to the Wal-Mart industry. More precisely, buyers
are continuously looking for the most cost effective and quality products.
Indirectly, buyers are looking to “decrease a firm’s revenue” (43). By doing
so, buyers have the power to make or break a company based on their purchasing
preferences. 

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