In what ways do you agree or disagree with this post’s on competitive differentiation, and how can this enhance/expand on your understanding of competitive advantage?
Provide a suggestion for an additional competitive advantage strategy to better support the posting, including a rationale for your suggestion.
Walmart’s strategic planning cycle, which includes the organization’s positioning, information technology, and communications, is exciting and has allowed the organization to gain a competitive advantage. Precisely, internally, Walmart positioned its organization in small towns that everyone ignored and later expanding into other areas (Dyer et al., 2020). Another strength displayed by Walmart was its investment in information technology, which improved its distribution process and allowed the company the opportunity to restock inventory precisely and quickly (Dyer et al., 2020). In addition, Walmart’s communication investment and strategy permitted members of the organization to communicate swiftly and without traveling, which saved a great deal of money and time. However, externally, Walmart faced several threats from its competitors. For example, Costco, a low-cost discount retailer, offered lower prices on higher quality products. Aldi’s business model strategy offered lower prices than Walmart; Amazon offered online products that matched or beat Walmart prices, with zero sale tax.
Walmart’s electronic data interchange (EDI) system helps separate the organization apart from other retailers like Target and Dollar Tree. The EDI system provides up-to-the-minute sales data to suppliers and is one of the primary reasons Walmart can achieve the lowest operations cost in the industry (Dyer et al., 2020). Walmart focuses 10 percent of its United States sales on its apparel compared to its competitor Target, which focuses on 40 percent on its clothing. Walmart’s advertisement costs in 2010 were only 0.6 percent compared to Target’s advertisement costs of 2.0 percent. In addition, all functions of the organization are focused on achieving the lowest possible costs. These strategies implemented by Walmart helped ensure lower prices than its competitors, and the lower prices are a significant factor as to why Walmart has gained many customers.
Challenges and discrepancies encouraged lawsuits from Walmart’s competitors, which drove Walmart to change the organization’s slogan from “Always the lowest price” to “Always low prices.” In most industries, competitors will likely introduce new business models that change the “rules of the game” (Bereznoi, 2014). Less than 10 percent of an organization’s overall investment is spent on developing a new business model (Johnson, Christensen, and Kagerman, 2008). However, Walmart continues to produce superior results, and customers choose Walmart due to its cost advantage over other organizations. The cost advantage allowed Walmart to offer customers products at lower costs.
Strategic Planning Cycle A strategic planning cycle is a process where managers use a set of planning procedures to examine major strategic issues faced by their organization (Lorange