Appelqvist Carolina    40090Brodbeck Helena       40093Mikael Meijer 40079 Riikka Murto 40097

China´s response to Walmart

 Resources - Sources of Wu Mart’s competitive advantage

    

 Tangible

 Intangible

 Human

IT system for retailers 

Widely recognized brand image: reliablevalue for moneyquality                                                  

management

store network -location-number of stores 

strong corporate culture employee training

financial resources reputation

relationship with government and suppliers

knowledge of local  market

 Capabilities

Procurement (bargaining power with local suppliers) Adjusting the assortment based on understanding of local consumers Expansion through aquisition of state owned retail company and other SOEs    Building relationship with government    Introducing Wu mart's corporate culture    Training the employees    Implementing Wu marts retail system    The brand name of Wu mart Logistics management Strategic management 

 

 Are their resources competitively superior?Valuable / Rare   Store network better than competitors entering the market Knowledge of local market Strong brand in northern China Relationship with government is an advantage compared to competitors  Corporate culture better than in the state owned companies  IT system better than domestic competitors but no advantage compared to foreign competitors Employee training better than local        

 

  Store network better than competitors entering the market Knowledge of local market Strong brand in northern China Relationship with government is an advantage compared to competitors Procurement (bargaining power with local suppliers) Adjusting the assortment based on understanding of local consumers  Logistics management Strategic management Expansion through aquisition of state owned retail company and other SOEs 

          

 

 Sources of competitive advantage

 Store network better than competitors entering the market  Knowledge of local market Strong brand in northern China Relationship with government is an advantage compared to competitors Procurement (bargaining power with local suppliers) Adjusting the assortment based on understanding of local consumers  Logistics management Strategic management Expansion through aquisition of state owned retail company and other SOEs 

The integrated sources         

 

 Sustainability of competitive advantageInimitable / Non substitutable

Appelqvist Carolina    40090Brodbeck Helena       40093Mikael Meijer 40079 Riikka Murto 40097

International expansion

 Problems to solve

1.What are the sources of Wu Mart’s competitive advantage?  Identify the principal resources and capabilities that form the basis of Wu Mart’s competitive advantage. Are Wu Mart’s resources “competitively superior” to other competitors at the time of the case? 2.How sustainable is Wu Mart’s competitive advantage domestically? Is its position sustainable when challenged by international entrants? To what extent is Wu Mart’s competitive advantage sustainable?

 

Resources - Sources of Wu Mart’s competitive advantage

    

 Tangible

 Intangible

 Human

IT system for retailers 

Widely recognized brand image: reliablevalue for moneyquality                                                  

management

store network -location-number of stores 

strong corporate culture employee training

financial resources reputation

relationship with government and suppliers

knowledge of local market

 Capabilities

Procurement (bargaining power with local suppliers) Adjusting the assortment based on understanding of local consumers Expansion through aquisition of state owned retail company and other SOEs    Building relationship with government    Introducing Wu mart's corporate culture    Training the employees    Implementing Wu marts retail system    The brand name of Wu mart Logistics management Strategic management 

 

 Transferability of competitive advantage to new markets

Their current competitive advantage is mainly connected to strong local focus:• government support • knowledge of customer base • bargaining power with local suppliers • recognized brand name and reputation

->  are all not transferable to other markets, but have to be built up again

initial advantage of technology and organized management structure are behind international players -> therefore resources and capabilities specific to China and the characteristics of emerging economies

 Transferability of competitive advantage to new markets

possibly transferable:• experience of building up a large-scale retail organisation• corporate culture • business plan

possible new markets:• market conditions need to be similar to China´s to make use of

resources• market s in the western world are already established, local

companies have an advantage regarding knowledge and product offerings

 -> suggestion:• expand into rest of China first to further use existing resources and

improve capabilities• expand into emerging markets with similar characteristics

 Upcoming challenges

• large scale operating requires larger networks    -> local suppliers and bargaining power might be reduced • changing economic environment / political system

    -> advantage of governmental  protection is not permanent

• international influences/ westernization: might already offer what customers want in the future

    -> international players might become substitutes

 

 Coping with threats

• keep informed about competitor's actions and strategy• realize first mover advantage when expanding in China • continue tracking diversified and changing demand• acquire new resources • extend into other business areas

      -> especially build on services            e.g. delivery services in new territories with few hypermarkets

 Conclusion

• do not focus on internationalisation• work on national network first• acquire new resources and capabilities, because existing ones might

not be sustainable