presentation on

1. presentation on

2. Introduction Cost Advantage Sustainability Recommendations Agenda • Agenda • Business Idea • Introduction of Wal*Mart • Ivy • Cost advantage & drivers • Cora & Shirley • Sustainability of competitive advantage • Kelvin & Michelle • Recommendations & conclusion • Stephanie & Louise By Cora, Ivy, Kelvin, Louise, Michelle, Shirley, Stephanie 2000

3. Introduction Cost Advantage Sustainability Recommendations Business Concept • Agenda • Business Concept • Established in 1969 by Sam Walton • Successful retail chain • 33% ROE • 35% sales growth • Different retail formats • Discount store • Sam’s Club • Supercenter • Principles • Cost advantage • Low price • Serving customers By Cora, Ivy, Kelvin, Louise, Michelle, Shirley, Stephanie 2000

4. Introduction Cost Advantage Sustainability Recommendations Drivers of Cost Advantage  Economies of Scale  Economies of Learning  Production Techniques  Product Design  Capacity Utilization  Input Costs  Managerial efficiency • Economies of scale • Economies of learning • Production techniques • Product design • Capacity utilization • Input costs • Managerial efficiency By Cora, Ivy, Kelvin, Louise, Michelle, Shirley, Stephanie 2000

5. Introduction Cost Advantage Sustainability Recommendations Economies of Scale  Economies of Scale  Economies of Learning  Production Techniques  Product Design  Capacity Utilization  Input Costs  Managerial Efficiency • In Wal*Mart … • Buying in bulk • Building own warehouse Economies of Learning • Repetition to gain experience • In Wal*Mart … • Experience on handling systems • Internal & external communication •  coordination & performance By Cora, Ivy, Kelvin, Louise, Michelle, Shirley, Stephanie 2000

6. Introduction Cost Advantage Sustainability Recommendations Production Techniques  Economies of Scale  Economies of Learning  Production Techniques  Product Design  Capacity Utilization  Input Costs  Managerial Efficiency • Production method & business process •  efficiency &  defects • In Wal*Mart … • Cross docking • Different IT systems Product Design • Designing products & services to • economize costs & materials • In Wal*Mart … • Cross docking • Pricing system By Cora, Ivy, Kelvin, Louise, Michelle, Shirley, Stephanie 2000

7. Introduction Cost Advantage Sustainability Recommendations Capacity Utilization  Economies of Scale  Economies of Learning  Production Techniques  Product Design  Capacity Utilization  Input Costs  Managerial Efficiency • In Wal*Mart … • Cross docking Input Costs • In Wal*Mart … • Located in rural areas & small towns • Non-union labor & 30% part-time labor • High bargaining power • Supplier relationship with network linkage Managerial Efficiency • In Wal*Mart … • Profit sharing • “Store within Store” • “Shrink Incentive Plan” By Cora, Ivy, Kelvin, Louise, Michelle, Shirley, Stephanie 2000

8. Introduction Cost Advantage Sustainability Recommendations Obscuration • Obscuration • Undermining Incentives • Causal Ambiguity • Resource Immobility • Availability of financial information • Difficulty in withholding profitability Undermining Incentives • Deterrence: large scale as threatening signal • Preemption: locating next to discount stores Casual Ambiguity • Multiple sources of competitive advantage • Difficulty in identifying KSFs By Cora, Ivy, Kelvin, Louise, Michelle, Shirley, Stephanie 2000

9. Introduction Cost Advantage Sustainability Recommendations Resource Immobility • Obscuration • Undermining Incentives • Casual Ambiguity • Resource Immobility • Intangible resources • Staff • Motivation • Shrinkage Incentive Plan • Profit sharing plan • Communication • Information sharing • No superstar • “Yes We Can Sam” • Autonomy • Setting price individually • “Store within Store” By Cora, Ivy, Kelvin, Louise, Michelle, Shirley, Stephanie 2000

10. Introduction Cost Advantage Sustainability Recommendations Resource Immobility • Obscuration • Undermining Incentives • Casual Ambiguity • Resource Immobility • Tangible resources  Intangible resources • Tangible: EDI • Forecasting, planning, replenishing • Electronic invoicing • Intangible: development of partnership • 300 vendors • 90% of sales value By Cora, Ivy, Kelvin, Louise, Michelle, Shirley, Stephanie 2000

11. Introduction Cost Advantage Sustainability Recommendations US Growth • US Growth • Global Growth • Virtual Growth • Conclusion • Emphasize on Supercenter • Growing sector • Focus on customer service • Large target group • One-stop shopping By Cora, Ivy, Kelvin, Louise, Michelle, Shirley, Stephanie 2000

12. Introduction Cost Advantage Sustainability Recommendations Global Growth • US Growth • Global Growth • Virtual Growth • Conclusion By Cora, Ivy, Kelvin, Louise, Michelle, Shirley, Stephanie 2000

13. Introduction Cost Advantage Sustainability Recommendations Global Growth • US Growth • Global Growth • Virtual Growth • Conclusion By Cora, Ivy, Kelvin, Louise, Michelle, Shirley, Stephanie 2000

14. Introduction Cost Advantage Sustainability Recommendations Virtual Growth • US Growth • Global Growth • Virtual Growth • Conclusion • Web store • Available in US and Canada first • Reasons • IT systems and logistics • Reputation • Increasing store traffic • Flexible, simple, convenient shopping By Cora, Ivy, Kelvin, Louise, Michelle, Shirley, Stephanie 2000

15. Introduction Cost Advantage Sustainability Recommendations Conclusion • US Growth • Global Growth • Virtual Growth • Conclusion Sustainable competitive advantages Wal*Mart: number 1 in retailing Focus on Supercenter Enter China market Go online By Cora, Ivy, Kelvin, Louise, Michelle, Shirley, Stephanie 2000

16. presentation on