PORTERS GENERIC STRATEGY: For any organisation to obtain a sustainable competitive advantage, Michael Porter suggested that they

should follow any of the three generic strategies. They are

Cost Leadership Differentiation Focus Now let us see what generic strategy Wal*Mart used in order to create sustainable competitive advantage in an industry when stiff throat competition is persistent throughout and also see how much effective they were by doing Porters five force analysis and comparing their value chain to see the sustainable advantage.

WAL*MART COST LEADERSHIP

Wal*Mart was framed in the ideology of supermarkets which incidently provided products at cheaper rates. It was not a suprise that Sam Walton decided to follow the same foot steps by providing goods at lower price than the industry standard. This was one of the edging factors which Wal*Mart strived on all the time. They relied on two major ways for achieving this, they are They increased prices by reducing costs, while charging prices below industry average. They increased market share by means of charging very less price while still making profit since they reduced costs.

Wal*Mart didnt simply rely only on providing low cost goods but instead constantly trying to find ways to reduce cost so that they can provide at much cheaper range. This is because they were aware that the competitors might attack and let us not capture more market share if we leave the gap wide open. Wal*Mart aimed to excel in achieving Cost Leadership by having the following aspects. Maintaining technological superioty that will bring cost down. Some of them are EDI, RFID, Bar coding, UPC, e-commerce and their satellite system. A very efficient logistics. They followed Hub nad spoke distribution mechanism. They had their own logistics. A very low cost base for labor, materials and facilities which boosted their prospects of providing goods at very low price. Access to the capital required to make a significant investment in processes which improved their effeciency. High level of expertise. They have unique coaching program for their employees and because of their open door policy, every store has expertise roung the corner.

The philosophy followed by Sam Walton is Japanese Kaizen philosophy of "continuous improvement". He made special emphasise on finding ways of reducing cost. This constant urge has given them broader scope for growth. The other aspect was that they targeted broad market. This is because of their strategy. Now let us see the five forces model with context to Wal*Mart and see their sustainable advantage.