Competitive Advantages of Wal-Mart and Amazon

Question: Describe about the Competitive Advantages of Wal-Mart and Amazon. Answer: Introduction This report is basically discussing about two organizations or companies who are having competitive advantage in their business areas. For the discussion, the companies Wal-Mart and Amazon is taken. Along with this, for the evidence and discussion, the journal articles will be used in this report. In todays changing and growing market, it is very important for the companies to stay competitive in the market. By using proper and effective strategies companies may be able to get competitive advantage over the competitors in the market. Proper business strategies are very helpful to attract the customers in the market. Case 1 The first case of the company who has competitive advantage is Wal-Mart. The case of competitive advantage of Wal-Mart is taken from article Quantifying Wal-Marts Source of Advantage in Strategic Entrepreneurship Journal. According to the journal article, the main competitive advantage of Wal-Mart is that they focus on being industry leader in various areas. Wal-Mart always focuses on employee satisfaction and high employee morale, judging of suppliers to force discount and minimizing the cost and prices by providing best quality in the products. The competitive environment of Wal-Mart is unique. The market is continuously changing and there is competition on pricing, store size, location, technology and innovation, and brand image. So, Wal-Mart offers lower prices, better variety and good quality then competitors (Sols et al, 2016). Case 2 The second case of the company who has competitive advantage is Amazon. The case of competitive advantage of Amazon is taken from the article Sustainable competitive advantage of internet firms in the journal International marketing review. According to the article, Amazon has competitive advantage over the competitors in the area of online marketing. Today online marketing is very popular among the customers. They seek best quality products with lower prices. Amazon has competitive advantage in many terms i.e. brand, diversification, pricing strategy and culture etc (Radulovich, et al, 2005). Description of cases Competitive advantage takes place when a company becomes able to provide the same benefits to the customers better than its competitors in the lower cost. Competitive advantage includes the practices and policies to provide high quality goods and products to sell at the lower prices in the market. Both the companies, Wal-Mart and Amazon are using this policy to gain competitive advantage in the market. Having 3960 stores and more than $209 billion revenue, Wal-Mart has top position in the market. Along with this, it is the continuously profit generating company. With the profit generation, the corporate culture of the company is also good. There are many ways for a company to gain competitive advantage over the competitors. Those ways can be quality, time, flexibility, and employees, differentiation in product or services and price of the products. The way that used by Wal-Mart is to set competitive prices for the customers. The company set low cost of the products compared to the competitors for the customers. The reason of setting low cost is that customers always find out the best quality products with lower prices (He, 2012). In the second case, Amazon is very famous company in online marketing industry. Today, online marketing is on the boom. Customers like to do online shopping because it us very time saving. They get unlimited products on the shopping sites at the affordable prices. Amazon focuses on the customers need and wants. The company identifies the needs of the customers that the customers want quick delivery of products which they order. Amazon has continuously improved the distribution services to please the customers. Amazon has competitive advantage in main four areas i.e. efficient distribution and logistics, strategic achievement, cost management, and economies of scale. In the cost management, company has cut down its prices to attract more and more customers. Evidence of competitive advantage Wal-Mart has achieved competitive advantage in both outside environment and inside environment. Outside environment has demand and competition while inside competition has distribution and inventory management of the company. Wal-Mart provides offers and discounts on the products to the customers. Along with this, Wal-Mart provides best products on the lower prices as compared to the competitors. Wal-Mart has such business system that responds quickly to the customers. In terms of competition, Wal-Mart does not set price of the products. Wal-Mart always has the prices 1% lower than the competitors. That is the reason customers attract more towards the products of Wal-Mart. Apart from this, culture and leadership are also the key factors of competitive advantage of Wal-Mart. Because of the low cost culture of the company, it is able to gain competitive advantage among the customers. This culture makes the company effective in the market. So, the culture and leadership are the most imp ortant factors in maintain the competitive advantage of the Wal-Mart (Gustafson, 2016). According to an article published in the International Business Times, from many years, Amazon is the fast growing internet company among all the companies. The company is gaining competitive advantage because of its diversified and advanced business model. The business model of Amazon is helpful to get competitive advantage compared to other e-commerce site. In starting, the Amazon was founded to sell the books online but once Amazon became leader in book selling, the company rapidly expanded into other retail products such as household items, electronic products and much more. Basically, the fast growing technology is the reason of the competitive advantage of Amazon. There are thousands of products on the Amazon and no any competitor is able compete the prices of Amazon. Customers are able to find out the products which are affordable by them. They can also able to order that product by one click. These factors prove that Amazon has competitive advantage across many retail compani es (Magee, 2011). Analysis and Explanation Wal-Marts strategy Wal-Mart uses low cost leadership strategy and product differentiation strategy for getting competitive advantage in the market. The Sloan of Wal-Mart is Save money, live better. Low-Cost Leadership: According to an article posted on MSNBC, by the cost cutting in the prices of products, Wal-Mart has increased 3.6% in net income. Consumers are ready to shop and spend in Wal-Mart because there are many products of lower costs in Wal-Mart. Along with this, during the recession; Wal-Mart gets advantage because of this strategy (Boone Kurtz, 2013). Differentiation Strategy: Wal-Mart uses product differentiation strategy to create uniqueness in the product or services compared to the competitors. This strategy is used by the Wal-Mart to attract the customers so that they feel special in the provided products. Wal-Mart marks the products in such a way so that it makes feel exclusive to the customers. Wal-Mart has got competitive advantage by offering brands images and warranties to the customers. The customers of Wal-Mart believe that the product they got is unique and exclusive (Brumfitt, 2001). The competitive advantage of Wal-Mart can be analyzed by the Portes five forces: Figure 1: Wal-Mart's Competitive analysis (Source: Brumfitt, 2001) Amazons Strategy Amazon has its presence across the world and it has faced high competition in the market. Because of similarity in the products, scope of business there are many competitors of Amazon in the market. This company also focuses on the cost leadership and differentiation strategy to attract the customers. The company not only provides books abut also many retail products are provided by the Amazon (Turnbull Valla, 2013). The strategies adopted by the Amazon are as follows: The aim of the company is to compete with the competitors in terms of prices of the products and delivery of the products on the time. The objective of the company is to become market leader in the market of e-commerce and physical commerce. Amazon focuses on increasing the profitability by providing the products in lower prices compared to the competitors. Amazon provides variety of products to compete against the competitors through competitive prices, cost leadership and product differentiation strategies (Miller, 2012). Company believes that the demand for online shopping will increase everyday because consumers always find the moist suitable and effective way for shopping. Amazon offers those products that are at a lower price and differentiate the services with the competitors in terms of customer services and delivery of products. Along with this, company has global presence with stable financial performance that enables the company to increase market base of customers (Taleghani, Biabani, Gilaninia, Rahbarinia, Mousavian, 2011). The competitive advantage of Amazon can be seen in the figure: Figure 2: Amazon's Competitive analysis (Source: Brumfitt, 2001) Conclusion This report is basically discussed on the competitive advantages of two companies. For the discussion, two companies named Wal-Mart and Amazon has been taken. For the above discussion, it has been observed that, the competitive environment of Wal-Mart is unique. Wal-Mart has top position in the market. The company set low cost of the products compared to the competitors for the customers. Wal-Mart provides offers and discounts on the products to the customers. Along with this, Wal-Mart provides best products on the lower prices as compared to the competitors. In case of Amazon, it has been observed that The Company is gaining competitive advantage because of its diversified and advanced business model. The business model of Amazon is helpful to get competitive advantage compared to other e-commerce site. There are thousands of products on the Amazon and no any competitor is able compete the prices of Amazon. Because of low-cot strategy and product differentiation strategy, both the c ompanies are successful in getting competitive advantage in their areas. References Boone, L., Kurtz, D. (2013),Contemporary marketing. 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