To win in the marketplace on a sustainable basis, you have to choose a game plan (from among the many options) by matching the external opportunities with your distinctive internal competencies. One must, however, not take ‘’exploiting distinctive competencies’’ as an end in itself – it is only a means to an end.

’The real essence of business is to find and keep customers.’’

Wal-Mart’s Sources of Competitive Advantage

A behemoth like Wal-Mart derives its competitive advantage from various sources.

First, its low cost and efficient operations. It does a lot of little things extremely well and they all add up to a tremendous cost advantage.

Second, its market position. Its small-town rural strategy has evolved into a network of stores with a relatively large number of ‘’local monopolies.’’

Third, its culture and human resources management. It’s empowered and committed associated ‘’live to work for the glory of Wal-Mart.’’

Fourth, its founder – Sam Walton – is Wal-Mart’s biggest enthusiast and cheerleader. He provided value by having a vision, setting the strategy, and creating the culture that drove the entire strategy.

Questions for Your Business:

  • How are you obtaining your returns?
    • Lowest costs through scale advantages?
    • Lowest costs through scope and replication advantages?
    • Premium prices due to unmatchable service?
    • Premium prices due to proprietary product features?
  • Do you own intellectual property – patents, trade secrets, trademarks – which competitors cannot likely replicate?
  • Can you deploy superior processes, capabilities, or resources that competitors cannot likely duplicate?

In the final analysis, it’s not enough to identify an advantage over your competitors. The advantage needs to be sustainable and dynamic, for you to have a consistent edge in the marketplace.