Walmart Inc. Takes on Amazon.com Harvard Case Solution & Analysis

Walmart Inc. Takes on Amazon.com Case Study Solution

Walmart’s biggest strength over its competitors and suppliers are economies of scale, efficient and effective use of resources, implementation of best practices and huge operating margins. These strengths are used to avoid threats of low prices and high quality from its competitors while less experimental risk used to penetrate market and grab more market share than its competitors. As compared to Walmart, Amazon’s biggest strength over its competitors are largest inventory selection and high number of third party sellers that help to maintain low cost structure in Amazon for the purpose of getting competitive advantage over its competitors by providing low prices high quality product to attract more customers (Jurevicius, 2019).

VRIO analysis of Walmart’s indicates its core competencies such as market power over suppliers and competitors, success of new practices, less risk associates with new experiments, effective resource management and economies of scales. VRIO framework for Amazon indicates its core competencies such as low cost structure, unique selection process, use of third party in selling process and synergies from local competitors and suppliers. (David Collis, 2018).

Currently, Walmart is pursuing business strategy. Business strategy used to reach company’s specific business objectives by making high level plans. Walmart use business strategy for growth purpose and to get strong competitive position in industry. Walmart’s main focus is on cost leadership strategies that help it to make high quality lower priced products in order to get competitive advantage over competitors. As compared to Walmart’s business strategy, Amazon is pursuing corporate strategy. Corporate strategy used to boost up revenues ultimately company’s overall profitability. In corporate strategy, Amazon’s more focus is towards diversification strategies. Amazon Incorporation has been shifting its trend from click and mortar position to brick and mortar one (Boitnott, 2017).

Walmart Incorporation’s main problem is slowly and gradually taking over of offline retail consumer market by Amazon Incorporation. By using strategy factor from 7 s factors, Walmart can overcome this threat. For this purpose, Walmart should focus on its inventory management that will reduce the shortage and excess of inventory at any given time in a year. To manage its inventory, Walmart’s should implement lean operations and Just in Time (JIT) inventory management tool with collaboration of its suppliers and subsequent retailers.

Currently, the biggest issue being faced by Amazon is the immediate delivery of goods to its customers because customers do not want to wait for single day to get delivery of their ordered goods. For this purpose, implementation of crowd sourcing strategy is best to overcome this faltering issue in future.

Question for Class Discussion:

  1. How can Walmart effectively manage and implement strategies to grab its previous position in industry?
  2. What should be the core focus of Amazon Incorporation related to its diversification strategies?

Exhibit 1: Financial Ratios

 Walmart Inc.Amazon Inc.Industry Average
Net Sales Growth3%30.80%2.20%
Profit Margins1.99%1.71%
Return on Equity12.70%10.95%
Return on Assets6.90%2.31%
Average House hold Income          42.2040.2
Average Age of Customers   56,000.0062900

Exhibit 2: Comparative Cost Analysis

Amazon$%Walmart$%
Revenue120100Revenue120100
COGS69.6COGS68.2
Marketing3.9Marketing0.5
SG&A1.8SG&A2.3
IT3.5IT1
Fulfilment9.5Logistics2.5
Shipping (3rd Party)2.7Store2
Shipping (In-house)6Labor12.9
Operating Income3Operating Income10.6

Exhibit 3: SWOT Matrix

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Walmart Inc. Takes on Amazon.com

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