Walmart is an America based multinational retail corporation which operates as a chain of discount department stores, grocery stores and hypermarkets. It is headquartered in Arkansas. The company has the competitive advantage of lower prices. As the retail industry in United States is getting competitive. It is also facing the competition from e-commerce sites Target, Amazon, Best Buy, and many other international and domestic retail brands for market share. However, Walmart is improving its performance every year in terms of both online and physical stores (Walmart, 2020).
A VRIO Analysis stands for Value, Rarity, Imitability, and Organization. This analysis helps the business in developing the set of tools to analyze the different capabilities and resources that a company should possess. This also helps in determining the competitive advantages and the potential of gaining it for the company. Here is the detailed VRIO Analysis of Walmart.
Value
The value questions about the company’s actions and use of its capabilities and resources for neutralizing the threats. Walmart truly stays with the leadership of Sam Walton, as the company values its employees, customers and other stakeholders. It makes sure to provide low-cost products to the customers, and some discounts or offers to make loyal customers. The company make sure that consumers would get to know that company takes good care of them. The company building in the medium of small markets, which shows the value for people as it brings jobs to areas and also help them in saving money that are not provided by other retailers. Walmart almost saves $2500 per year. This can be done with the help of low cost charged by Walmart and also force other retailers to lower the prices (Hayes, 2015).
Rarity
This will analyze the rarity of the company and its strategy with other retailers in the industry. Walmart has the capability and resources for leveraging the information technology effectively. Many rivals in the industry tries hard to compete with Walmart on same level. Walmart uses POS- point of sale data for making store arrangements and also forecast the sales for future quarters. They also make sure to check the stocks continuously and maintain stocks.
The efficient POS system is rare to be implemented in the industry and Walmart has set a good example. They also set good example in maintaining a good relationship with their suppliers. Walmart has good bargaining power due to shear volume and bulk purchases. The company has successfully maintained its reputation, image and integrity in industry that many vendors are willing to trade with Walmart (Johnson, 2019).
Imitability
This answers the question of what if the any company does not leave with enough resources as compared to its rivals, will the company face the cost disadvantage for obtaining this? Walmart is one of a biggest retailer across the globe. It has multiple distribution channels and networks than the rivals, which cost them high charges in getting the products. Walmart also has to face low inventory cost due to cross-docking facility.
This helps the company in keeping the inventory on shelves rather than in warehouse, where it might cause them loss. Competitors have to invest a lot of capital and time to maintain such an efficient shipping and transporting facility (Hayes, 2015).
Organization
This deals with the procedures and policies of organization for analyzing the structure of the company according to the value, rarity and inimitability. The organizational structure of Walmart is well organized and managed. Walmart empower its managers to manage and operate the stores in a well-structured manner according to the regulations of the company. Walmart has recently re-structured its management into more effective and leaner. The company always hire knowledgeable staff who can deal with stores issues and provide best customer services (Johnson, 2019).
Conclusion
The VRIO analysis is an effective and efficient tool for the companies for doing internal analysis and determine the need to change or to make decision about the resources and capabilities. This Walmart’s analysis gives the answers that why it is a leading company in retailing industry. The company is successful in implementing the strategies which other retailers are not capable of doing so. This gives the company a competitive advantage.
| Resources/Capabilities | V | R | I | O | |
| Supply Chain | ✓ | ✓ | ✓ | ✓ | Sustainable advantage |
| Bargaining power | ✓ | ✓ | ✓ | ✓ | Sustainable advantage |
| Inventory management | ✓ | ✓ | ✓ | ✓ | Sustainable advantage |
| Brand Equity | ✓ | ✓ | ✓ | ✓ | Sustainable advantage |
| E-Commerce | ✓ | ✓ | Temporary advantage | ||
| HRM | ✓ | ✓ | ✓ | Temporary advantage | |
| Product range | ✓ | ✓ | ✓ | Competitive parity | |
| Policies and Procedures | ✓ | ✓ | ✓ | ✓ | Competitive parity |
(Pratap, 2020)
References
Hayes, S. 2015. VRIO Analysis. [Online], Available at: https://www.academia.edu/15744136/VRIO_Analysis, [Accessed on: 25th February, 2020].
Johnson, R. 2019. Walmart VRIO/VRIN Analysis, Value Chain Analysis (Resource-Based View). [Online], Available at: https://www.rancord.org/walmart-vrio-analysis-competitive-advantages-core-competencies, [Accessed on: 25th February, 2020].
Pratap, A. 2020. VRIO Analysis of retail brand Walmart. [Online], Available at: https://notesmatic.com/2020/01/walmart-vrio-analysis/, [Accessed on: 25th February, 2020].
Walmart, 2020. Our story. [Online], Available at: https://corporate.walmart.com/our-story, [Accessed on: 25th February, 2020].