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business
Owned by Sam Walton Wal -Mart is one of the leading discounting stores in the United States of America. With discounting accounting for 91% of sales and 96% of pretax profit in 1985 has made it the leading discounter in both profitability and growth, and with sales continuing to increase with time many analysts predict good times are ahead for the business.
Analysis of Wal-Marts Competitive Advantage VS Competitors:
The corporate History in exhibit 1 of the case shows Wal-Marts history from the year 1976 to 1985. We start of by the net sales which are steadily increasing with time; in addition the company started with $469(million) in sales and in 1985 it had increased to $8451(million). The main reason for that is the discount operations method that they used. Table 1 shows the industry net sales was 100% and for Wal-Mart 100%.
Industrial operating expenses was 23.3% in contrast to Wal-Mart which equaled to 17.5%and the main reason behind this difference is the increase in net sales of the company which brought with it an increase in operating expenses. Furthermore to have a high percentage of operating expenses then the net sales should be high.
Payroll expenses for the Industry equaled to 11.2% in comparison to Wal-Mart which has payroll expenses of 10.1%. In terms of wages and salary expenses Wal-Mart was considered to be tightfisted and in the late 1970s the expenses accounted for 11.5%. But because of improvements in labor productivity and capital investments the number dropped to 10.1% which was less then the industrial average.
Advertising expenses for the industry equaled to 2.3% even though many of the companies had good levels of growth. In contrast to Wal-Mart which had advertising expenses of 1.32%, which was a slight increase then the late 1970s.the basic fact of television advertising which increased from 43.7 million in 1977 to $16.3 million in 1985 but they also dropped back when they actually established a presence in the market.