Sse wumart group1a_2011.ppt
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Transcript of Sse wumart group1a_2011.ppt
Media ManagementCase: Wumart Stores: China’s response to Wal-Mart
Group 1aEkaterina, [email protected]
COMPETITIVE ADVANTAGE OF WUMART: SOURCES AND SUSTAINABLITY
Sources of competitive advantageResource
Strong regional foothold, multiple retail format
Relationship with SOE’s and governments
Understanding of consumers
Brand image and corporate culture
Centralized procurement, distribution and logistics
(MIS, ERP)
Competitive advantage
«Every day low prices”, small stores enable fast growth
Rapid but low-cost expansion (synergy effect)
Good reputation
Support from political authorities
Strongest bargaining power with local suppliers
Tangible
Intangible
Capabilities
Sources of competitive advantageResource
Strong regional foothold, multiple retail format
Relationship with SOE’s and governments
Understanding of consumers
Brand image and corporate culture
Centralized procurement, distribution and logistics
(MIS, ERP)
Competitive advantage
«Every day low prices”, small stores enable fast growth
Rapid but low-cost expansion (synergy effect)
Good reputation
Support from political authorities
Strongest bargaining power with local suppliers
Tangible
Intangible
Capabilities
How sustainable is Wumart’s competitive advantage domestically?
• Yes, because of path dependency principle
Hard to copy
• Questionable, competitors also constantly work on upgrading the resources (i.e. good relations , IT)
Durability
• No information about knowledge management in the company, but strong corporate culture
Appropriability
• On local market not likely to be substituted
Substitutability
• Some resources are not, i.e. IT usage, but mostly capabilities in regions have competitive superiority
Competitive superiority
TRANSFERRING COMPETITIVE ADVANTAGE AND LEVERAGING RESOURCES
Ability to transfer competitive advantage to other countries
Strengths Weaknesses
Retail ExperienceEstablished MIS , ERP, logistics systemsCorporate Culture
Local knowledge concentrationParticularities of Chinese market hard to transferLack of foreign network
Opportunities Threats
Emerging marketsEconomy of scaleImprove bargaining power
Strong global players Loosing focus on home marketNegative image of Chinese enterprises
Key points of transferring competitive advantage
• Risk of failure when expanding globally is high• Good opportunities to further expand in China
with other retail formats• Government connection is key but hard to
transfer
Expansion potential to other retail sectors and formats
• Build on existing brand image • Established networks, logistics, customer knowledge• Support of the government
However , there is threat of loosing core focus
Specialty franchise storeClothing storePrivate labelDrug store
SUSTAINING WUMART’S PERFORMANCE IN THE FUTURE
Challenges Wumart faces
• Risk of losing other attractive markets before they are saturated by rivals
• Changes in government policy• Awareness of brand name only in home
region, not in other areas• Market research for new markets• Transfer “Beijing model” to other regions
Recommendations to Wumart
• Build strong presence over all of China• Explore Joint Venture opportunities
(consolidation)• Continue to build relations with government ,
BUT also consider how to work without governmental support
• Be on front edge of technology
Long term planning of international expansion strategy
• Employ foreign top-managers • Joint Ventures• Market Research
References
• Collis & Montgomery, “Competing on Resources”
• Farhoomand A., Tao Z., ”Wumart Stores: China’s Response to Wal-Mart», Harvard Business Review 07/317C