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MATILDA NYALUNGU

STUDENT NUMBER: 72714948

STRATEGY FORMULATION: MBA 592-2

ASSIGNMENT 1

DUE DATE: 26 SEPTEMBER 2011

TUTOR: ELVIS RABOHALE

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QUESTION 1

Resources possessed by Walmart that would give it an advantage over local

retailers

The proponents of resource-based view (RBV) argue that the resources and

capabilities of an organization are the main source of its competitive advantage

(Bakhru and Gleadle, 2010). Barney (1986) cited by Parnell and Lester (2008) argue

that the resource-based view considers performance to be a function of a firm's

ability to utilize its resources. Although environmental opportunities and threats are

important, a firm's unique resources compose the key variables that allow it to

develop a distinctive competence (Lado, Boyd, and Wright, 1992) and enable it to

distinguish itself from rivals and create competitive advantage.

A firm's resources include all of its tangible and intangible assets, such as capital,

building, equipment, employees, technology, organisation’s reputation, brand,

knowledge, organisational culture and information. An organization's resources are

directly linked to its capabilities, which can create value and ultimately lead to

profitability for the firm (Parnell and Lester, 2008). Barney (1991) cited by Bakhru

and Gleadle (2010:14) argued that a resource must be valuable if it is to contribute to

competitive advantage. These valuable resources must be rare, imperfectly imitable

and non-substitutable. These resources and capabilities would enable the

organisation implementing a strategy to generate sustainable competitive advantage.

1.1 Background of Walmart

The announcement of Walmart (the world largest retailer) for placing a $4.25 billion

offer to buy up the shares of South African retailer Massmart Holdings Ltd.  (Wal-

Mart/Massmart merger) as a way of entering South Africa's market, was faced with

opposition from unions. Due to Walmart's global notorious disrespect for worker

rights, the firm's specific business model and practices, unions belief the world’s

largest retailer’s entry into South African retail sector will impact not only on

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Massmart's competitors in the retail space, which include SMMEs and informal

traders, but also reverberate up the supply chain. .

Massmart, headquartered in Johannesburg, is one of the largest distributors of consumer

goods on the African continent and is the leading African retailer of general merchandise,

home improvement equipment and supplies. Massmart is also the market-leading retailer of 

basic foods in the region. The company runs 290 stores in 13 countries in Africa, with the

vast majority of its stores in South Africa, and manages eight wholesale and retail chains

operating under a variety of different brand names. 

Walmart is well-known for its strong positive culture 

Sam Walton initiated Wal-Mart’s values of  dedication to customer service, treating

employees as partners, zealous pursuit of low costs, frugality, etc. These beliefs were set

decades ago, and subsequent managers have continued to develop them into patterns of 

shared values and behaviours that benefit the organisation. 

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Conclusion

The Wal-Mart footprint has created numerous challenges for competitors, particularly

small retailers whose managers are not well prepared when the big boxer opens a

store nearby.

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QUESTION 2

The popular image is that Wal-Mart comes to town and locally-owned retailers shrivel up

and die. This may happen, but it doesn't have to. Retailers who carefully analyze their own

strengths and weaknesses vis a vis Wal-Mart's may survive and prosper. Retail owners should

consider three strategies: a focus on low costs, a focus on differentiation, and a value

orientation. Sometimes these can be mixed-and-matched among a retailer's product lines.

"There's no substitute for knowing one's customers, markets, and resources as a foundation

for ... a successful strategy," according to the authors 

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Conclusion

Regardless of the option chosen, a successful strategy can only be developed when

a retailer has the appropriate knowledge and tools required to make the best choice

and tailor it specifically to the firm's unique array of strategic resources (Parnell and

Lester, 2008).

References

Bakhru and Gleadle, 2010. Competing with capabilities. Unit 3, Milton Keynes: Open

University

Lado, A., Boyd, N., and Wright, P. (1992). A competency-based model of sustainablecompetitive advantage: Toward a conceptual integration. Journal ofManagement, 18(1), 77-91.

Parnell, J.A and Lester, D.L. 2008. Competitive strategy and the Wal-Mart threat:positioning for survival and success [Online]. SAM Advanced ManagementJournal. Available from<http://webcache.googleusercontent.com/search?q=cache:I9HS5EaAjjsJ:www.allbusiness.com/company-activities-management/company-strategy/11416513-

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1.html+Tactics+by+South+African+local+retailers+to+defend+against+walmart+resources+and+capabilities&cd=10&hl=en&ct=clnk&gl=za>[Accessed on 19 September 2011]

Implementing Strategy Through Organizational Structure, Control, and CultureA. The first component of strategy implementation is organizational structure, which assigns

employees to specific tasks and specifies how those tasks link together to realize a competitive

advantage. The purpose of organizational structure is to coordinate and integrate the efforts of all

employees at the corporate, business, and functional levels, and across functions and business units,

so that they work together to help the firm achieve its strategies successfully.

B. Another component of implementation is a strategic control system, which provides the incentives

that motivate employees to help the firm achieve its strategies. Control systems also provide

performance feedback to managers so that corrective action can be taken if needed.

C. Organizational culture is another important component of strategy implementation, and it consists

of  the values, norms, beliefs, and attitudes that are shared by people in an organization. Culture

guides the way that employees interact with each other and with stakeholders outside theorganization, and thus will have an important impact on the implementation of an organization’s

strategies.