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MATILDA NYALUNGU STUDENT NUMBER: 72714948 STRATEGY FORMULATION: MBA 592-2 ASSIGNMENT 1 DUE DATE: 26 SEPTEMBER 2011 TUTOR:

ELVIS RABOHALE

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, organisations 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. (WalMart/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 worlds largest retailers entry into South African retail sector will impact not only on

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-Marts 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.

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.

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

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 sustainable competitive advantage: Toward a conceptual integration. Journal of Management, 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 Management Journal. Available from <http://webcache.googleusercontent.com/search?q=cache:I9HS5EaAjjsJ:ww w.allbusiness.com/company-activities-management/companystrategy/11416513-

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

Implementing Strategy Through Organizational Structure, Control, and Culture A. 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 the organization, and thus will have an important impact on the implementation of an organizations strategies.

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