WuMart-case

Yu ChaoCéline Delacour

Katerina GorokhovaJustinas Legas

Competitive Advantage

Competitive Advantage at Wumart

Resource or capability

Centralised procurement,distribution and logisticssystemLocal market leader

Bar –code system

Joint-venture contracts

Competitive Advantage in China

Better economies of scale than similar competitors

Better bargaining power toward suppliers

Efficient system to trackInventory

Opportunity to access prime locations

Competitive Advantage at Wumart

Resource or capability

Strong local brand

Support from government and their network

Competitive Advantage in China

Well-known Chinese chain –can be expanded further

More possibilities to expandbusiness and allocateresources appropriately

Competitively superior resources?

• Bargaining power towards suppliers – Every Day Low Prices strategy

Sustainability of WuMart’s competitive advantage

Inimitable resources(difficult or impossible to copy)

Customer loyalty

Brand name

Relation-ship with govern-

ment

Knowledge of local customers

Geogra-phical concentr-ation

Sustainability of WuMart’s competitive advantage

Weak substitutability(difficult or impossible to substitute)

• “Everyday low prices” pricing strategy

• Management information and Enterprise resource planning systems

Sustainability(speed of resource depreciation)

• Strong corporate culture

Is Competitive Advantage Transferable?

Advantage Transferable to other countries (developed )

Transferable to other countries (emerging market)

Transferable to other retail sectors/formats

Market positioning Questionable1 Questionable1 Yes

Low-cost expansion No No No

Multiple store formats

No Yes Yes

Commitment to IT No Yes Yes

Outsourcing No Yes No

Brand image No No Yes

Strong corporate culture

Yes Yes Yes

1 http://www.euromonitor.com/Global_consumers_are_edgy_about_the_Made_in_China_brand

How Transferable is Competitive Advantage?

WuMart’s capabilities are:– Localized to Chinese market– Hard to transfer to other emerging markets– Non-transferable to developed markets

Hard to leverage same resources and capabilities when expanding

Sustain performance

•Hold the position of local leader

•Build long term relationship to suppliers

Price competition

•Good at finding new goods distribution channels

•Rapid respond to dynamic market

Variety competition

•Build up brand can make a deep impression

•Combine the brand(image) with core company culture

Brand competition

•Have a good ability of store’s location choice in city

•“New City” development

Location Choice

•Make the best use of IT

•Build a system of standards

Management

Questions?