Amazon Vs Walmart

What concepts in the chapter are illustrated in this case? 

Business Value Chain Model

  • series of activities
  • activities where competitive strategies can be applied
  • primary vs secondary

Porters competitive forces model view of firm, competitors and environment

  • Traditional Competitors
  • New Market Entrants
  • Substitute products and services
  • Customers
  • Suppliers

Analyze Amazon and using the value chain and competitive forces model

Secondary Activity Administrative, finance infrastructure Legal, accounting, financial management HR Management Personnel, lay recruitment, training, staff planning Product and technology development Product and process design, production engineering, market testing, R&D Procurement Supplier management, funding, subcontracting, specialization

Primary Activities Inbound Logistics Quality control, receiving, raw materials control, supply schedules Operation Manufacturing, packaging, production control, quality control, maintenance Outbound Logistics Finished goods, Order handling, Dispatch, delivery, invoicing Sales and Marketing Customer management, order taking, promotion, sales analysis, market research Servicing Warranty, maintenance, education and training, upgrades Value Chain Competitive advantages

  • Strong technological infrastructure with a single platform
  • High investments in technology development (Kindle) to leverage digital products
  • Great product forecasting system
  • Print on demand
  • Constantly soliciting suggestions on new products
  • East and fast payment system
  • 24 hour operations
  • Free returns within 30 days

Infrastructure Look ahead and strategize, plan, organize determine how to deal with threats and competitors HR Hire employees worldwide, coordinate  benefits, design training programs Real Estate Find and open new store locations worldwide and locate best locations for warehouses Technology and IT Systems Integrate prices, costs, vendors, and sales to minimize costs and maximize profits worldwide Primary Activities Product Sourcing Look for new products and suppliers Purchasing and Inspection

Quality Control Logistics Bringing product from warehouses to stores Stocking shelves Marketing Reaching the target audience effectively Inventory Management POS System to communicate with suppliers and logistics, and purchasing and inspection


Competitive Forces Example Supplier Power Wal mart is a key account for many suppliers therefore Wal-Mart possesses power over suppliers Threat of Substitutes Price is a competitive advantage  Buyer Power Weak – large target audience that has demand for low prices Threat of New Entrants Economies of scale limits the threat of new  entrants. Large capital investment required to develop competitive value chain like Wal-Mart 


Activity Supporting Computers, software, systems Wal-Mart Stores Vendors supplying goods for sale Integrate suppliers through IT and give competitive pricing.

Develop long lasting relationship Engineering construction companies Construction of brick and mortar stores Advertising agencies Wal-Mart Corporate marketing team Data Mining Collection and usage of customer purchase behaviour Internal Value Chain Aggressive with technology

  • Strong supply chain management system
  • Barcodes, POS, RFID, inventory


  • Speed delivery, improve security, reduce costs Procurement Centers Bentonville, Arkansas
  • Shenzhen, China
  • suppliers have satellite offices next door for centralized management

Customer Support

  • Delivering customer experience – greeting customers, finding merchandise, returns Competitive Advantages of Wal-Mart
  • Distribution capabilities
  • Partnership relations with suppliers
  • Data mining
  • Everyday Low Prices

What management, organization and technology factors have contributed to the success of both Wal-Mart and Amazon? Wal Mart Amazon


  • Cost management strategy
  • Lowest Cost – ability to provide EDLP


  • Growth Management Strategy
  • People management strategy – fair compensation and respect in exchange for efficiency and productivity – career development
  • Co-Branding, cross promotion, high advertising Technology
  • Information systems have allowed for  better control of logistics operations and customer service Inventory replenishment
  • Efficient website, ease of use – search
  • Prompt shipping
  • Customer relations
  • Innovative technology – drones to deliver product
  • Customer profiling – data mining
  • Compare Wal-Mart's and Amazon's e-commerce business models. Which is stronger?

Explain your answer Wal-Mart

  • e-procurement, adjustment of internal processes
  • Pull model – customer demand drives suppliers
  • Inventory control – determined by purchasing trends shared with suppliers, to allow for quick response
  • Decentralization of the procurement process – staff in store can order stock electronically, requiring rapid response from suppliers
  • Overall – rapid replenishment system, accurate purchase forecasting
  • Use of Electronic Delivery of Information (EDI)

Amazon Wide range of products available that drives growth in both B2B and B2C Amazon Market place – merchants list products that customers can purchase using Amazons ecommerce platform 1-click ordering, customer viewing, recently viewed products, keyword auto-fill, your personalized store, items to consider Amazons Associate Program – anyone with a website can post links to and earn money 

Take advantage of Amazon Web Services – lets people use Amazons utilities for their own urpose Amazon Web Services API (Application programming interface) – lets developers access Amazon technology infrastructure to build own applications for own web sites Associate gets a small commission on each sale Still incorporating Web 1.0 – need to use a mouse click to view a product ass opposed to being able to see product details with a mouse roll over Where would you prefer to make your internet purchase? Amazon or