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Wal-Mart’s Core Competencies
Definition of
'Core
Competency'
A narrowly defined
field or task at
which a company
excels. A firm's
core competencies
are difficult for its
competitors to
mimic, allowing the
company to
differentiate itself.
Most core
competencies will
be applicable to a
wide range of
business activities,
transcending
product and market
borders.
Investopedia explains 'Core
Competency'
A core competency for a firm is whatever it does
best. For example, Wal-Mart focuses on lowering
its operating costs. The cost advantage that Wal-
Mart has created for itself has allowed the retailer
to price goods lower than most competitors. The
core competency in this case is derived from the
company's ability to generate large sales volume,
allowing the company to remain profitable with
low profit margin.

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Wal-Mart is a company that has taken its core competencies, which
are the capabilities the firm emphasizes and performs especially
well while pursuing its vision and turned them into competitive
advantages. Core competencies must satisfy four characteristics in
order to be a competitive advantage. These advantages, according
to our text, include:
*valuable,
*rare,
*difficult to imitate,
*non-substitutable.
Wal-Mart’s Core Competencies:
1. Culture- One core competency Wal-Mart has is its culture.
Wal-Mart’s employees are hardworking, efficient, and process
oriented. In the video “The Age of Wal-Mart” it pointed out that
Sam Walton, founder of Wal-Mart, called his employees associates
and treated them as partners. He wanted their input and ideas on
how to make the company better. Also, no matter what Wal-Mart
you go into across the country, Walton wanted you to know you will
ALWAYS receive low prices, excellent customer service, and feel at
home. From door greeters to big charity contributions, this type of
culture is rare and difficult for competitors to imitate.
2. Low Cost Operations- As the video pointed out, Sears was a
leading retailer during the 70’s, but was greatly affected by the
recession. They targeted middle class families, expanded their
overhead, and developed in larger cities. Wal-Mart focused on

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small towns and lower overhead during this time. As the economy
worsened, people began looking for lower prices and moving to
smaller towns and suburbs. Today Wal-Mart can generate big
sales volume which allows the company to gain profits with low
profit margin giving it an advantage over its competitors.
3. Distribution- Wal-Mart operates an unrivaled global network of
146 distribution centers. Because of this, the trickle-down effect
happens. Trucks do not have to travel long distances to make
deliveries which helps to reduce lead times for the...
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You see it everywhere in magazine articles and advertisements, but what exactly is a
core competence? At its simplest, a core competence is a unique capability that
affords some type of competitive advantage. It corresponds to a business process, and
involves underlying skills, functions, systems and knowledge. To determine if
something is of core competence, one must ask, "Does this 'thing' give the company a
unique advantage over its competitors and help make the company profitable"?
Capabilities, on the other hand, refer to a firm s skill at effectively coordinating its
resources. In other words, resources are the source of a firm's capability; and
capabilities refer to a firm s ability to bring these resources together and to deploy
them advantageously. Every organization possesses many capabilities that enable it to
perform the activities necessary to provide its products or services. Some of these
activities may simply be performed adequately, while others may actually be
performed rather poorly. However, successful organizations conceivably possess
certain capabilities allowing them to perform key activities exceptionally well.
Moreover, these are the distinctive capabilities that support a market position that is
valuable and difficult to imitate.
At Wal-Mart, its major competitive core competence is its superior logistics system.
Wal-Mart is one of the biggest global retailers in the world, operating in several
different countries around the world, with multiple formats, all tied together by a
state-of-the-art retail distribution system known as a Retail Link. No other mass
retailer or trading community - domestic, foreign, or global - has developed a system
even close to Wal-Mart's capabilities in supply chain and distribution management

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and optimization. However, the possibility of competitors having allocated significant
resources to developing state-of-the-art data warehouses that, like Wal-Mart's, goes
beyond collecting point-of-sale data to drive replenishment, exist. In looking at Wal-
Mart more closely...
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Campbell Soup Company has a capability set that centers on convenience , unsurprisingly,
considering its business focus is convenience food. That focus is realized through
capabilities in research, customer relationship management, and sales force management,
among other capabilities.
For example, to make it easy for supermarket shoppers to buy Campbell soups, the company
has created an in-store display system that shelves each variety of soup in rows on a sloped
rack. When a shopper takes one unit, another slides handily to the front. While seemingly
simple, the system actually was the result of a series of insights into both consumer and
retailer needs. Campbell consumer researchers discovered that a shopper who wants to buy
low-salt cream of mushroom soup and doesn’t see it on the shelf will hunt behind the cream
of broccoli and the chicken noodle, shuffle the adjacent rows, and leave frustrated if the
desired product can’t be found. The disarray creates difficulty — and cost — for the retailer,
who must restore order to the shelves. Campbell’s solution solved the problem for both the
retailer and the consumer. People see what they’re looking for immediately or they
immediately see that it’s out of stock. Because there’s no more rooting around at the back of
deep shelves, the retailer keeps a tidy display and has a reliable indicator of stock level.
Getting this concept to work also required additional training of the retail force and a
dedicated effort to get retailers’ “buy-in” on the new shelf.
…Capability plans should be unique,
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A core competency is defined as something unique that an
organization has, or as something unique it can do. A company that
develops a unique core competency can create long lasting
competitive advantage.

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A core competency will typically meet all rules on the following
checklist:
 it provides benefit to the customer
 it is difficult to imitate
 it can be leveraged widely to create many products (or operate
in many markets)
 it will uniquely identify the organization
 it will be difficult to pin down, because it seems to be a
combination of things such as technology, process, and know-
how.
Now that we know what core competencies are, and we’re armed
with a checklist to check for one, let’s look at some core
competency examples…
Core Competency Example 1: Apple
The core competency of Apple can be said to be “making user
friendly user interfaces and design”. Let’s examine this statement
against our checklist:
Criteria Yes/No
Customer benefit? Yes. The customer clearly benefits from great user interfaces
Difficult to imitate? Yes. Companies have been trying for years and not yet succeeded.
Can be leveraged?
Yes. This core competency has been rolled out to the iPod, the
iPhone, and most recently, the iPad.
Uniquely identifies the
organization?
Yes
Difficult to pin down? Yes – it’s not just design, but marketing, software, hardware etc

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Core Competency Example 2: Walmart
The core competency of Walmart can be said to be “Groceries at a
low cost”. Let’s examine this statement against our checklist:
Criteria Yes/No
Customer benefit? Yes. The customer gets their goods cheaper than anywhere else
Difficult to imitate?
Yes. A company would require huge scale to replicate, and that
is obviously not an easy thing to achieve.
Can be leveraged? Yes. Walmart sells all kinds of goods using the same model
Uniquely identifies the
organization?
Yes, I think in the US at least, most consumers would identify
Walmart as being amongst the cheapest in this space.
Difficult to pin down?
Yes – it’s scale, but also supply chain management, and high
inventory turnover etc.
Core Competency Example 1: Dell
The core competency of Dell can be said to be “custom made PC
direct from manufacturer at a low cost”. Let’s examine this
statement against our checklist:
Criteria Yes/No
Customer benefit? Yes. The customer gets a PC at a inexpensive price point.
Difficult to imitate? Marginal – and this could be Dell’s downfall
Can be leveraged? Yes. They have rolled the model out to laptops, printers etc
Uniquely identifies
the organization?
Yes. Dell would certainly be identified by consumers as one of the most
affordable in this space.
Difficult to pin down?
Yes (but probably the easiest to identify of all 3 examples) – it’s a
combination of just in time manufacturing,low cost sales channels
(Internet), outsourced R&D etc.
Summary
A core competency is defined as something unique that an
organization has, or as something unique it can do. A company that
develops a unique core competency can create a long lasting

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competitive advantage. If you are working in a project or program
management environment then you should understand how what
you’re working on leverages or adds to your organization’s core
competencies. This will enable you to understand how the project
outputs will compete in ….
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Let me cite Wal-Mart as an example. Their core competency is 'logistics'. They
know how to buy train cars full of product and move it to the locations where it
is needed. They can even intercept a shipment in progress to reroute it where a
shortage has occurred.
If you doubt that logistics is their core competency - a few years ago Amazon
attempted to hire one of Wal-Mart's executives. Wal-Mart sued. They declared
their logistics strategy as a trade secret and sued to make sure that this
employee didn't reveal any Wal-Mart secrets. They understand the value of their
core competency.
Everyone wants to run their company effectively and efficiently. If you can
make your 'mission critical process' more efficient and more effective, then you
can expect lower costs, increased revenues, and improved customer
relationships. Make BPM your core competence.
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