Wal-Mart Stores in 2003 Identifying the ProblemWal-Mart stores, one of the most successful retail chains in the world, has gained a competitive advantage over its competitors. Thanks to its unique set of characteristics, such as its powerful IT system, its way of managing suppliers or its logistics system, Wal-Mart is able to respond quickly to changes in demand, keep costs low and meet its clients. Framework used in the analysis The analysis will be conducted using the value chain framework in order to analyze the situation and activities that Wal-Mart is currently facing. The different resources and capabilities will be organized and classified according to the value chain. Thus, it will be possible to discover the unique set of competitive advantage that allows Wal-Mart leadership in the retail industry.* DC: Distribution CenterPrimary ActivitiesDistribution is one of Wal-Mart's most important activities. The company decided to build its own warehouses to be able to purchase in large quantities at attractive prices. Wal-Mart's distribution centers are huge (one million square feet), highly automated, close to stores, and operate 24 hours a day. Goods are delivered to stores usually within 48 hours of ordering. The percentage of merchandise moving through distribution centers is higher for Wal-Mart (compared to competitors). These characteristics allow for high efficiency (Wal-Mart's inventory turnover is 7.6 compared to Kmart's 5.4 and Target's 6.1. Wal-Mart's inventory cost in 2003 represents only 2 -3% of revenues compared to 4-5% of other retailers). The Scan'n Pay system reduces the risk of unsold items for Wal-Mart and is an indication of its enormous bargaining power. Innovation has always played a central role in Wal-Mart's distribution... middle of the paper... where Wal-Mart pays its workers less than the industry average and its incentives are primarily for higher levels of management people. We think that could be one of the reasons why Wal-Mart achieves labor cost savings. While the salary may be low and various employee benefits may not be better than those of its competitor, Wal-Mart has put a lot of effort into offering training to benefit employees' future development. The IT system helps Wal-Mart achieve high efficiency. The IT system is used in many, if not all, of Wal-Mart's value chain activities and helps the company achieve operational efficiency and cost savings. For example, the RFID system reduces labor costs, and the IT system in operation greatly increases labor productivity; MCAPS creates great value for suppliers which in turn improves Wal-Mart's bargaining power with its suppliers. These types of examples are many.