Latecomer’s advantage occurs when a firm creates a new advantage and captures a strong market position previously dominated by an incumbent. According to research, a firm needs to adopt three strategies in order to utilize latecomer’s advantage. The firm should first introduce a grabber that reflects a new value preposition that will succeed in all market segments. In addition, it should consider building a strong holder infrastructure that will help the new value preposition to succeed in the market. The last key step that a firm should do is to benefit from latecomer’s advantage is to adopt techniques that will ensure that customers switch their preferences. This will help these customers to consider the new value preposition introduced by the firm as a critical factor while making future decisions on purchasing. Several companies have succeeded by utilizing the latecomers approach. Such companies include Honda, Dell and Wall-Mart. This essay focuses on how Wall-Mart utilized latecomer’s advantage to become largest chain store in America.
The success of Wal-Mart in becoming the largest chain store in the United States is a good example of a company that benefited from latecomer’s advantage. Before Wal-Mart became a successful company, the largest chain store in the United States was Sears. It had well established supply chains making it possible for them to acquire supplies from consumers at a cheap price. Kmart also began its operations within the same period that Wal-Mart started. Kmart utilized mass merchandizing to offer all its consumers quality products using brands that it stocked in its shelves. Consumers loved to purchase from its stores since they would get a wide variety of goods. Shears was also successful since it had a wide distribution network. It had well established stores in the big cities of the United States. However, Wal-Mart was able to utilize the latecomer’s advantage to overtake Sears and become the largest chain store in the United States.
Sears was the largest retailer in the United States before 1980. It was established in 1925 and by 1950 it had very many urban departmental stores. Between 1960s and 1970s, this company started expanding to suburban markets of the United States. However, this company conducted different business operations since it believed that it was a form of diversifying its portfolio. It engaged in insurance under Allstate Insurance Company. When Wal-Mart began its retail store operations in 1962, it focused on offering goods to its retail store consumers at low prices. Sam Walton, founder of Wal-Mart, believed that the only way that this company could succeed was if it focused on offering low prices to wide range of consumer items that are stocked on its shelves. Consumers started to prefer purchasing items from its stores since they were cheaper compared to the products offered by the other retail stores. In addition, it decided to build its own distribution network instead of relying on external suppliers for the delivery of its products. In contrast, Sears depended on wholesalers for its supplies. Wal-Mart was therefore able to save many costs that it would have incurred if it relied on wholesalers.
The case of Wal-Mart and Honda are similar in several ways. Both of them utilized latecomer’s advantage to become market leaders. When Honda was entering the automobile market, it used the grabber “clean air” to win its consumers. In contrast, Wal-Mart used the grabber “everyday low prices”. Honda was able to succeed in a market dominated by big players such as Toyota and Nissan. Although these companies had established distribution networks and big production facilities, Honda was able to take advantage of its reliability and quality products as its holder. Sears mainly controlled the retail market that Wal-Mart ventured. However, Wal-Mart was able to win consumers since it offered goods at low prices to its consumers and emphasized on quality customer service as its holder.
The future of Wal-Mart looks positive based on the history of Honda. Honda was able to expand from a motorcycle manufacturing company to a company exporting automobiles to European countries and the United States. Moreover, it was able to build its brand in the United States despite the fact that the consumers from there did not like goods coming from Japan. Consumers in the United States love Wal-Mart since this company always concentrates on maximizing their satisfaction. Wal-Mart’s suppliers also love the management of this company since it includes them in its decision-making. It shows that Wal-Mart has a high chance of succeeding since it practices corporate social responsibility to its stakeholders. Wal-Mart will continue to grow because consumers love its values and brand. Due to this, it will manage to expand in many countries across the globe. Since most of its suppliers love its terms of purchase, Wal-Mart will have guaranteed supplies which will further make its future positive. Honda’s case makes it clear that only innovative companies are able to succeed in their respective markets. In addition, innovative companies should try to understand grabber-holder dynamics if they want to succeed in new markets.