Introduction to Competitive Advantage in Information Systems

As you read, think about how using, protecting, and managing information and data could support an organization's competitive advantage. Conversely, failure to protect data, particularly personal information, could reduce or destroy any competitive advantage within a business. How does understanding customer information and data support current operations? How might it impact future operations?

Data Asset in Action: Technology and the Rise of Wal-Mart

Learning Objectives

  1. Understand how Wal-Mart has leveraged information technology to become the world's largest retailer.
  2. Be aware of the challenges that face Wal-Mart in the years ahead.

Wal-Mart demonstrates how a physical product retailer can create and leverage a data asset to achieve world-class supply chain efficiencies targeted primarily at driving down costs.

Wal-Mart isn't just the largest retailer in the world, over the past several years it has popped in and out of the top spot on the Fortune 500 list - meaning that the firm has had revenues greater than any firm in the United States. Wal-Mart is so big that in three months it sells more than a whole year's worth of sales at number two U.S. retailer, Home Depot. From 2006 through 2009, Wal-Mart has appeared as either number one or number two in the Fortune 100 rankings.

At that size, it's clear that Wal-Mart's key source of competitive advantage is scale. But firms don't turn into giants overnight. Wal-Mart grew in large part by leveraging information systems to an extent never before seen in the retail industry. Technology tightly coordinates the Wal-Mart value chain from tip to tail, while these systems also deliver a mineable data asset that's unmatched in U.S. retail. To get a sense of the firm's overall efficiencies, at the end of the prior decade a McKinsey study found that Wal-Mart was responsible for some 12 percent of the productivity gains in the entire U.S. economy. The firm's capacity as a systems innovator is so respected that many senior Wal-Mart IT executives have been snatched up for top roles at Dell, HP, Amazon, and Microsoft. And lest one think that innovation is the province of only those located in the technology hubs of Silicon Valley, Boston, and Seattle, remember that Wal-Mart is headquartered in Bentonville, Arkansas.