Building Competitive Advantage with Interorganizational Information Systems in Value Chain: Evidence from Chain Retail Industry

As the largest private retailer in the world, Wal-Mart employs more than 1.6 million associates worldwide and operates more than 5,000 units all over the world. And, about 140 million customers visit Wal-Mart stores weekly. In 2004, Wal-Mart accomplished USD285.2 billion sales globally. How can Wal-Mart create so much value? How does it manage so many suppliers and customers successfully? This paper argued that its competitive advantages are based on its successful interorganizational information system (IOIS). According to Bakos and Treacy, and Bartlett and Ghoshal, a framework is introduced to show how a chain retailer builds competitive advantages from the perspective of value chain. By changing rules of interorganizational competition and sharing information, bargaining power is strengthened by IOIS's enforcing cooperation with suppliers and customers, comparative efficiency is gained by IOIS's reinforcing interorganizational relationships and facilitating interorganizational business process reengineering (IBPR), responsiveness is improved by enforcing cooperation with suppliers and customers. As a case study, Wal-Mart' value chain was analyzed according to above-mentioned framework. At last, we discuss how the chain retailers in China should develop more quickly in the future