Wal-Mart's Corporate Identity Crisis
Although Michael Porter's Five Forces Model is the most well-known of strategic management theories, there is a reason that it is only one of four or five that I teach. That reason is that like all theories, there are issues of importance that it does not address either in part or in full. Point in case is the role of corporate identity, or the lack thereof, in determining firm performance. Whether or not one thinks the role is minimal or substantial, it is clear that this issue does not fall neatly within the purview of Buyers, Suppliers, Barriers to Entry, Substitutes, or Rivalry. One theory that does posit a central role for corporate identity is Gary Hamel's Business Concept Innovation framework, as outlined in Chapter 3 of his most interesting and overlooked book from 2000, Leading the Revolution.
The four major components of BCI are Core Strategy, Strategic Resources, Customer Interface, and Value Network. The Core Strategy is defined as "the essence of how the firm chooses to compete" and its three aspects are:
Mission: the overall objective of the strategy- what the business model is designed to accomplish or deliver.
Product/Market Scope: where the firm does and does not compete, i.e. which customers, geographies, and product segments.
Basis for Differentiation: how the firm competes and, in particular, how it competes differently than its competitors.
Though the words "corporate identity" are not mentioned explicitly, it is clear that these three factors are important, if not central to it. Below is an example from a recent article in The Street.com about the role of corporate identity in explaining how Wal-Mart lost its way:
The last few years have seen an endless stream of glowing reports on the success of Apple Computer's foray into the music industry. Products like the ipod have become both ubiquitous and emblematic of the perpetual-innovation machine that Apple appears to be- at least under Steve Jobs. Such unique and stylish products have also provided Apple with tremendous leverage over its value chain, allowing it even to win a protracted battle with retail behemoth Wal-Mart over the price at which ipods would be sold.