Wal Mart Essay

Submitted By broncodmb
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Porters Five Forces
Threat of new entrants: Low
The retail industry was protected by high barriers to entry, when a competitor wants to enter the market they require high startup capital to buy in bulk which would require economies of scale usually. Also the already existing companies sell their product at low prices which is hard to duplicate at the beginning.
Threat of substitutes: Medium
All the products that they carried were relatively similar to that of other retailers and they didn’t differentiate their product catalog much, the mainly focused on their low cost strategy. Also there may not be many stores in the town to choose from.
Power of Buyers: Medium
The buyers had low power because in a lot of cases the consumers didn’t have many choices on where to go shopping and the possibility of them shopping somewhere else is possible but in places like small rural towns they might actually travel a significant distance to go to one of the supermarkets.
Power of suppliers: High
There was not a large amount of suppliers around this time which gave the suppliers a lot of power over retailers. Because of this they need to cooperate and keep good relations with the supplier as well as keep competitive elements to stay in business. Also switching costs were high when switching suppliers.
Intensity of Rivalry: High
The industry contains numerous small competitors such as Target and K-Mart. There is a low industry growth so the degree of rivalry is increased as well as the lack of differentiation between products which brings little separation between competitors.

In my opinion I believe that the market isn’t as attractive as I at first thought it would be and I might have been hesitant when entering this industry. By solely looking at the five forces and without any knowledge of Wal-Mart’s future I would suggest that Sam Walton shouldn’t enter because he would probably be unsuccessful.

Sustainable Competitive Advantage 1. Customers perceive a difference in important attributes between a firm & it's competitors
To consumers price is one of the most important attributes when buying products at retailers and Walmart has set up a model that emphasizes its prices and how it separates itself for its competitors. 2. That difference is the direct consequence of a capability gap between a firm & it's competitors
Not only does Walmart have economies to scale but their supply chain is very efficient and more advanced than that of most of their consumers. 3. The difference and the capability gap are enduring
This one is a bit harder to
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