case-19-wal-mart.docx - III Situational Analysis Threat of New Entrants Threat of Substitutes Competitive Rivalry Bargaining Power of Suppliers

case-19-wal-mart.docx - III Situational Analysis Threat of...

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III. Situational AnalysisThreat of New EntrantsLOWThreat of SubstitutesLOWCompetitive RivalryMODERATEBargaining Power of SuppliersLOWBargaining Power of BuyersLOWA.The EnvironmentThreat of New Entrants-Threat of new entrants is low. Wal-Mart has been an established, well-known and a leading company in the retail industry which makes the brand an invaluable asset that can create a barrier for the new entrants. It contains the “Wal-Mart effect” which quickly shuts off competitors around its retail stores’ arras. The new entrants also need a high capital to enter into the industry, should establish a vast supply chain and must create a unique brand differentiation.Threat of Substitutes-The threat of substitutes is low. This is because Wal-Mart offers a very wide range of merchandise such as, but not limited to apparel, automotive products, health and beauty aids, home furnishings, electronics, hardware, toys, sporting goods, lawn andgarden items pet supplies, jewelries, housewares, prescription drugs and grocery items. Basically, it offers almost, if not, all items that is needed by the consumer in his/her everyday life. Competitive Rivalry-There is a moderate competitive rivalry in the furniture industry. Wal-Mart has faced an intense competition in the retail industry, such as Kmart, Costco and Target who offers similar products to the customer but doesn’t offer the same pricing strategy of Walmart.Bargaining Power of Suppliers-The bargaining power of suppliers is low. Wal-Mart has a network of 61,000 U.S suppliers and some 5,000 suppliers in 40 countries, so Wal-Mart has more power to control its connections and business with its suppliers. 1
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Bargaining Power of Buyers-The bargaining power of buyers is low, since Wal-Mart is the only retail store that offers almost all types of products at very low prices. The everyday low pricing strategy is made possible because of its low-cost and effective operations. B.The Industry Businesses under the grocery and retailing industry sells goods and services to theconsumers. There are department stores, discount stores, specialty stores, super stores andseasonal retailers which differentiate itself from the competition and strategy that the companyuses to sell the products being offered and the service being applied. Stores such as Wal-Mart,Carrefour and Costco who were larger retailers have managed to set up huge supply ordistribution channels, inventory management systems, financing pacts and wide scalemarketing plans.On other hand, discount retailing industry was an intensely competitivebusiness. Competition among discount retailers centered around pricing, store location,variations in store format, merchandise mix, store size, shopping atmosphere and image withshoppers. The two (2) largest competitors in the warehouse club segment were Costcowholesale and Sam’s Club. Internationally, Wal-Mart’s biggest competitor was Carrefour. Formore ethical and environmentally friendly sourcing in the retail industry, Wal-Mart has an
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