March 30, 2011
MGT 699, Case Analyses
Though Wal-Mart's low-wage, low-price, globally sourced model is not exactly unique in
the retail industry, Sam Walton’s Bentonville based company has become the most dominant
retailer in the world. After saying this, Wal-Mart is much more than just the world's largest
retailer. It is a cultural phenomenon, an economic force, and a hotbed for controversy. It all
started with a simple viewpoint from founder Sam Walton: Offer shoppers a lower price than
they will get anywhere else. To be more specific the central goal is to keep the retail prices low --
and the company has been very successful at this. Experts estimate that Wal-Mart saves shoppers
at least 15 percent on a typical cart of groceries.
This uncomplicated strategy has shaped Wal-
Mart's beliefs and driven the company's growth. As the largest retailer on Earth, Wal-Mart is
most conspicuously unique in terms of its size.
To give an idea how vast Wal-Mart has become, there are now roughly 7590 stores
visited by well over 100 million people each week, Wal-Mart is a convenient shopping magnet
for American consumers. Reporting $401 billion in revenues for the 2009 fiscal year, Wal-Mart
ranks as the world's largest corporation by sales.
After becoming a dominant player in the United States, Wal-Mart decided to extend into
international territories. They extended into Puerto Rico, Mexico, U.K., Japan, Canada, China,
Brazil, El Salvador, Honduras, Chile, Argentina, South Korea, and Germany.
Porters Five Forces Model:
The threat of the entry of new competitors:
The threat of new competitors is medium, only due to Wal-Mart’s ability to control cost
advantage over the rest of the market. The threat comes from grocers potentially entering into the
retail side of things. Entry barriers would be relatively high since it’s not a niche market, but
Wal-Mart has outstanding locations, distribution systems, brand name, and financial capital to
fend off competitors.
The intensity of competitive rivalry:
There is medium pressure in this category. Currently, there are three main incumbent
corporations that are present in the same market as Wal-Mart: Target, Sears, and K Mart. Target
is the strongest of the three in terms of retail. Target has experienced remarkable growth in their