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Wal-Mart - Adam Ibrahim MGT 699 Case Analyses Wal-Mart...

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Adam Ibrahim March 30, 2011 MGT 699, Case Analyses Wal-Mart Introduction: 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
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domestic markets, and has defined their niche quite efficiently. Sears and K-Mart seem to be drifting and have not challenged Wal-Mart in sometime. The threat of substitute products or services: There is a low threat of substitute products and services for various reasons. First, there are not many substitutes that can offer low pricing and ease. The consumer has the option of going to many specialty stores to get their desired products, but they are not going to find Wal-Mart’s low pricing along with many other items them may need that the other store may not offer. The bigger substitute in my opinion is online shopping. Online shopping proves as another threat
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