30 wal marts biggest competitor in this segment is

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Wal-Marts biggest competitor in this segment is Target, which produces more upscale and chic products
than Wal-Mart at inexpensive prices.
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Wal-Mart is still cheaper than Target, but those customers who
want superior quality and are willing to pay slightly more for it might swap. Another substitute alternative
is online shopping. Here, customers can find cheap alternatives since online businesses do not need real
stores and on site staff, can save this money and therefore reduce product cost. The risk of developments
of substitute products is medium.
Bargaining Power of Suppliers
This force affects the level of competition in any industry, but as a general rule it can be said that
competition gets fiercer when:
- there are many suppliers
- there are only a few good substitute raw materials
- the costs of switching raw materials is especially costly
Usually, it helps both the business and the supplier when they enter into a closer relationship with
more visibility, an agreement on fair prices and better cooperation.
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The volume of Wal-Marts
orders is so large that supplier’s bargaining power is fairly low.
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Suppliers do not want to lose this
big customer and are willing to reduce product’s prices accordingly.
Wal-Mart sells mainly undifferentiated and standard products. For these, the costs of switching
raw materials are low, lowering the bargaining power of suppliers further. The bargaining power
of suppliers is low.
Bargaining Power of Customers
When there are many customers or when customers buy large volumes their bargaining power is high,
affecting the level of competition. Competition is particularly high in industries with little product
differentiation, which is the case with Wal-Mart.
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Therefore, Wal-Mart is forced to offer the lowest prices,
or the customer will go buy the product somewhere else. Besides that, the number of customers in this
industry is huge, increasing customer bargaining power further. Wal-Mart ’s customer bargaining power is
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Strategic Management, Concepts and Cases, Twelfth Edition, Fred R. David p. 120
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Walmart Stores, Inc.-2009, Amit J.Shah and Michael L. Monahanat, Frostburg State University p. 306
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Strategic Management, Concepts and Cases, Twelfth Edition, Fred R. David p. 121
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Strategic Management, Concepts and Cases, Twelfth Edition, Fred R. David p. 121

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high. To sum it up it can be concluded that Wal-Mart has Porter’s Five Forces under g ood control and
integrated it into its strategy.
There is not much rivalry to be expected since Wal-Marts biggest competitors are still much smaller than
itself and cannot beat its prices. Wal-Marts size also comes in handy when controlling new industry entries,
making it almost impossible for new entrants, unless they bring a lot of capital.