Essay About Wal-Mart And Large Number Of The Suppliers

Wal-Mart Swot
Essay Preview: Wal-Mart Swot
Report this essay
Wal-Mart
Industrial Analysis:
Wal-Mart competes primarily in the Retail (Department & Discount) industry.
It started out operating mainly as a discount retail department store offering a wide
variety of non-grocery items. However, their focus has turned more toward their
Supercenters which have the same as mentioned above but also includes a full line of
grocery products.
Some of Wal-Marts main competitors in the discount arena are K-mart and
Target. Since the introduction of the Supercenter and the Neighborhood Market it has
gone up against grocery chains like Albertsons and Kroger. Sams Club (a membership
only) warehouse which is owned and operated by Wal-Mart competes mostly with
Costco.
Five Forces Framework:
The Threat of New Entrants is probably not much of a concern for the worlds
largest retail chain only because they do have Economies of scale by keeping the cost of
products per unit down because they buy in such mass volumes. Wal-Mart has very good
product differentiation with some very large name brands. Access to distribution
channels is a thing of the past since a large number of the suppliers have warehouses
based in the same city as Wal-Marts distribution center.
The bargaining power of buyers; in this case Wal-Mart being the buyers, the
Pg.2
power for them is probably very much in their favor because of the shear quantity that
they purchase and the fact that there are only a couple of other major companies in the
retail sector buying at those capacities. In a lot of cases Wal-Mart is the largest purchaser
from some suppliers enabling it with great bargaining power.
The bargaining power of suppliers (the suppliers being those that sell to Wal-
Mart) in this particular case are not real good. The only way a supplier can get the upper
hand in this situation with Wal-Mart would be to have a product that was only offered by
that one supplier with no other substitutes available on the market or to have a very high
switching cost for Wal-Mart to have to pay.
Yes there will always be the threat of substitutes from Wal-Marts major
competitors and even from some smaller ones. However, they will most likely not be able
to keep the same pricing across the average of the overall bang for your buck theory that
todays society wants.
Wal-Mart will always see some shape or form of competitive rivalry mainly
because if not for the K-Marts and the Targets then for the small local merchant that
wants to get their foot in the door and try to make a profit.
I believe that the bargaining power of the buyer is the most important factor for
Wal-Mart for the future. Because of their size and the mass quantities of products that
they purchase they will be able to hold their suppliers at prices that they are willing to
buy at and to give the public what it thinks is a good deal and yet still make a profit at the
same time.
Pg.3
SWOT Analysis:
Some of Wal-Marts strengths are that it is the nations largest retailer who offers
a variety of products at a cheaper than most price. It uses sophisticated technology to
keep its suppliers in formed and up to date on the amount of merchandise that