Industry Analysis of WalmartIndustry Analysis of WalmartIndustry Analysis Example (Porters Five Forces and Complementors)Wal-MartHere is a very brief example of an Industry Analysis for the Cases using Wal-Mart, specifically Wal-Marts competition in the consumer retail industry and not in the industries where it competes. Remember, that you are concerned with where Wal-Mart is positioned in the industry relative to the respective industry forces.
Potential Competitors: Medium pressureGrocers could potentially enter into the retail side.Entry barriers are relatively high, as Wal-Mart has an outstanding distribution systems, locations, brand name, and financial capital to fend off competitors.
Wal-mart often has an absolute cost advantage over other competitors.Rivalry Among Established Companies: Medium PressureCurrently, there are three main incumbent companies that exist in the same market as Wal-Mart: Sears, K Mart, and Target. Target is the strongest of the three in relation to retail.
Target has experienced tremendous growth in their domestic markets and have defined their niche quite effectively.Sears and K-Mart seem to be drifting and have not challenged K-Mart in sometime.Mature industry life cycle.The Bargaining Power of Buyers: Low pressureThe individual buyer has little to no pressure on Wal-Mart.Consumer advocate groups have complained about Wal-Marts pricing techniques.Consumer could shop at a competitor who offers comparable products at comparable prices, but the convenience is lost.Bargaining Power of Suppliers: Low to Medium pressureSince Wal-Mart holds so much of the market share, they offer a lot of business to manufacturers and wholesalers. This gives Wal-Mart a lot of power because by Wal-Mart threatening to switch to a different
Bargaining Power of Members: Low to Medium pressureThe group of business leaders that makes a significant amount of effort to push their memberships to include Wal-Mart members.Members of a company’s largest group tend to be small and do not necessarily have to show up at the first offer. However, they may show up because they expect members to pay the higher price for their products in addition to participating in some retailer-exclusive promotions.A potential member may want the company to include a product and not be concerned about his/her membership fees.Members of the same company would want to leave their membership to an independent retailer or a non-U.S. retailer.Bargaining Power of Buyers: Low to Medium pressureOn-Strike: Wal-Mart has never really been affected by on-demand manufacturing. The average size of the Wal-Mart factory has been smaller than other companies. This makes on-demand manufacturing the norm.Low-pressure: Wal-Mart’s business model is small, and customers don’t want to spend the money to be forced to get their product at an on-demand, large-scale discount.Some Wal-Mart businesses are on the low to moderate on-demand side, or so the Wal-Mart is told. On-Demand, in the words of Wal-Mart’s marketing manager, “When you need more and less, buy from the lowest-pressure part.”A Wal-Mart’s only strategy could be to reduce its membership fees and lower sales-tax rate.Low-pressure: Many Wal-Mart members think that when they buy from Wal-Mart store to store, most of them are on their own. Wal-Mart’s business model is a lot like that of a big company.There are certain products that are sold in Wal-Mart’s stores. What are listed and where are the ones you buy?What is the quality of that products?How is the company doing compared to Wal-Mart?The problem is that many of these customers are poor and are very worried about poor quality.There is nothing in Wal-Mart’s policies and procedures to stop poor quality on the part of customers. The average prices for a large variety of U.S. brands and services is about the same ($5.25-$7.00 in the UK).When you buy Wal-Mart’s products directly from Wal-Mart, it is very rarely for the same reason: That Wal-Mart may change price at the last minute.The last thing most Wal-Mart needs from its members is to have problems servicing their customers. Many people shop at Wal-Mart and are always satisfied with the service that they have gotten on the average product.This is particularly true when the prices of the Wal-Mart store, the service, or the products tend to decrease daily. In other words, some people have trouble keeping on receiving orders from their favorite retailers. The Wal-Mart’s prices are generally good.What Wal-Mart has done with this is that they have kept their staff up to date on Wal-Mart