Miceal Porter of Walmart

Topics: Wal-Mart, Price, Marketing Pages: 3 (922 words) Published: March 28, 2013
* Supplier concentration-Since 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 supplier would create a scare tactic to the suppliers * EFFICENCY - is a key factor in maintaining Wal-Mart's low-price leadership among retailers. Their margins can be far lower than other retailers' because they have such an efficient supply chain. The company's cost of goods is 5% to 10% less than that of most of its competitors. * Importance of volume to suppliers- Suppliers work with Wal-mart because they know Wal-mart purchases in bulk and can move products. This gives Wal-mart a upper hand in its relationship with suppliers. * Power to influence -When Mr. Walton was told that products already were being offered at manufacturer’s cost, he encouraged vendors to improve efficiencies in manufacturing. Usually, they did and this helped Mr. Walton secure lower costs for his customers. * Wal-mart has enough power to influence how much suppliers will change their products for them. Levi jeans is an example. Wal-mart was able to offer customers Levis jeans for about $20 when in fact Levi traditionally did not offer jeans for less than $40 dollars, $30 at the least . * Shifting cost to suppliers- Walmart transfers packaging cost to suppliers

* Relative price performance of the substitutes -When it comes to this market, there are not many substitutes that offer convenience and low pricing. The customers has the choice of going to many specialty stores to get their desired products but are not going to find Wal-Mart’s low pricing. Other retailers offer products or services that easily can be substituted for Wal-mart’s products; however, the prices are usually not the same Wal-mart has to contend with the reality that other retailers can provide similar products. * Wal-mart has responded to some...
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