1) Choose an industry of your interest. Apply the V Forces, Porter model to it and answer then to the Question: is an attractive industry according to Porter’s approach?
Ans: 1: Wal-Mart as the company to see the implications of Porters V forces in the Retail Industry. Presented below is the model that is generally used for ref:
We analyze Wal-Mart’s case based on Porters V Forces model and determine below points:
* Potential Competitors: Medium pressure
* 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 Pressure
* Currently, there are three main 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. * Sears and K-Mart seem to be drifting and have not challenged K-Mart in sometime.
* The Bargaining Power of Buyers: Low pressure
* The individual buyer has little to no pressure on Wal-Mart. * Consumer advocate groups have complained about Wal-Mart’s 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 pressure
* 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. * Wal-Mart could vertically integrate.
* Wal-Mart does deal with some large suppliers like Proctor & Gamble, Coca-Cola who has more bargaining power than small suppliers.
* Substitute Products: Low pressure
* When it comes to this market, there are...
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