Walmart Porter's 5 Forces Analysis
• Potential Competitors: Medium pressure o Grocers could potentially enter into the retail side. o Entry barriers are relatively high, as Wal-Mart has an outstanding distribution systems, locations, brand name, and financial capital to fend off competitors. o Wal-mart often has an absolute cost advantage over other competitors.
• Rivalry Among Established Companies: Medium Pressure o Currently, 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. o Target has experienced tremendous growth in their domestic markets and have defined their niche quite effectively. o Sears and K-Mart seem to be drifting and have not challenged K-Mart in sometime. o Mature industry life cycle.
• The Bargaining Power of Buyers: Low pressure o The individual buyer has little to no pressure on Wal-Mart. o Consumer advocate groups have complained about Wal-Mart’s pricing techniques. o 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 o 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. o Wal-Mart could vertically integrate. o Wal-Mart does deal with some large suppliers like Proctor & Gamble, Coca-Cola who have more bargaining power than small suppliers.
• Substitute Products: Low pressure o When it comes to this market, there are not many substitutes that offer convenience and low pricing. o The customer 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. o Online shopping proves another alternative because it is so different and the
• Rivalry Among Established Companies: Medium Pressure o Currently, 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. o Target has experienced tremendous growth in their domestic markets and have defined their niche quite effectively. o Sears and K-Mart seem to be drifting and have not challenged K-Mart in sometime. o Mature industry life cycle.
• The Bargaining Power of Buyers: Low pressure o The individual buyer has little to no pressure on Wal-Mart. o Consumer advocate groups have complained about Wal-Mart’s pricing techniques. o 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 o 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. o Wal-Mart could vertically integrate. o Wal-Mart does deal with some large suppliers like Proctor & Gamble, Coca-Cola who have more bargaining power than small suppliers.
• Substitute Products: Low pressure o When it comes to this market, there are not many substitutes that offer convenience and low pricing. o The customer 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. o Online shopping proves another alternative because it is so different and the