Walmart Porter's 5 Forces Analysis

Topics: Kmart, Wal-Mart, Department store Pages: 2 (416 words) Published: April 18, 2008
Potential Competitors: Medium pressure
oGrocers could potentially enter into the retail side.
oEntry barriers are relatively high, as Wal-Mart has an outstanding distribution systems, locations, brand name, and financial capital to fend off competitors. oWal-mart often has an absolute cost advantage over other competitors.

Rivalry Among Established Companies: Medium Pressure
oCurrently, 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. oTarget has experienced tremendous growth in their domestic markets and have defined their niche quite effectively. oSears and K-Mart seem to be drifting and have not challenged K-Mart in sometime. oMature industry life cycle.

The Bargaining Power of Buyers: Low pressure
oThe individual buyer has little to no pressure on Wal-Mart. oConsumer advocate groups have complained about Wal-Mart’s pricing techniques. oConsumer 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
oSince 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. oWal-Mart could vertically integrate.

oWal-Mart does deal with some large suppliers like Proctor & Gamble, Coca-Cola who have more bargaining power than small suppliers.

Substitute Products: Low pressure
oWhen it comes to this market, there are not many substitutes that offer convenience and low pricing. oThe 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. oOnline shopping proves another alternative because it is so different and the customer...
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