Case Analysis – 1
University of New Brunswick – Saint John
9th April, 2015
Wal-Mart, Kmart, Target, and Costco are few retail stores that dominate the retail industry. Wal-Mart is a well-known American company, which was founded by Sam Walton and his brother in the year 1962. It is the world 's largest retailer, third biggest public company, and largest private employer. Wal-Mart comprises of discount stores, warehouse outlets – Sam’s and Bud’s, supercenters, and hypermarkets. Wal-Mart sells general merchandise, such as groceries, electronic items - microwaves, refrigerators, and printers, kid toys and clothing, and ladies’ and gents’ dresses and…show more content… But, currently their net sales growth is $68 billion as per the annual report of Wal-Mart of 2014. Porter’s Five Forces Model
The Porter’s Five Forces Model is as follows: Bargaining power of suppliers
The bargaining power of suppliers is high, when there are few substitutes available in the market, suppliers provide a unique product, and there is high supplier switching costs. According to the case, Wal-Mart is a retail store that holds a huge market share, and the suppliers are well aware of this fact. So, the bargaining power of suppliers is low in case of Wal-Mart.
Bargaining power of buyers
A retail store has to differentiate its products from its competitors in order to attract customers; otherwise it will lose them because they are usually price sensitive. Customers, first compare the price of the product they want to buy among different suppliers (in this case it will be Wal-Mart and its competitors, such as Target, Costco, and Kmart), then purchase materials from the one who sell them products at a lower or discounted price. This, in turn, increases the competition among the retail stores. The ‘Everyday Low Price’ (EDLP) strategy distinguished Wal-Mart from its competitors. It sells groceries, and other products at a cheaper price compared to other retail stores, which attracted a broad base of customers. So, the bargaining power of buyers is low.
Threats of new