Critical Analysis of Internal Resources and External Environment of Wal-Mart

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Critical Analysis of Internal Resources of Wal-Mart and External Environment.

External Environment
We have used Porter’s five forces on the discount retail industry to understand external environment(Porter, Michael E., Competitive Strategy(1988).
1. Threat of new entrants: Low

a. Highly price competitive nature of the discount retail industry with already established players vying for market shares forbids new entrants. High entry barriers due to huge capital investments and need for economics of scale.
b. Incumbents already have strong and trusted supplier network which couldn’t be replicated by new entrants
c. Wal-Mart by its scale of operations drive cost and price lower which can’t be replicated by new entrants
d. Wal-Mart possess
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Price-sensitive buyers coupled with low or nil switching cost provides high bargaining power of the buyers.
b. Brand differentiation and product differentiation in the consumer durable industry is les leading to convenient shopping.
Internal Resources
Below is an analysis based on resourced based view model (RBV) which will help to determine the sustainability of core competencies(Peteraf, M. A. (1993))
Competency Valuable Rare Inimitable Non-Substitutable Conclusion
Deep Focus of technology in supply chain practices Yes No No Yes Competitive parity
Ability to pull demand to generate large sales volume Yes Yes No Yes Temp. competitive advantage
State of the art logistics and return logistics system Yes Yes No Yes Temporary competitive advantage
Decentralized Operation Yes Yes Yes No Temporary competitive advantage
Shared Beliefs, Culture and Values Yes Yes Yes Yes Sustainable competitive advantage
Human Resource and employee empowerment Yes Yes Yes No Temp. competitive advantage
General Management Policies Yes Yes Yes Yes Sustainable competitive advantage

Even though at an individual level, core competencies of Wal-Mart might offer only a temporary competitive advantage but in unison they form a sustainable core competency driving revenue growth and profitability. Scale of operations along with capital investment in integrated supply chain coupled with a strong logistics system gives Wal-Mart necessary bargaining power over suppliers. Strong general management
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