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Wal-Mart Current Market Conditions

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Wal-Mart: Current Market Conditions Paul Kahler, Dawn Smith, Sean McClintock, Danny Truong University of Phoenix ECO365/Principles of Microeconomics Matthew Angner October 25, 2010 Wal-Mart: Current Market Conditions Market trends in the retail market are not difficult to track. “Any major initiative Wal-Mart undertakes has enormous supply chain implications worldwide” (ThomasNet News, 2010). The analysis for this paper is to look at the approach of Wal-Mart in a very competitive industry and examine how Wal-Mart is so successful. Some of the areas that will be examined are the Market Structure, the impact of new companies entering the market, prices, productivity, and cost structure, price elasticity of demand, competitors, …show more content…

If Wal-Mart were to increase the price of their products then the demand for them would likely decrease and the demand for the competitor’s merchandise would likely increase, where if the price of the products drops at Wal-Mart then the demand will likely increase at Wal-Mart and decrease at the competitor’s stores. If Wal-Mart increased to match the prices then the demand would be perfectly elastic. Competition for Wal-Mart encompasses many different areas such as retail, electronics, club stores, and gasoline sales to name a few. In the US, Wal-Mart’s main competitors are department stores such as Target, K-Mart, and ShopKo. When considering Wal-Mart’s Club store competitors one must look at Costco and BJ’s Wholesale Club in the eastern part of the US. Wal-Mart’s main US retail competitor is Target and seems to be doing very well considering the current market conditions. With Wal-Mart’s push to add greater sustainability and eco-friendly techniques to its repertoire, it becomes that much more difficult for the competition to stay with the industry leader. In 2009 Target’s EBIT (Earnings before Interest and Taxes) were 4.74 Billion with a net income of 2.49 Billion (Daily Finance an AOL Money and Finance Site, 2010). Target Inc. operates in the United States exclusively which keeps the Wal-Mart competitor in a distant second place. Although economic conditions in recent months have been

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