Walmart Case

1537 Words Mar 23rd, 2016 7 Pages
Walmart case 1. To what extent is Wal­Mart’s performance attributable to industry attractiveness and to what extent to competitive advantage? Wal­Mart´s performance is not attributable to industry attractiveness due to the high internal rivalry within the retail sector. Such rivalry results in margin compression and lower growth for Wal­Mart.
By using Porter's 5 forces, we see that supplier power for Wal­Mart is weak because many of Wal­Mart's suppliers are consumer product companies. These companies are commodity companies since their product has little differentiation. As a result, they have little bargaining power against retailers with large market share
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Internar rivalry
Industry competitors: Target, Kmart, T.J Maxx, Costco and more
Whole foods, best by­ more service orientated.
­ Highly competitive industry with firms competing on all levels.
­ Industry concentration
­ Differentiation: services, branding, marketing
­ Economies of scope and scale.
­ Industry concentration: Low ­ zero sum game Threats to entry
­ High capital requirements
­ Economies of scale.
­ Advertising
­ Link with suppliers Larger companies that possess the capital requirements can invest in a chain.
Smaller independent stores: target niche customer group. (Moderate threat) Supplier power
­ Strong buying power of Walmart.
­ Centralised purchasing.
­ Excessive requirements.
­ Forward integration: own brand products.
­ Suppliers offering wide variety of products possess greater bargaining power.
­ Backwards vertical integration. Buyer power
­ Buyers individually have low bargaining power
­ As a whole they are potentially very powerful due to:
a) ease of switching
b) Lack of differentiation among discount retailer

Threat of substitutes
­ Walmart owns different substitutes in the discount retail market such as Sam's warehouse club, Neighborhood markets and supercentres.
­ Treat from online sellers.
­ Threat from non­food products. 2. In which of Wal­Mart’s principal functions and activities (namely:

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