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Walmart Porter's 5 Forces Analysis

Essay by   •  March 18, 2011  •  Essay  •  357 Words (2 Pages)  •  2,806 Views

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• Potential Competitors: Medium pressure

o Grocers could potentially enter into the retail side.

o Entry barriers are relatively high, as Wal-Mart has an outstanding distribution systems, locations, brand name, and financial capital to fend off competitors.

o Wal-mart often has an absolute cost advantage over other competitors.

• Rivalry Among Established Companies: Medium Pressure

o Currently, 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.

o Target has experienced tremendous growth in their domestic markets and have defined their niche quite effectively.

o Sears and K-Mart seem to be drifting and have not challenged K-Mart in sometime.

o Mature industry life cycle.

• The Bargaining Power of Buyers: Low pressure

o The individual buyer has little to no pressure on Wal-Mart.

o Consumer advocate groups have complained about Wal-Mart’s pricing techniques.

o Consumer 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

o Since 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.

o Wal-Mart could vertically integrate.

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

• Substitute Products: Low pressure

o When it comes to this market, there are not many substitutes that offer convenience and low pricing.

o The customer has

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