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Case study analysis (Wal*mart) - Essay Example

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Wal-Mart - Case Study - Student Number and Number Name of Professor Number of Words: 3,285 Q.1 How attractive was the discount retailing industry in the USA when Wal-Mart first began operations in the 1950s. In 1950s, Wal-Mart started its grocery retailing business in rural and small towns particularly in Arkansas, Rogers, and Walton (Scholasticus, 2011; Gross, 1997, pp…
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Case study analysis (Wal*mart)
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Download file to see previous pages 30). To determine how attractive the discount retailing industry in the United States when Wal-Mart started its business operations back in 1950, Porter’s five forces framework will be used in analyzing external business environment. Porter’s Five Forces Analysis Framework Barriers to Entry and Industry Competitors Specifically the low capital requirement in establishing small- and medium-scale grocery retailing business tightens the market competition within the grocery retailing industry in rural and small town areas. Using the Porter’s five forces framework, the threat of entry is high since anyone can easily establish small- and medium-scale supermarket retailing store outlets throughout the different geographic areas in the United States. In order to gain competitive advantage as compared to small- and medium-scale grocery retailers in US, Wal-Mart decided to continuously expand the number of its existing retail store outlets in Arkansas, Rogers, and other parts of the United States (Scholasticus, 2011; Gross, 1997, pp. 269 – 272). ...
Bargaining Power over Suppliers As the number of Wal-Mart discount retail store outlets in the United States increases, the volume of food and non-food supply requirements also increases. It is the ability of Wal-Mart to order food and non-food consumer items by bulk makes the retailing store outlet’s bargaining power over its accredited suppliers high. Since Wal-Mart’s demand for food and non-food supplies is continuously increasing, the company has been exerting effort in locating local American manufacturers of food and non-food items that are willing to supply consumer products to all Wall-Mart discount retailing stores at the lowest possible price (Ungson and Wong, 2008, p. 164; Taub, 1986, pp. 30 – 31). Bargaining Power over Buyers Wal-Mart is selling homogenous food and non-food products. It means that any small- or medium-scale grocery retailing stores can easily sell the same commodities that Wal-Mart is selling. This makes Wal-Mart’s bargaining power over its buyers relatively low. Selling homogenous products at a higher selling price as compared to other sellers would make price-sensitive consumers decide to purchase their grocery items from other grocery stores that sell cheaper consumer products. Upon analyzing the case of Wal-Mart, it is clear that Wal-Mart is not in the position to dictate the selling price of its basic consumer products. Threats of Product Substitution Any person can easily establish their own grocery retailing business. Having in mind that the threat for food and non-food product substitution is high, the target buyers of Wal-Mart have the power to simply decide on purchasing its preferred grocery items from other nearby grocery stores. Discussion Back in ...Download file to see next pagesRead More
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