Wal-Mart Strategic Management - Essay Example

But certainly the situation was not the same in the late 1950s or early 1960s, when Wal-Mart began its operations. Porter's five forces analysis proves to be quite useful in finding out the attractiveness of an industry. Porter came out with the five forces analysis, which helps in analyzing the attractiveness of an industry by taking into account different aspects of the business. Porter's Five Forces have become a yardstick for assessing industry profitability. This helps the retailer in consistent performance and planning.

The five forces are; Suppliers: In today's context, large supermarkets like Wal-Mart have the overwhelming advantage over the small shopkeepers, as they are in a position to dictate the price they pay to the suppliers. The situation may not be as challenging for suppliers as now, but the lucre of supplying large quantities to reputed companies had always been there, as it helps the suppliers to leverage the economies of scale. Well, the number of stores of Wal-Mart and its presence was not as prevalent as today, but we must also take into account that the population and number of customers too was less.

Therefore, even if we go back by about 55-60 years, we could easily figure out that the power of suppliers was not substantial enough to dictate terms to Wal-Mart. This helped the company to further strengthen its discount retail business.Competition: Competition in the retail business is a relatively newer phenomenon. The era of colonialism can very well be said to have given shape to the trend of globalization, but the roots of modern era of globalization came on the horizon in the late 1970s or early 1980s.

Policies of liberalization by many countries around the world provided the all important catalyst to the modern era of globalization. There were indeed some reputed companies like K-Mart, Sobeys Inc, Family Thrift Centre etc in the retail business when Wal-Mart came out its concept of discount retail business, which might have given interesting competition to Wal-Mart even during those early days.Potential Entrants: Looking at the number of retailers and timeline of their origin, it becomes quite clear that the retail business seemed to attract quite a few entrepreneurs.

Dan's Super Market, Wally's Supermarkets etc. are some of the new entrants during the 1950s, which found the retail business quite attractive. Therefore, while carrying out the discount retail business, the threat of new entrants was quite genuine one for the company even during those days. Buyer/ Customer's Power: If we go by the present circumstances, it is amply clear that today the customer is indeed treated like a king. Today companies believe in trying all out efforts to invite the attention of the customers and provide them with attractive discounts, better quality products and services.

But the situation