Management- Strategies - Essay Example

The growth of the specialty discount industry is attributed to the wide selection of merchandise that the stores carried and their everyday low pricing strategy. Full line chains perceived this segment as “category killers” since their merchandise line-up could not offer the same amount of shelf space and square footage to any one product category. Research shows that consumers are likely to find what they are looking for in specialty stores than they would in full line discount stores. Buying preferences and buying patterns of consumers also change more often (Gamble, p.957). The full-line discount segment is also growing faster than the U.S. economy.

The entire retail discount industry was both rapidly going into consolidation through mergers and acquisitions, liquidation, and bankruptcy. Rivalry in this sector revolves around store location, pricing, and promotion. The advent of consolidation will make it easier for Wal-Mart to merge with or acquire smaller retail stores in the U.S and abroad. Considering that Wal-Mart is one of the leading stores in the industry, they have the bargaining power over their suppliers which in effect would give them pricing advantages over other retailers.

If a Wal-Mart moves into a community, chances are the other retailers in that community, especially if they are privately owned are going to lose money and may even be forced to close down. SinceWal-Mart is the largest retailer in the United States and number 1 on the Fortune 500 list, they have the ability to lower their prices and therefore can force other retailers out of business because they can not match Wal-Marts low prices (Pereira et al, 2002). Business level strategies describes how firms outperform each other and enjoy such competitive advantage over time.

Michael Porter identifies three generic strategies: cost leadership,differentiation, and focus (Dess & Lumpkin, 2002). From the 1940s to the 1970s, the cola industry was dominated by