Number of Rivals
Wal-Mart’s primary competitors were Kmart and Target. Wal-Mart also competed against category retailers like Best Buy and Circuit City in electronics, Toy “R” Us in toys, Kohl’s and Goody’s in apparel; and Bed, Bath, and Beyond in household goods. It also competed against warehouse club segment like Costco Wholesale, Sam’s Clubs and BJ’s Wholesale Club. Internationally, Wal-Mart‘s biggest competitor was Carrefour. Scope of RivalryWal-Mart operates nationally, but its principal interests are in the urban centers of United States. Internationally, its interests are mainly in Mexico, Japan, United Kingdom, Brazil, Canada and China. Number of BuyersAs a discounted retailer, Wal-Mart’s customer base is the consumer making individual purchases, and is therefore fragmented and with no appreciable power. Degree of Product DifferentiationThe product is wide product selection and a mix of both name-brand and private-label merchandise, and therefore, a commodity with some minor differentiation available on price, selection and quality.
However, Wal-Mart had successfully pursued a low-cost leadership strategy which could provide everyday low prices for their customers Product InnovationWal-Mart provides multiple store formats to attract and satisfy customers’ needs: Wal-Mart discount stores, Supercenters, Neighborhood Markets, and Sam’s Clubs. Wal-Mart should expect it to become a common feature as rivals attempt to copy their success. Supply/Demand ConditionsWal-Mart was the biggest customer of virtually all of its 66,000 suppliers. It allowed it to bargain power with suppliers and get their bottom prices. In 1992 Wal-Mart began establishing standards for its suppliers.
Pace of Technological ChangeMore sophisticated means of managing the supply chain, to include EPC/RFID systems mentioned in the case, suggest that new means of reducing costs are presenting opportunities for retailers to obtain an advantage over one another. Vertical IntegrationThe presence of suppliers indicates that the industry is not perfectly integrated. However, Wal-Mart and its competitor each maintain extensive warehousing and transportation assets, suggesting that there is a considerable degree of integration in the industry. Economies of ScaleGiven that the product is a commodity provided by suppliers, economies of scale would be essential in this industry.
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