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Public Domain Walmart Inc. The variety of competition compels Walmart to develop strategies to protect the business from the issues in its industry environment, such as the ones linked to external factors identified in this Five Forces analysis of the business. These external factors define the bargaining power of customers or Costco case study and strategic analysis, the bargaining power of suppliers, the threat of substitution, the threat of new entrants, and competitive rivalry.
In this case, the five forces refer to the retail industry, where Walmart focuses its operations. This condition of the industry environment pushes the company to explore strategic measures to manage the negative effects of competition.
Considering that the retail market is saturated, Walmart is in a continuous process of improvement to counteract the impact of strong competition. Five Forces Analysis of Walmart Inc. In determining the degree of competitive rivalry in the retail industry, a basic consideration is market saturation.
The retail services market is highly saturated. As a result, Walmart Inc. Competitive rivalry or competition — Strong Bargaining power of buyers — Weak Bargaining power of suppliers — Weak Threat of substitutes or substitution — Weak Threat of new entrants — Strong Recommendations.
Based on this Five Forces analysis, the business needs to continually improve its capabilities to sustain its competitive advantages.
However, the company needs to develop additional enhancements. It is recommended that the company increase its investment in the automation of internal business processes, including its supply chain. It is also recommended that the company further enhance its human resource management.
Such improvement can contribute to workforce competencies that support business growth. These resulting improvements based on these recommendations can help counteract the effects of the strong forces of competition and new entry, which are the most significant issues determined in the results of this Five Forces analysis.
Intensity of Competitive Rivalry or Competition Strong Force The intensity of competitive rivalry is strong in the retail industry. There are many firms of different sizes competing in this industry environment. Large number of firms in the retail market strong force Large variety of retail firms strong force High aggressiveness of retail firms strong force Walmart experiences the strong force of these external factors that define the competitive rivalry in the retail industry environment.
Also, higher firm aggressiveness leads to stronger competitive rivalry. Thus, the company must remain aggressive to remain competitive. Walmart must keep growing to remain in its position as a major global retailer.
Bargaining Power of Buyers or Customers Weak Force Walmart faces the weak intensity of the bargaining power of buyers in the retail industry environment. Walmart is subject to the following external factors concerning the weak bargaining power of buyers or customers: Large population of consumers weak force High diversity of consumers weak force Small size of individual purchases weak force The large population of buyers exerts a weak force on Walmart and the retail industry.
The weak force of buyer diversity and the weak force of small individual purchases further weaken the bargaining power of customers. Higher buyer diversity makes it more difficult for customers to collectively impose pressure on the company. In effect, the bargaining power of buyers is weak in influencing Walmart and other firms in the industry.
Bargaining Power of Suppliers Weak Force The bargaining power of suppliers has weak intensity in the retail industry environment.
There are many suppliers in the industry. Large firms like Walmart can easily affect these suppliers. Based on this condition, Walmart experiences the weak force of the bargaining power of suppliers, based on the following external factors: Individual suppliers have minimal influence on large retailers like Walmart.
Also, there are many suppliers competing for limited space in retail stores. The high availability of supply makes it difficult for suppliers to impact the strategic growth of Walmart. Thus, the company faces the weak intensity of the bargaining power of suppliers.
Threat of Substitutes or Substitution Weak Force The threat of substitutes or substitution has weak intensity in affecting the retail industry environment. Walmart offers a wide variety of goods and services that have a few or no substitutes. The following external factors impose the weak threat of substitution against Walmart: However, the external factor of the low variety of substitutes makes it difficult for consumers to move away from products available from retailers like Walmart.Get the latest news and analysis in the stock market today, including national and world stock market news, business news, financial news and more.
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