Wal-MartGeneralEnvironmentAnalysis--Aretailingdominatorintheworld

The

Wal-MartEmpireGeographicDistribution:smalltownsduringitsinfancyandclosetomajorcitiesby2003.PopulationSize:5,000to25,000insmalltownsandgreatnumberofpeopleinitsgloballocations.Theworldeconomyisingeneralweaknessandtheenvironmentprevailedisuncertain.Discountretailinghadevolvedintoaglobalindustry.AndtheglobalizationtrendisnowincreasinglystrongInruralareas,asteadyjobatadecentwagewasallthatwaswantedbytheresidents,solaborcostsarelow.Asthelaborforcehasincreased,ithasbecomemorediverseasmorewomenandminoritieshaveenterthelaborforce.Thepercentageandstatusofwomenbothincreased.Theunionhasamorestrongpowerandalwayswanttobringmorelaborsundertherefold.People’sconsciousnessoftheirrightsasconsumershasbeenmorestrong.Technologicalchangeisinarapidpaceandcompetitiveadvantageismoreandmorederivedfromnewlyemergingtechnologies.Internetandwirelessformsofcommunicationssuchasprivatesatellitenetworkareimportanttechnologiesnowadays.Goodlogisticssystemanddeliversystemareimportantfactorswhichinfluenceefficiency,i.e.volumeandinventoryturnvelocity,ofretailcompanies.Globalizationtrendismoreobviousnowandcompaniessearchtomoveintointernationalmarketsbyacquisitionorsettingupnewbranchestoextendtheirreachandpotential.Socioculturalandinstitutionalattributesarequitedifferentinglobalmarkets.RisksalsoexistsinglobalmarketsforcountriessuchasBrazilandArgentinaarequiteunstablegiventhefluctuatingfortunesoftheirrespectiveeconomies.BeingbigisnotsoeasyExperiencedcompetitorssuchasDollarGeneralandCarrefourareniche-basedchallengerswhodeservecarefulwatchout.Pendinglawsuitsfiledbyitsemployeesabout“overtimeworkwithoutanypay”andgenderdiscriminationmaycausehugeinfluenceaboutitsimage,andit’salsoexaminedbyimmigrationandnaturalizationserviceforwhetherhiringillegalimmigrants.OnitsWal-Martizationway,differentsociocultureandcompetingenvironmentsuchasthoseinBrazil,Argentina,GermenandsourceKorea,maybecomestumblingblocks.Giventhelargesizeandreachthatthecompanyhadbuilt,manyfearedthatithasbeentoopowerful.“self-appointedcensor”

KeyThreatsPorter’sFiveForcesModelanalysisoftheglobalretailingindustryThreatofnewentrantsBarrierstoentry:

economiesofscale:thediscountretailinghadevolvedintoaglobalindustry,andbigcompaniessuchasWal-Martanditscounterpartieshadcorneredasignificantchunkoftheglobalretailbusiness,sotheycancutalotofexcesscostsandpassonsometotheendcustomers.

capitalrequirement:toestablishitsowncommunicationsystem,andtoinvestinbuildinguptensofthousandsofstores,thecapitalrequirementsarehigh.

switchingcost:thoughallretailingcompaniestrytomaintainapriceaslowaspossible,customerscanswitchtootherstoresiftheywant,sotheswitchingcostismoderate.

accesstodistributionchannels:thesecanbestrongentrybarrierfornewcompanieshavetobuilduptheirownchannels.Expectedretaliation:therearemanypowerfulcompaniesandniche-basedchallengersinthisindustry,theyhavethecapacitytotakevigorousretaliationswhennewretailersenterthisindustry.BargainingpowerofbuyersThebuyersaretoughnegotiatorsanddemandedawidearrayofpriceandserviceconcessions.Retailcompanieshavealwaysbeentryingtokeeplowpricebykeepingdownsuppliers’pricesbecausetheyalwayswantedconsumerstogetthesamequalityovertimeinthelowestpricepossible.However,somecompaniesmayhavetoobigamarketshareresultingthatconsumersdonothavemanyalternatives.Forexample,Wal-MartinU.S.individuallyresponsibleforselling35%ofallpetfood,24%ofalltoothpaste,andthelargestvolumeofjewelry,groceries,DVDsandsoon.ThreatofsubstituteproductRecently,someretailcompaniesintensifiedtheirpromotionoftheirownlabelsandbrandsthatcompetedirectlyagainsteachother.Theseproductswithhighqualityandlowpricefacelittlethreatofbeingsubstituted.Intheotherside,theproductssoldintheirstoresandthepricearequitesimilar,soconsumersmayswitchtootherretailer’sproducts.Sothethreatofsubstituteproductismoderate.IntensityofrivalryamongcompetitorsThecompetitivebattleinretailingbusinessisfoughtlargelyintermsoftheirabilitytolureshoppersontheirmerchandisemix,priceoffers,andconvenience.Majorretailcompanieshavetheabilitytopleaseshoppersbysatisfyingtheirneedsandparticipatethiskindoffiercecompetition.Andinternationalexpansionandcompetitionarenowmoreandmorenormalandtranscendmerenationalboundaries.Accordingtocompara