Merits and Demerits of Six Forces Model and Core Competencies in Business Strategy

Running head: GLOBAL BUSINESS STRATEGY
GLOBAL BUSINESS STRATEGY
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Question: 1
Introduction
In the recent time, it is becoming more important for the business organizations to
determine the intensity of the competitiveness of the industry apart from just identifying the
close substitutes. This is due to the reason intensity of competitiveness will have impacts on the
potentiality of the organizations (Singh et al., 2014). In this case, six forces model of Porter are
being used for determination of the industry competitiveness. However, it should also be noted
that this model is having its advantages and disadvantages. In this paper, the major merits and
demerits of using six forces model will be discussed.
Advantages of six forces model
One of the major advantages of this model is its simplicity. This is due to the reason that
the six dimensions being discussed in this model are based on generalized assumptions. Thus, the
business organizations will not face any difficulties in using this modal and can use this in
different situational scenarios (E. Dobbs, 2014). Another major advantage of this model is
coverage of all the major elements from suppliers to consumers. Thus the entire supply chain is
being covered, which is further helping the business organizations in having the understanding
about the competitiveness of different business aspects.
Disadvantages of six forces model
However, on the other hand, there are number of disadvantages also being identified. One
of the major disadvantages is less alignment with the changing external forces. It is identified
that industrial environment can get changed at any point of time but this model has not

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considered changing environmental factors. Another major disadvantage is the limitation of the
model for the small enterprises. This is due to the reason that small enterprises will not all the
relevant factors discussed in this model. The effectiveness and utility of the six forces will be
identified if it is applied in a real world organization.
Six forces model of Walmart
Competition  Competitive rivalry in the retail industry is high with the
present of good number of competitors.
 Industry growth is slow as retail market is already becoming
stagnant (Dan et al., 2013).
 Cost leadership plays an important role in attracting new
customers over other competitors.
New entrants  Threat of new entrants for Walmart is low.
 It is difficult for the new entrants to match the brand value of
Walmart.
 New entrants will also not gain the economies of scale as
Walmart.
 Thus, there are number of barriers present for the new
entrants.
Buyers  Bargaining power of the buyers is high for Walmart.
 There are number of competitors already operating in the
market and thus the customers are having more options.
 Switching cost is also low for the customers.

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 Thus, the market determined price is being followed by
majority of the retailers.
Suppliers  Bargaining power of the suppliers is low due to the presence
of large number of suppliers in the industry.
 These suppliers are not having the brand identity of Walmart.
Thus, they are more depended on the end retailers.
 However, the pricing of the suppliers will affect the end
pricing of Walmart and this will determine the flow of the
customers.
Substitutes  Threat of substitutes is more for Walmart due to the similar
offerings by their competitors.
 Almost all the retailers are reselling the same manufactured
products to the customers.
 Thus, the differentiation is less among the competitors.
Complementary products  Number of consumer goods of Walmart is depended on the
complementary products.
 Thus, the level of impact of complementary product is high
for Walmart.
 Availability of the finance with the customers will determine
the extent of potentiality for Walmart.