Walmart's Porter's Five Force Analysis

This document provides an analysis of Walmart's position in the market using Porter's Five Force model. It discusses the potential competitors and changing market trends that have influenced Walmart's strategic management. The document also explores the external factors such as the threat of substitutes, bargaining power of suppliers and customers, competitive rivalry, and the threat of new entrants. The analysis helps Walmart determine its market condition and form strategies to respond to the retail industry environment.

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Walmart Strategic Management
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Topic Walmart’s Porter’s Five Force Analysis
Walmart is known to be one of the biggest retailers in Australia and in other countries
too. The potential competitors and the changing market trends have allowed Walmart to develop
suitable strategies to stay sustainable in the market. The strategies are designed to protect the
business from the various issues connected to the industry environment (Dudovskiy, 2019). The
industry environment is closely related with the external factors which can be best analyzed with
Michael E. Porter’s Five Force model. The analysis will determine the current position of
Walmart and the strategic direction in which it should proceed in the market. The external
factors consist of the threat of substitutes, the bargaining power of the suppliers, the threat of
new entrants, the threat of substitution and the competitive rivalry (Lincoln & Andrew, 2018).
The analysis will help the organization to determine the market condition and form the strategies
to respond to the retail industry environment.
The intensity of the competitive Rivalry or Competition ( Strong force)
In the retail industry, the threat of competitive rivalry is strong because there are many
firms which are of different sizes and competing in the industry environment. There are few
factors which are of significant considerations in the strategic management in Walmart. Firstly,
there are a good number of firms in the market with large variety of retail firms (Rothaermel,
2015). Moreover, there are huge aggressiveness of the retail firms. It is evident that Walmart is
experiencing strong force of the external factors which define the competitive rivalry in the
environment of the industry. A high variety of firms are interrupting in the competitive
advantage of the company. They are adopting diverse approaches in the market to attract the
customers. It has been found that the more the firms are aggressive, the more they stay
competitive in the industry. Among the major competitors of Walmart, Amazon, Home Depot,

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Costco, e- Bay, Aldi, Walgreens are the most popular(YouTube.com, 2019). Hence, Walmart
should try its best to stay aggressive and stay firm in its position as a global retailer.
The Bargaining power of the Customers (Weak Force)
Walmart experiences less intensity in terms of the bargaining power of the customers in
the retail industry environment. The Five Force Analysis of Porter suggests that the large
population of the buyers restrict any one buyer to put pressure on the retail firms. There are
certain reasons behind the bargaining power of the buyers being a weak force. Firstly, there is a
large population of the consumers, there is high diversity among the consumers and size of
individual purchase is usually small(YouTube.com, 2019). Notably, the individual buyers have
almost negligible impact on the global revenues of the company. Undoubtedly, high buyer
diversity makes it difficult for the customer to bargain with force and the firm can move on to the
nest customer.
The bargaining power of the suppliers (Weak Force)
The bargaining power of the suppliers in the retail industry is also low because there is
abundance in the number of suppliers in the market. The large firms like Walmart can easily
influence these suppliers in the market. The conditions based on which Walmart faces weak
force of the suppliers is the large number of the suppliers, high competition among the suppliers
and huge availability of the suppliers(YouTube.com, 2019). Notably, the individual suppliers
have negligible impact on the company. It becomes difficult for them to impact on the strategic
development of Walmart. Moreover, the corporate social responsibility of Walmart supports the
company to manage the suppliers’ influence n the business.
Threat of substitutes (weak force )

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The threat of substitutes in the retail industry is a weak force and can hardly affect the
environment. Walmart offers an extensive range of goods having few or no substitute. The
factors which are responsible for the weak force of the threat of substitutes are the moderate
existence of substitutes, higher costs of the substitutes and low variety too(YouTube.com, 2019).
Although some products have the substitutes, their high costs and unavailability makes the force
weak on Walmart. The retail firm provides goods at standard price with good quality too.
The threat of new entrants (strong force)
Walmart faces the strong threat of the new entrants and must address it as much as
possible. Although the retail industry is captured by the market goliaths like Walmart, the entry
of the retail firms is not difficult. There are new firms which enter the market and compete
based on the advantage of price, location and others (YouTube.com, 2019). The entry of the new
entrants in the retail industry is easy because he cost of doing business is low, the capital costs
are moderate and the brand development costs are moderate. Few entrants enter with limited
capital and few enter with high capital. These factors depict that the new entrants can operate in
the industry and become threatening for the firms like Walmart.

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Reference
Dudovskiy, J. (2019). Walmart Porter’s Five Forces Analysis - Research-Methodology.
Retrieved from https://research-methodology.net/walmart-porters-five-forces-analysis/
Lincoln, I. V., & Andrew, C. E. (2018). Porter Analysis: A Business Strategy of Amazon. Com
Through a Value Chain and Comparative Advantage Analysis of Amazon’s Trademarks
and Intangibles. Com Through a Value Chain and Comparative Advantage Analysis of
Amazon’s Trademarks and Intangibles (November 27, 2018). Practical Guide to US
Transfer Pricing,.
Rothaermel, F. T. (2015). Strategic management. McGraw-Hill Education.
YouTube.com. (2019). The Five Competitive Forces That Shape Strategy. Retrieved from
https://www.youtube.com/watch?v=mYF2_FBCvXw&feature=youtu.be