General Characteristic of Walmart Company
Large brands such as Walmart that are trying to operate internationally put strong emphasis on its political forces. Characterized by different political structures, the international business landscape also is subtle to differing governance models. The governments of neighboring nations may not be equally open to international trade dude to what’s taking place within the American government.
The 80s and 90s in Americas economic history is parallel to the roaring 20s we saw before the great depression as America’s economy did fall into crisis in the 2000s. This is a positive sign for the retail sector which is expected to grow at a fast rate in the coming years. The situation in the labor market has also improved during this time period and people’s per hour earnings have increased. Now they have more dispensable income to spend on various items which circles lower classes back into spending money on retail.
Social have a heavy influence on the profitability of international businesses. Social trends influence the buying behavior of customers which in turn influences the profitability of the brands. Customer service, convenience, and customer engagement were the top social trends that affected the retail sector during the late 80s. Across the globe, social and cultural structure varies from nation to nation within each market, meaning Walmart has to compensate for these differences.
The timeframe for Walmart currently (ending when the owner passed) is right before we are introduced to lifechanging technology, and industry changing e-commerce.
Threat of Substitutes
Being a retail store, a substitute for Walmart would be any stores selling groceries, to clothing stores, even pet stores. Any place that distributes products that Walmart can would be their substitute. There is a tendency in retail to deal with a wide range of products instead of specializing in one good or service. What that could mean for Walmart is that whatever product is found and offered at one of their locations is likely to be found at another store or chain of stores. When retailers offer unique products to their customers, they usually have a stronger advantage over their competitors.
Threat of New Entry
New entry of retail firms is easily achieved even with Walmart dominating the consolidated market. Small retailers can enter and compete on the basis of convenience, location, specialty, customer service and engagment, etc. The force of new entry can be broken down into the following factors: having at least moderate cost of brand development, low cost of doing business, and moderate capital costs. All can be found in abundance for new entries in the market (for the next decade, though, Walmart has to compete with e-commerce and online retail as well).
Bargaining Power of Buyers
This force involves the ability of the buyers to put the company under pressure. As individuals, consumers have little bargaining power with retail stores, especially large companies such as Walmart. As a whole buyers could demand higher quality products at lower prices, it turn causes retailers to adapt to their expectations. In the case of Wal-Mart, though the customers are considered to have weak power because consumers are large population, and a small size of individual purchases and consumers as a whole rarely come together to buy one product.
Bargaining Power of Suppliers
There is a large supply of suppliers, tough competition among them as their market is fragmented, and Walmart has more clout than these suppliers, meaning their options are not limited and will receive about the same profit regardless of the supplier, showing this force being weak.
During the time period, Walmart’s main competitors were Target and Kmart. Target’s strategy is that they are able to deliver discount goods with a higher quality and a bigger product variety compared to Wal-Mart. This strategy attracts high-income customers and generates higher revenue. Convenience stores (along with vending machines) are also a popular retail store group with hundreds of thousands across the nation. These stores sell a limited variety of groceries, candy and magazines, and sometimes also fuel. These large numbers of firms in the market along with the high variety details the massive competition Walmart is forced to face.