Essay on "Strategic Research Project Wal-Mart Research Taxonomy"

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[EXCERPT] . . . .

Strategic Research Project

Wal-Mart

Research Taxonomy - Strategic Research Project -- Wal-Mart

"Everyday low prices" is the vision statement of Wal-mart and has been since Sam Walton opened his first store in 1962. To accomplish the vision statement of Wal-mart, the company incorporated a philosophy of keeping its prices low by increasing its sales and lowering its costs. Wal-mart has become the world's largest retailer by focusing on its vision statement. Although Wal-mart has a reputation, in many countries, of providing only medium to lower end products, it targets this kind of consumers and has proven success in doing so.

When we try to perform a competitive analysis, based on the Michael Porter's five forces model, we can clearly show the company's efforts and success in each step used in this model. The forces are listed as:

The threat of substitute products or services

The threat of new entrants

The bargaining power of buyers

The bargaining power of suppliers

5. The rivalry between existing firms

This model is a simple and powerful technique, yet its weakness is that it is externally focused and it only considers the competitive environment (Lever, 2008). Any internal factors that will be relevant when considering any competitive edge and business strategies to pursue are not reflected in this model (Lever, 2008).

The threat of substitution means how easily can a product or service be copied and improved, or substituted with a newer and better product. The threat of new entrant's means how easy is it for businesses to enter the market and become a competitor. The threats of bargaining power by buyers and suppliers means that how much each group is able to influence pricing decisions. The rivalry between existing competitors can lead to improvements on product or service quality. By using this framework for strategic analysis one would need to understand that this model in itself is not perfect and should be complemented by other similar analytical techniques such as SWOT, for example (Lever, 2008). SWOT for internal analysis and also on each of the existing competitors and the Porter's model for external analysis would allow a combination blend of both internal and external analysis and therefore that analysis should be more complete as a result (Lever, 2008).

A SWOT analysis for Wal-mart would focus on the strength and weakness more than on opportunities and threats. The strength of the company is clearly its size and the related power it has toward its suppliers. The company is able to dictate prices to its suppliers to allow their vision of everyday low prices. The weakness can be seen in the fact that lower quality products, which allow the company to offer lower prices, are not always desired by its customer base. Also, several low quality products may post a risk of product defects which could lead to injury, or damage of other property to the consumer. The opportunities for the company are based on its size mainly. For example, if Wal-mart would open its own bank in each of its stores, it could easily compete with large banks such as Bank of America or Citigroup. The threats toward the company are not of a significant nature since each and every competitor has to understand that they would have to fight against the market power of Wal-mart. To enter the market and be a successful competitor to Wal-mart, companies such as Target, K-Mart, and others, would have to adjust to the way Wal-mart conducts its business. Adjustments like this are not easy for large corporation and are not really feasible. As we can see these competitors have their own agenda and are doing well, maybe not as well as Wal-mart, yet we have not read in any newspaper about these companies and significant issues due to strong competition.

As we can see in current advertisings, TV and radio, Wal-mart… READ MORE

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