External Analysis - Walmart

Threat of New Entrants Bargaining Power of Buyers Competitive Rivalry of Existing Firms Threats from Substitute Products or Services Bargaining Power of Suppliers Identify Competitiveness: Low Medium Medium Low Medium - Economies of Scale: Walmart is a global brand in the retail industry that has achieved economics of scale, making it difficult for new rivals in the industry. - Access to distribution channels: Due to its influence and global network, established brands work with Walmart. Also, due this vast retail network along with good relationships with the suppliers and effective logistics system for the distribution, creates barriers for new entrants. - Force Down Price: Walmart deals with many small buyers which limits the bargaining power of such buyers. Therefore, such buyers have less control over this giant retailer. - On the other hand, because the customer base of Walmart is vast and diverse, therefore buyers in this case have a little more power. They can look out for the alternatives and switch to other retail brands. - Industry growth: The retail industry is growing by nearly 4%, and there is strong competitive rivalry. There are certain large firms (No-frills, Amazon, Costco, Loblaws, etc.) in the retail market strengthening the competition. - Established Brands: Walmart’s competitive rivalry with the above-mentioned established brands in retail industry is intense. So, the competition is always on factors like price, customer service, innovation, and so on. - Availability: Walmart offers variety of products and substitutes of an item is readily available on shelves of Walmart. - Difficulty of Switching: It is easy to find the substitute of an item, so all product variations are easily found in Walmart stores. - Ability to raise price: Walmart buys from different suppliers and has the high power to negotiate prices with suppliers as it buys in large volume from them. In this case, due to the decreased ability, suppliers cater Walmart’s needs as best as possible. - Reliance on each purchaser: Although Walmart has more advantages over most of the suppliers, still there are certain well-established brands which are significant to Walmart’s product offerings. Therefore, here the negotiating power of Walmart is limited. Canada’s Retail Industry is highly competitive Porter’s 5-Forces