Critical Analysis of Internal Resources of Wal-Mart and External Environment

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External Environment
We have used Porter’s five forces on the discount retail industry to understand external environment(Porter, Michael E., Competitive Strategy(1988).
1. Threat of new entrants: Low

a. Highly price competitive nature of the discount retail industry with already established players vying for market shares forbids new entrants. High entry barriers due to huge capital investments and need for economics of scale.
b. Incumbents already have strong and trusted supplier network which couldn’t be replicated by new entrants
c. Wal-Mart by its scale of operations drive cost and price lower which can’t be replicated by new entrants
d. Wal-Mart possess a strong distribution and logistics network enabled by technology, a deep pocket which could invest in new generation process and a well-established brand name

2. Threat of substitutes: Low

a. Alternatives like Mom-and-Pop stores and Specialty stores fail to provide the consumer choices in terms of products and brands and competitive prices provided by retail chain
b. E-commerce/ Online industry is a maturing industry but fails to attract purchase of daily consumer durables due to higher prices and longer fulfillment times. Grocery stores fail to offer a viable substitution due to high prices.

3. Competitive rivalry in Industry: High

a. Mature industry with few existing players with oligopolistic industry structure.
b. Industry is price competitive with firms focusing on improving internal operations to cut costs and hence price.

4. Bargaining power of suppliers- Low

a. Wal-Mart’s large scale of operations with strong network of stores around the world provides them global sourcing capability with a wide range of vendors/suppliers. This leaves no bargaining ground fo...

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6. Canada, N. (2011). Walmart canada completes acquisition of leases for 39 stores. Canada Newswire.
7. Bromiley P, Fleming L. The resource based view of strategy: an evolutionist’s critique. In The Economics of Choice, Change, and Organizations: Essays in Memory of Richard M. Cyert, Auger M, March JG (eds). Edward Elgar: Cheltenham; 319–336
8. Christensen, C. R., Andrews, K. R., Bower, J. L., Hamermesh, R. G., & Porter, M. E. (1982). Business policy: Text and cases. Homewood, IL: Irwi
9. Peteraf, M. A. (1993), "The cornerstones of competitive advantage: a resource-based view". Strategic Management Journal, Vol. 14, No. 3, pp. 179–191
10. Porter, M. E. (1980), "Competitive Strategy: Techniques for Analyzing Industries and Competitors", New York, NY: Free Press

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