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International business Case Analysis - Wal-Mart - Essay Example

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International business (Case Analysis- Wal-Mart) Contents How attractive was the discount retailing industry in the USA when Wal-Mart first began operations in the 1950s. 3 With reference to the key components of its Business Model, describe the sources of Wal-Mart’s competitive advantage in the USA…
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International business Case Analysis - Wal-Mart
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International business Case Analysis - Wal-Mart

Why was Wal-Mart unsuccessful in Germany, withdrawing in 2006, and relatively successful in the UK? 12 Reference 16 How attractive was the discount retailing industry in the USA when Wal-Mart first began operations in the 1950s. The US retail industry has considerably changed over the few decades due to two related trends, one being the discount retailing and second factor is the increasing prevalence of the large retail chains. The discounting retailing sector is controlled by chains. The concept is fairly new and the first discount store appeared in the 1950s. Discount retailing is one of the most dynamic sectors in the retail industry. Until 1990s two important retail chains were Wal-Mart and Kmart (Jia, 2007, p. 5). The retailing industry is known to be the second largest industry across the globe with respect to total number of establishment as well as total number of employees. The retail industry generates about $3.8trillion annually. The top five retail industry operating across the world are Wal-Mart, Target, Home Depot, Costco and Kroger. Wal-Mart apart from being the largest retailer globally is also the largest company and generates approximately $256billion sales annually. In discount retailing industry the two main competitors are Wal-Mart and Target. ...
With regards to Wal-Mart, suppliers who do not maintain or live up to the expectation of Wal-Mart point of system are thus replaced. Wal-Mart being a big brand and is powerful enough to make the suppliers recognise the fact and the situation when they do good business and thus can very conveniently switch suppliers at its convenience when they do not perform the work as expected. The suppliers also cannot afford to lose on the big brands, the key players and hence the supplier power tends to be low. As shown above the bargaining powers of customer are relative high as discount retail purchase can be substitutable and thus consumers has the power to go between the competitors depicting a high bargaining power. The switching cost involved in shifting from one competitor to another is also low and the consumers demand for high quality products at discount price. It is important to understand that consumer as individual does not have bargaining power with the retail stores but as a group consumers can demand a higher quality product at low price. Consumers are also price sensitive as a result the suppliers need to keep the price low to succeed indicating high customer power. Threat of new entrant is particularly low in the discount retailing industry as there exist a high barrier to enter the discounted retail industry with respect to investors, capital and competition. The huge capital required by a new entrant to compete with all the established retailers will take a longer time and establish them in the retail market. Although the switching cost is low for the consumers but brand loyalty towards a particular brand are relatively high and consumer would not like to shift towards a ... Read More
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