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Stategic Management in Wal Mart - Case Study Example

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Stategic Management in Wal Mart

The basic model for Wal-Mart had thus been created.
There were a number of competitors for Wal-Mart however, companies such as Mammoth Mart, WT Grant and Woolco were already successful within the field, but through Walton's business expertise, luck and vision they eventually fell to the competition that Wal-Mart offered them. Porter's Five Force Model is a useful tool for analyzing what Wal-Mart faced as it began to move into competition with much larger retailers during the 1950's and 1960's. Thus the overall category of "rivalry" was based upon a combination of a number of forces, including supplier power, threat of substitutes, buyer power and barriers to entry.
These forces were fairly fluid and easy to negotiate if Wal-Mart came up against them because the sector was fairly new and still in the process of bring molded into more rigid characteristics. Thus Sam Walton was able to create his own supplier relationships in the first few decades of the company through adapting the existing model to his own ends. Wal-Mart was able to create its highly one-sided supplier relationships through the fact that it became the largest potential market for such suppliers.
There were no barriers to entry for Wal-Mart because Walton chose to locate many stores in areas that other retailers normally avoided. Thus the poorer, smaller rural towns where many Wal-Marts became so successful largely offered no competition for the company. The economic landscape was essentially open for an entrepreneurial approach as Walton envisaged and put into action across the country. Walton's practice of locating Wal-Marts in areas which did not offer other large discount retailers also meant that the threat of substitution did not exist in most of these early stores. The Wal-Mart model was allowed to develop, adapt and come to maturity without constant concern from new competition within the area. When it did occur, Walton would study the competition and take what he could from it, instituting the most worthwhile elements within Wal-Mart itself.
Wider business and economic conditions were also favorable for the development of a company such as Wal-Mart during the 1950's. This was the period when the American suburb was starting to appear and to expand exponentially with the growth of the economy. People were becoming used to traveling further for work, school, entertainment and shopping. The car culture that was associated with this was an ideal complement to the development of Wal-Mart. People were prepared to drive a few miles further to get the cheaper prices that were offered by Wal-Mart. This enabled Walton to establish Wal-Marts on some of the cheapest land available and thus increase the return on the investment and/or keep prices low.
Along with suburban development came less of sense of "community" for many people: they did not know their next door neighbors, nor had they any sense of a town shopping center that they would be loyal to. Being on a first name basis with a shop keeper was of less importance than finding the cheapest prices possible. Along with the cheap prices came a wider range of consumer goods that households wanted to buy for their houses. Thus Wal-Mart could offer a sheer range of goods that were not offered by other stores because there were more goods to be made ...Show more


The discount retailing industry was an attractive prospect for any new company with new ideas that wished to enter it during the 1950's. The model for discounting existed, but was ripe for perfection and development by the right company. That was Wal-Mart.
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