The Attractiveness of the Discount Retail Industry - Case Study Example

Kmart was started by the Kresge corporation, Target was started by Dayton Hudson, and Wool was co-initiated by F.W Woolworth. With the domestic location of its stores, Wal-Mart growth was increasing very slowly but later on, they tried to gain from the international opportunities. Wal-Mart became a figure of free enterprise that had lost organization (Wal-Mart Stores 14). With the analysis of the influential five forces that model an industry, Wal-Mart’s growth and development over the years can be well elaborated.

The attractiveness of the discount retail industry

During the 20th century, general retail has been alive. It was not a good system for the customers because they were not allowed to take any merchandise from the shelves. Later on, Discount retail came to the market and it encouraged, little charge, presented less service, and credit, and they returned some advantages to the customers. This displayed how catchy the corporation had developed to be. Consumers displayed readiness in buying the brands from Walmart where they felt comfortable with the “one-stop shopping” where an extensive collection of commodities were located in one place. This was to reduce the time they spent shopping. In rivalry, a firm can decide to alter the prices to get an advantage, or either improve manufactured goods differentiation (Wal-Mart Stores 15).

The threat of substitutes product means the product found within the companies. A close substitute product will limit the chance of Walmart to raise its prices.  But Walmart had a fairer price set on their merchandise, which made a great difference in the market compared to other firms (Wal-Mart Stores 17).

Principal functions and activities where Wal-Mart’s main competitive advantages lie and their distinctive capabilities.

Their main lead came from the organization and management style, IT, and in-store operations. They did set low prices for their goods which gave them an upper advantage in the market; this was due to aggressive use of technology in their retail operations. Its competitors tried to respond to Wal-Mart’s advantage in logistics and EDI by making modest cooperative changes by bringing into play the use of the internet and software package made by Isoft corp. With its great management style, Wal-Mart had basic integrity in all of its deals. It does not cheat on its suppliers. The distinctive resources and capabilities in organized and good management are basic integrity and good control of prices. In IT, we look at the use of logistics and EDI in the internet and software.

Sustainability of Wal-Mart’s advantages

Its advantages were sustainable in terms that they had a wide coverage with several stores and they were able to reach a wide range of markets. They started selling their merchandise on the internet. This is an upholding move because everyday use of the internet keeps on increasing and the chances of losing the market keep going low. They do not deal in one product, which increases their chances of making a profit. This helps them in balancing their finances. In case of a reduction in profit in one line of products, the loss can be normalized via the profit made in the other products.

My assessment of this is viewed in that, in one part like the cross-docking, many competitors like the foremost retailers have found it complicated to reproduce Walmart’s products. Kmart copied the form of management, which entailed offering large income potential to store managers in that, each store manager was directly linked to a customer’s satisfaction index. It also faced opposition in building new stores, and it was criticized by magazines and professionals who claimed that it was depressing wage growth in the United States economy; it was a ground for anti-capitalists to wage war against it through media and social campaigns (Wal-Mart Stores, 2010).

Wal-Mart’s strategic options

Walmart has devised new formats in dealing with its management and ways to accelerate international growth. Walmart has planned to add more than 600 units and also the new stores were anticipated to be of natural escalation rather than acquisitions.

Conclusion

For a long period of time, Walmart has been a regional retailer that has been dealing with several stores that cut across the regions in the US. Though it has experienced some challenges in its form of growth, it has increasingly formed means by which it has gained success in the market. This is through the competition that it faced from other companies like k-Mart, and other specialized retailers for a period of time, of which it, later on, managed to come on top. Wal-Mart has come up with strategic options that will accelerate its international growth and stabilize its management and growth in the market.