Midterm Examination Harvard Case Solution & Analysis

WALMART

  • Discuss the structural characteristics of the online retail Industry, from the point of view of the Five Competitive Forces (Porter) framework. (Porter) framework

Porter 5 Forces Model

Bargaining Power of the Buyer

Under the online retail store, the bargaining power of thebuyer is medium to high.It is due to the fact that there are many online retail stores offering similar products at nearlythe same pricing, the bargaining power of buyer remains high. In addition to this, since the switching cost is low and there is availability of other alternatives such as physical retail stores, the bargaining power of the buyer remains high.

Bargaining Power of Supplier

The bargaining power of the suppliersis weak in terms of online retail stores.It is due to the availability of a large number of suppliers in the market, increasing supply whilereducing the demand. In addition, since big storeslike Walmart, Sears and others have highcustomerfootfall and spread in the market, the suppliers have an advantage to attain highs sales through a limited number of players, hence, it keeps the bargaining cost of the supplier low on the company.

Extent of Rivalry

The extent of rivalry is high in the market.It is due to the fact that sincethereare many otherplayers operating in the same retail markets and havea substantial market share, the level of competition is high. Moreover, since more and more entrants are entering into the market due to high availability of suppliers and low market barriers, the level of competition is high.

Threat of Substitution

The threat of substitution is medium to High in the market.It is due to the availability of similarproducts from physical retail storesand convenience stores at the same prices.However, the power may bereduced due to the emergingandbusylifestyleof the end targetmarket, makingonlineshoppingmore convenient.

Threat of New Entrant

The threat of new entrantsis high in the market.It is due to the moderate setup cost, easy hand on the ecommerce technology and low market entry barriers.In addition, since there is sufficientsupply of suppliers in the market, the new entrants havea potential edge when entering into the new markets. (Porter, 2008)

Midterm Examination Harvard Case Solution & Analysis

2-      Discuss the Wal-Mart online strategy, from the perspective of the Resource Based View of the Firm framework

Resources

Walmart has a strong and extensive labor force and technology, which allows it to deliverthe retail service at a speedy rate.The company also hassubstantial cash reserves, which it may use to launch online stores at a great scale.In addition to this, Walmart also has a strong brand name and brandrecognition in the market, which allows it to leverage the stance to driveonline sales.

Capabilities

Walmart has a strong logistic system andinventorymanagement protocols, along witha potential supplier base, which allows itto continuously meet the customerdemand and maintain its cost simultaneously. Such is a strong resource capabilityof the company as it allows ittomaintain its cost and operation in themarket, offerings strongcompetitiveedgethrough costleadership. In addition to this, the company also hasstrong backward integratedoperations, whichreduce its core dependencyfor distributionthrough thirdparties, leading to efficientmaintenanceofthe operationsand value chain in the market.................

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