Industry Analysis Example (Porter’s Five Forces and Complementors)
Wal-Mart
First, I would recommend that you re-read the section using pages 40-50 in the text as your guide. Here is a very brief example of an Industry Analysis for the Cases using Wal-Mart, specifically Wal-Mart’s competition in the consumer retail industry and not in the industries where it competes. Remember, that you are concerned with where Wal-Mart is positioned in the industry relative to the respective industry forces.
• Potential Competitors: Medium pressure
o Grocers could potentially enter into the retail side.
o Entry barriers are relatively high, as Wal-Mart has an outstanding distribution systems, locations, brand name, and financial capital to fend off competitors.
o Wal-mart often has an absolute cost advantage over other competitors.
• Rivalry Among Established Companies: Medium Pressure
o Currently, there are three main incumbent companies that exist in the same market as Wal-Mart: Sears, K Mart, and Target. Target is the strongest of the three in relation to retail.
o Target has experienced tremendous growth in their domestic markets and have defined their niche quite effectively.
o Sears and K-Mart seem to be drifting and have not challenged K-Mart in sometime.
o Mature industry life cycle.
• The Bargaining Power of Buyers: Low pressure
o The individual buyer has little to no pressure on Wal-Mart.
o Consumer advocate groups have complained about Wal-Mart’s pricing techniques.
o ...