Describe the nature of the industry in which Wal-Mart competes
The discount retailing industry, in which Wal-Mart competes, suffered slower growth in industry sales and in new store increases by reaching maturity. This resulted in a shakeout that has left the industry very concentrated. These trends are likely to continue due to intensified competition driven by companies seeking to expand market share by gaining efficiencis and economies of scale in distribution and purchasing. Indeed, in 1993 the top 5 discounters accounted for over 70% of total industry sales. Consequently, barriers to entry are high. Other barriers to entry include the high capital expenditure requirements of leasing or buying the stores; promotional costs; vast capital costs of leasing or buying warehouses and distribution channels in order to buy and store the product; costs of training and hiring the work-force to provide high-quality customer service. Finally, the threat of subsitution is high, for all the merchandize is readily available at many types of stores; this reinforces the need to compete on prices, costs and customer-focus. As growth in this industry slowed securing more market share is the critical way to compete as only then are you able to leverage your economies of scale to build cost advantages.
The nature of Wal-Mart's competitive priorities are based on the foundational of minimizing all its costs vis-à-vis its competitiors so that it may provide the lowest cost merchandise, and thereby boost its market share. Wal-Mart aims to differentiate itself, and enhnce it's competitiveness, by making technology, its advanced computer and telecommunication system, a core competency. This maintenance of superior technology greatly enhances Wa ...