PORTER’S FIVE FORCES MODEL

A model was put forward by Michael. E. Porter in an article in the Harvard

Business Review in 1979. This model, known as Porter's Five Forces Model is a
strategic management tool that helps determine the competitive landscape of an
industry. These Porter’s five forces are as follows:

The above picture Displays about porter’s five forces model. Now let us discuss
about the porter’s strategy for Walmart.
PORTER’S STRATEGY FOR WALMART

Threat of New Entrants

Based on this Porter’s Five Forces analysis, the strong force of new entry is
broken down into the following component external factors:

• Moderate to high cost of brand development

• Low cost of doing business
• Moderate capital costs

It is costly to develop a new entrant’s brand. Nonetheless, some large new

entrants have the financial resources to build a strong brand. This condition exerts
a moderate force on Walmart Inc. The cost of establishing a new retail firm and
the cost of running it are low to moderate.

Bargaining Power of Suppliers

Walmart experiences the weak force of the bargaining power of suppliers, based
on the following external factors:

• Large population of suppliers

• Tough competition among suppliers
• High availability of supply

This Porter’s Five Forces analysis of Walmart Inc. considers the large population
of suppliers as having weak potential to impact the company. Individual suppliers
have minimal influence on large retailers like Walmart.
 Bargaining Power of Buyers

Walmart is subject to the following external factors concerning the weak

bargaining power of buyers or customers:

• Large population of consumers

• High diversity of consumers
• Small size of individual purchases

Threat of Substitute Products or Services

The following external factors impose the weak threat of substitution against
Walmart:

• Moderate availability of substitutes

• Low variety of substitutes
• Higher cost of substitutes

Some substitutes to Walmart’s goods are readily available. However, the external
factor of the low variety of substitutes makes it difficult for consumers to move
away from products available from retailers like Walmart.

Rivalry Among Existing Firms

The following external factors are the most significant considerations in

Walmart’s strategic management of the strong force of competition:

• Large number of firms in the retail market

• Large variety of retail firms
• High aggressiveness of retail firms

Walmart experiences the strong force of these external factors that define the
competitive rivalry in the retail industry environment. In Porter’s Five Forces
analysis model, a large number of firms typically strengthen competition.