Hi class,

Since we have already discussed Porter's five force analysis pros and cons, a case
study on Walmart regarding the said analysis is explained below.

WALMART-Very low threat of new entrants - Walmart is a giant in the retail industry.
Investment in sales and marketing, distribution, and product development is so huge
that it becomes tough for a new player to enter into this industry and compete with
existing players.

Secondly, all retailers strive for the same number of buyers while offering somewhat
similar products. Overall, severe competition makes it hard to exist in the retail-
business. Walmart sustains a great relation with suppliers and sells to a significant
number of customers. Further, it has got well-designed distribution systems and range.

In this scenario, we may say that the threat to new entrants is ranked very low.
WALMART Medium to low Bargaining Power of Buyers - It deals with many small
buyers daily, which disseminates the purchasing-power of those buyers. These
customers exert moderate-to-low power over this retail giant because of the store’s low-
price approach, the convenience of which is difficult to find anywhere else. As a result,
there is not much pressure from customers as regards pricing.
Walmart has weak points like non-availability of new brands(High-demand brands)
launched in the market and low switching cost (anyone can purchase at a different
store).
Despite this, buyers mostly find Walmart to be the best choice to satisfy their needs.
Walmart is too big to worry about substitutes for substitutes because of its product
variety, low prices, and location advantages. That is why the bargaining power of buyers
is evaluated as medium-to-low.
Low bargaining power of suppliers of WALMART - Walmart purchases in large
volumes and broad customer-reach. Thus, it appears to be a buyer of high power. That
is why its suppliers make sure to cater to its needs at Walmart at all times. They even
build their operational centers adjacent to the store locations to meet Walmart’s
demands. Suppliers always try to accommodate their requests, and Walmart is also
confident of switching to a different one if its request is not honored. All this weakens
the power of suppliers. It employs a Supplier Diversity Program as part of its Corporate
Social Responsibility outlook. By this, its dependency on a single distributor is further
mitigated. In short, Walmart is a strong buyer whose suppliers exert very low power.
WALMART Low Threat of Substitutes - Since it offers a great variety of products and
item categories – from groceries to household appliances and almost all products in this
category are available, the retailers fight no substantial substitution.
Since almost all product variations are easily found on the store shelves of Walmart,
there is no real threat of substitutes to consider.
WALMART Medium industry Rivalry - The competitive advantage economies of scale
and price strategy which Walmart enjoys can hardly be found elsewhere. There are a
few rivals to which the company needs to keep a vigilant eye on
the retail-giant scores medium industry rivalry present in the US retail business.
Draw conclusions and recommendations:
The whole purpose of Porter’s 5 Forces analysis is to identify areas that the company
should focus on while making strategic decisions. For Walmart, this is the industry
rivalry, as it is the only one that exerts medium power to its competitive position. That is
the reason the retailer must continuously strengthen its capacity concerning existing
players. To augment, the company needs to further invest in automation of internal
processes for supply chain management and human resource development.
These strategic approaches may contribute to better efficiency and business growth. As
a result, Walmart can remain persistent in beating the competition.

Regards
Bibhuti

Reference: https://365financialanalyst.com/knowledge-hub/business-analysis-
and-strategy/ porters-5-forces-analysis-of-walmart-a-practical-example/