Chapter 1 Section 2 Business Strategy

by Jake S
Wal-Mart is a huge company in the United States. Michael Porter suggests there are three generic business strategies. The three strategies areĀ  broad cost leadership, broad differentiation, and focused strategy. Wal-Mart definitely exemplifies broad cost leadership. Wal-Mart markets towards normal people looking for the best deals on clothing, home items, groceries, and virtually any life necessity. They offer a wide range of products all at low cost since they purchase the items at a low cost and are exceptional at cutting costs.

Wal-Mart has a competitive advantage in the superstore market. They really only have one serious competitor; Target. Wal-Mart does so many things well in regards to Michael Porter’s Five Forces Model. The segment of the Five Forces Model are as follows: Buyer Power, Supplier Power, Threat of substitute products or services, Threat of new entrants, and Rivalry among existing competitors. Wal-Mart does well in at least three of the five forces. They do excellent in buyer power by providing the lowest prices to their customers. It is very hard to find a price lower than Wal-Mart can provide. They also exceed in the Supplier Power segment by buying the products they sell at very low cost to themselves in which they can pass on to the customer. They also dominate along with Target in deterring any new entrants. At this point it would be virtually impossible to enter the superstore market. Wal-Mart’s only true competitor is Target. K-Mart has closed some stores recently and does not seem to be a major player any longer.

Wal-Mart displays many of Michael Porter’s ideas and they use those their products and their forces to create a competitive advantage in their market.

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-Jake Showers