Assess Porter’s Five Forces for the Retail industry as they applied to

Assess Porter’s Five Forces for the Retail industry as they applied to Walmart at the beginning of 2012.

The Five Forces are: 1. the threat of new entrants, 2. The bargaining power of customers, 3. The threat of substitutes, 4. The bargaining power of suppliers, and 5. The intensity of rivalries.

ANSWER

Walmart is sitting in a relatively good position as of 2012 in relation to Porter’s Five Forces. 1. Barriers to entry for a large-scale retailer are very high, thus the threat of new retail provides is still very low for Walmart. Customers do not have much bargaining power and are unlikely to gain such power in the forseeable future. Substitute products are unlikely, and Walmart should be able to switch to trendy items as well as any competitors should this be necessary. Given the weak economy, suppliers are also not in much of a bargaining position. The only serious and immediate issue for Walmart is the intensity of their rivalries. Target is a formidable retail competitor, Amazon is a strong online competitor with an existing technological, logistic, and name recognition advantage, and grocery stores such as Kroger and Safeway are well established and well-capitalized. Walmart’s existing competitors appear to provide the greatest immediate threat.