To what extent is Wal-Mart’s performance attributable to industry attractiveness and to what extent to competitive advantage?
Wal-Mart is a company which operates in the service sector, more specifically in the “Discount, Variety Stores/Retail” industry.
The company’s superior performance is demonstrate d through the fact that it was America’s largest company in 2002, and the reputation of the company is reflect ed in the opinion of “Fortune” who have identifi ed Wal-Mart as one of the world’s most admir ed companies.
In 2004 Wal-Mart had been hiring 1.4 million employees – making it the largest corporation in the world. Wal-Mart’s share prices have also been stable at time of stock market volatility.
There are several reasons behind Wal-Mart’s breathtaking results, most of them coming from the fact that Wal-Mart had been able to combine industry attractiveness with its competitive advantages
In order to be successful in business, we must understand what our customer’s needs and wants are and deliver them in an efficient and profitable manner. In order to do so, we must also understand the industries in which the companies are immersed
and what makes them attractive from the general point of view.
Industry attractiveness was initially describ ed by Michael Porter in his book, Competitive Strategy (Porter 1980).
Porter’s well-known Five Forces Model is often used as an analytical tool by companies when they are deciding whether or not to enter a particular industry. According to Porter, what makes an industry attractive or unattractive is determined by 5 forces:
Rivalry: This force is measur ed by how intense the rivalry/competition relationship in an industry is.
The factors affecting rivalry are: number of competitors, slow market growth, low levels of product differentiation, how aggressive competing companies are, etc. For example, retailing has always had the reputation of being a highly competitive industry,
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