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Walmart Case Analysis

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September 26 & 28: Wal-Mart case

Question 1 – Assessment of Wal-Mart’s external environment
Wal-Mart –> Part of the retailing Industry
External Environment: * Demographics I. Age Structure –> younger generation, a generation that is easier to influence, mainly women between the ages of 25-45. II. Income Distribution –> lower class/lower income individuals, but who still have a strong interest in fashion and who want to look good

* Socio-Cultural
Our society and our culture “dictate” how and what you should wear.
The increase in TV reality shows such as “What Not To Wear” greatly influence our decision-making.
Industry Environment: * Power of Buyers –> High
We, the consumers, are the buyers of Wal-Mart’s cheap chick clothing line.
The switching costs are low; it is easy for us to go see elsewhere to acquire clothing.
As buyers, the consumers represent Wal-Mart’s sole source of income, which means that if dissatisfied consumers will buy elsewhere, giving buyers high power in Wal-Mart’s future profit margins.

* Power of Suppliers –> Low
The textile industry would be considered to be Wal-Mart’s suppliers as well as a third-party clothes producers / factories where Wal-Mart places its orders.
Since Wal-Mart is part of the “cheap chick” industry, it is not as picky when it comes to the “quality” of the textiles acquired to make their clothing items; and the clothes are not expected to be of premium quality and long-lasting wear. Since there are many producers of textiles and lower quality fabrics, and plenty of sewing factories, there is no incentive for Wal-Mart to keep working with a certain producer if they do not meet their demands. Therefore, Wal-Mart is the one holding the power in its relationship with its suppliers.

* Treat of Substitutes –> Medium-High
Substitutes of this “cheap chick”

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