Industry Analysis Example (Porters Five Forces and Complementors) Wal-Mart Here is a very brief example of an Industry Analysis

for the Cases using Wal-Mart, specifically Wal-Marts competition in the consumer retail industry and not in the industries here it competes! "emember, that you are concerned ith here Wal-Mart is positioned in the industry relative to the respective industry forces! Potential Competitors: Medium pressure o Grocers could potentially enter into the retail side. o Entry barriers are relatively high, as Wal-Mart has an outstanding distribution systems, locations, brand name, and financial capital to fend off competitors. o Wal-mart often has an absolute cost advantage over other competitors. ivalry Amon! Esta"lis#ed Companies: Medium Pressure o Currently, there are three main incumbent companies that exist in the same market as Wal-Mart !ears, " Mart, and #arget. #arget is the strongest of the three in relation to retail. o #arget has experienced tremendous gro$th in their domestic markets and have defined their niche %uite effectively. o !ears and "-Mart seem to be drifting and have not challenged "-Mart in sometime. o Mature industry life cycle. $#e %ar!ainin! Po&er o' %uyers: (o& pressure o #he individual buyer has little to no pressure on Wal-Mart. o Consumer advocate groups have complained about Wal-Mart&s pricing techni%ues. o Consumer could shop at a competitor $ho offers comparable products at comparable prices, but the convenience is lost. %ar!ainin! Po&er o' )uppliers: (o& to Medium pressure o !ince Wal-Mart holds so much of the market share, they offer a lot of business to manufacturers and $holesalers. #his gives Wal-Mart a lot of po$er because by Wal-Mart threatening to s$itch to a different supplier $ould create a scare tactic to the suppliers. o Wal-Mart could vertically integrate. o Wal-Mart does deal $ith some large suppliers like 'roctor ( Gamble, Coca-Cola $ho have more bargaining po$er than small suppliers.

)u"stitute Products: (o& pressure o When it comes to this market, there are not many substitutes that offer convenience and lo$ pricing. o #he customer has the choice of going to many specialty stores to get their desired products but are not going to find Wal-Mart&s lo$ pricing. o )nline shopping proves another alternative because it is so different and the customer can gain price advantages because the company does not necessarily have to have a brick and mortar store, passing the savings onto the consumer. Complementors: (o& pressure o )ne complementor that exists for Wal-Mart is !am&s Wholesale Clubs. *lthough the same company o$ns this, it complements Wal-Mart by offering the same products in $holesale form, making the company more profitable. o !uppliers of goods need to have innovative products to attract customers. o +or the most part, complementors do not affect Wal-Mart&s business model.

1. Overview of the industry o Current players, their products, their strengths and weaknesses. o Benefits that customers (from all segments) obtain from all the products provided by this industry. o arket segments ! who are they" what do they care about" o #mportant governmental regulations (if any) that affect the industry. o $he five competitive forces (%orter&s framework) as applied to this industry.

'. (istorical approaches to value creation and value delivery in the industry o )evelop a *value web* by charting the various ways the product moves from sources of production to destinations of consumption. o #dentify the nodes of the value web that have the most influence on the value(s) delivered to customers. o #dentify the players who have developed enduring and+or successful value propositions. ,ome aspects of the value chain to e-plore are. /ogistics ! how they handle product movement before production. )esign+%roduction ! how they transform inputs into finished products arketing+,ales ! how they identify and reach targeted segments, and satisfy segment needs Channels ! how they move finished products through their channels ,ervices ! how they deliver pre! and post!sales services. o )evelop precise verbal descriptions of the successful value propositions. o 0rticulate which value concepts are most vulnerable in an #nternet economy. Can the core product be delivered directly on the #nternet or via #$" Can services associated with the product be enhanced by #nternet presence or other #$" Can transaction costs be reduced" Can the credence, e-perience, or search attributes of the product be enhanced using the #nternet or other #$"

1. 2ey components of the transformation in the industry o (ow are various customer segments evolving in this industry today" (3eeds and wants, 0wareness, 0ttitudes, %references, and Behavior). o (ow are intermediaries evolving" (e.g., nature of relationships, role of technology, the intermediaries& responses to the new environment). o 4hat have been the recent changes to the competitive structure of the industry (especially new players with new approaches). o (ow are incumbents and new players adapting to the new environment" Changes to their marketing mi- (new product development, pricing, channel structure, customer service, electronic transactions, etc.) %artnering and strategic alliances 3ew value propositions and their market performance (where available)

5. ,trategy development for a selected organi6ation o 0rticulate the core competencies of the organi6ation. (ow 7uickly will a competency depreciate" Can a competency be erased by another competency" (ow much better is this competency compared to those of competitors" #s a competency hard to copy over the ne-t 1!' years" o ,ummari6e the opportunities and threats associated with the organi6ation&s (potential) use of technology and+or participation in electronic commerce o 8-plore alternative ways the company can take advantage of the transformations and trends affecting the industry (i.e., link the opportunities and threats to ways in which the organi6ation can leverage its core competencies). o #f applicable, develop a specific plan for this organi6ation participate in electronic commerce and ma-imi6e its benefits from technology use. %recisely articulate the strategic rationale for the plan ,ummari6e the costs and benefits to the company (monetary and non monetary) of the proposed plan ,ummari6e the costs and benefits that the plan will have for customers, channel members, and to society at large. o #dentify the ma9or barriers to e-ecuting your plan and e-plain how you will overcome these barriers. o )evelop specific ways the company can measure the impact of implementing its plan.

:. 4hat did you learn from this pro9ect" o 2ey insights gained. o ;enerali6ability of these insights (across industries and market situations).