Research Paper: competitor analysis table for Wal Mart

Pages: 5 (1482 words)  ·  Bibliography Sources: 3  ·  Level: Doctorate  ·  Topic: Business: Companies  ·  Buy for $19.77

SAMPLE EXCERPT:

[. . .] It is interesting to see that Costco and Amazon have grown so large despite Wal-Mart, but they have been able to do so mainly by avoiding head-to-head competition. As they grew their businesses, they were better able to move into spaces where Wal-Mart excelled. Costco was basically the same – they built their business, outcompeted Sam's Club and today has become a company strong enough to compete both in the warehouse space and outside of it more directly on a par with Wal-Mart.

Summary

This stage of the strategic planning process is important because it helps the company understand the competitive environment in which it exists. It is helpful to look at both direct competitors like Target and indirect competitors like Amazon and Costco. These businesses compete directly against some of Wal-Mart's major brands, but they also serve as indirect competition with the main Wal-Mart stores as well. People have many options for where to shop, and at the end of the day these options can be quite varied. Wal-Mart has chased down some of the emerging means of shopping, and that has put it into direct competition with these other companies.

The competitive landscape is more complex that this simple analysis, but knowing that Wal-Mart is competing on a number of fronts has significant strategic implications. The company must be aware that its competitors are strong – they have many advantages and even ones that are weaker than Wal-Mart are pretty well-run companies. Being able to leverage your competitors' weaknesses is good, but it is also good to know where your competitors are better than you.

There are different types of competitive intelligence (Rouach & Santi, 2001). By understanding the different forms of competitive intelligence, analysis such as this can be quite comprehensive and allow executives to set out high-level strategy, as well as more actionable items that they work with, like what markets to enter, M&A, vertical vs horizontal integration and other major strategic decision.

There is, however, a fair question to be asked about the value of relatively superficial analysis. Executives prefer that intelligence contains in-depth knowledge, but that it is presented in an easily-digestible format that is also quite actionable (Bernhardt, 1994). One would expect, for example, that anybody in Wal-Mart's upper management would be fully aware of everything that there is to know about these competitors. The people running Sam's Club would want to know Costco intimately, and the Wal-Mart.com team the same for Amazon. Competitive intelligence high value, but only when it yields unique and actionable insights.

At this point, Wal-Mart knows what it needs to for its next strategy. It knows that Target is struggling so it can probably take advantage of that to win share from its main bricks-and-mortar rival. It knows that Amazon is an incredibly strong competitor, and while it might get distracted trying to be a media company, at the end of the day, Amazon is going to be difficult to beat. Costco just keeps plugging along, but with a decent growth rate, Costco is continuing to make inroads into businesses that Wal-Mart is currently strong in.

Wal-Mart will also take a look at what the next big opportunities are. It did well when it decided to enter the grocery business, and the pharmacy business, and there are still other ideas like that to explore. When deciding what lines to enter, Wal-Mart will surely perform a comprehensive competitive analysis in order to fully understand the opportunity that it has, and set its strategy accordingly.

It has an opportunity now, for example, to go after Target, and try to really squeeze that competitor at a time of weakness. If Wal-Mart can do that, it could find another five or ten billion in revenue. But it might find the same going online. If online is growing rapidly, then Wal-Mart might lose badly to Amazon and still improve its bottom line significantly. Looking at different types of competitors, as this analysis does, also has the benefit of allowing Wal-Mart to examine decisions in terms of opportunity cost. All told, the company has some interesting choices with respect to strategy.

References

Bernhardt, D. (1994) I want it fast, factual and actionable – tailoring competitive intelligence to executives' needs. Long Range Planning. Vol. 27 (1) 12-24.

Rouach, D. & Santi, P. (2001). Competitive intelligence adds value: Five intelligence attitudes. European Management Journal. Vol. 19(5) 552-559.

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