Factors Affecting formulation of the Corporate Strategy
I. Dominant Economic Features
A. Market Size
Businesses in the discount retail industry can earn annual sales as high as $200B up to a low of $7B.
B. Scope of Competitive Rivalry
Generally, there are two sets of competitors for Wal-Mart. Regional discount retailers such as roses, Howard's and Duckwall-ALCO. These companies will be forced into a massive marketing revolution with the entry of Wal-Mart to their region.
Also, Wal-Mart has competitors in a national basis. These retailers could be identified as K-Mart, Sears, Kohl's and Target. Wal-Mart also has located itself in the international scene with acquisitions of local companies. This could be considered as a means of fortifying their position, making it outside the United States before competitors can cope with it.
C. Market Growth and position in the product line
For the year 2000-2001, the Wal-Mart and their national competitors had gains ranging from 0.1%
to a high of 22% increase in sales.
The products being marketed are mostly in the mature stage because the items are necessities. Therefore, a constant innovation in marketing techniques such as pricing and promotions should be done to gain a competitive advantage over rivals.
D. Number of companies in the industry
There are 4 major competitors in the retail industry.
Sears, Roebuck and Company - not a discount store targeting middle-market customers. Focus strategy of product lines on apparel, automotive and home materials.
K-Mart- retail and discount combination, similar to Wal-Mart minus the marketing strength. Its track record has been negative
Number of stores ranges from 4,414 stores (Wal-Mart), to 382 stores (Kohl's). This number shows the ability of Wal-Mart to expand into others states, making their number a strength of the company. For a competitor, number is not always the issue.