Walmart's Five Forces And Industry Structure Analysis

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Michael porter five forces framework provides directions to strategist for designing the strategy by understanding the competitive forces in different area and aligning company 's strategy to earn more profit. I do agree with the Porters framework of five forces and industry structure analysis as explained through different examples from different industries. Porter has explained that each industry have the different structure and different profitability. Depending upon the strength of the forces and other factors that affect industry structure profitability of the industry differs. An strategist should accurately watch the changes in the five forces during course of time and make changes in their strategy to get benefitted through these …show more content…
it is a classical example for bargaining power of the customers in dairy product industry. Walmart has observed that the suppliers are earning more profit thorough their operation hence they decided to backward integrate its operation with dairy processing. This move will allow them to better control over cost. However, this can significant impact on profitability as well as strategy of the suppliers like Dean food whose stocks were reported to slip by 12% after walmart 's disclosure. Dean food and other dairy processing are now facing threat of entry from such a big corporation like walmart (Kieler A, 2016). The overall profitability of the dairy processing business is going the change now. Another example is from the pharmaceutical industry, Pfizer was facing a challenge from generic pharmaceutical industries when its block buster molecule Atorvastain (Brand Lipitor) was going to be off patent from 2012. Pfizer has worked on innovative loss of exclusivity optimization strategy to overcome these entry threat. To restrict the entry of generic players pfizer has started to give discount in Lipitor brand to pharmacies, wholesalers and PBM 's. It helped Pfizer to maintain its market share with its original brand name and helped them to still earn profit from Lipitor brand (Audet P., …show more content…
Porters framework considers the Profit as a bottom line for the competition. Differentiation strategy as explained by porter is very broad. However, differentiation is the key factor that differentiate a company from other competitor by offering unique product or service in altogether different segment and customer base. I think the porters five forces framework pushes strategist to think on red ocean strategies with cut throat competition and lower profitability. Porters framework not put much emphasis on the innovation within the organization. Development of the new product and services as a source of competitive advantage. Strategy Consultant Cissoko Mamady has started an discussion about the relevancy of Porter 's Five Forces vs Blue Ocean Strategy (Mamady C., 2015). Apple 's iPhone is a best example of the blue ocean strategy, unique safety features and user friendly operation build in to the product through innovation and research returned high profitability. Apple have higher ROI as compared to other cell phone manufacturers in industry. Apple has also added value to its customers through iTune

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