Walmart's Rocky Path From Bricks To Flicks Case Study

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Question 2

Wal-Mart’s Rocky Path from Bricks to Clicks

1. Discuss the structural characteristics of the online retail Industry, from the point of view of the Five Competitive Forces (Porter) framework.

Porter’s Five Competitive Forces model is used to analyze an industry’s value structure.
1. Entry of competitors. There are many barriers for new comers to start an online retail business. The first and biggest one is the economy of scale that has been created by the pioneers in the industry. Among them, we can mention Amazon, and eBay. Also the capital and investment required to have the adequate technology and distribution channels to compete in this industry are a big deterrent. In addition, new entrants have to consider the loyalty of
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Bargaining power of suppliers. Since there are no switching costs for customers, they can easily switch suppliers. However, big companies like Amazon, eBay and Provide Commerce have developed a business branding and strategy that allows them to offer quality service, competitive prices, and fast shipping. These competitive advantages give these companies a certain power to retain its customers, making hard for the competition to match that kind of service.
5. Intensity of rivalry. With some clear leaders in the online retail industry, there is an intense rivalry among them. An important factor to consider is the industry costs, which is something that encourages the competition to reduce prices to gain the market. The rivalry is greater due to the fact that there’s no switching costs and no product differentiation or no commodity products. Competitors in this industry have developed strong growth strategies along with huge capital investment, which creates an exit barrier and puts them on greater rivalry.
2. Discuss the Wal-Mart online strategy, from the perspective of the Resource
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When United and Continental merged, the goal was to create value by combining the operation of both companies, focusing on making it “better not bigger.”
Functional skills transfer. To create value, both companies transferred people, shared information and know-how. This could make a difference between success and failure.
Transfer of general management skills. When the company improves its vision, coordination and control of the business, it creates value. That implies making tough decisions that need to be made; for example, reducing employees, or raising fares.
Combination benefits. Both companies leveraged cash resources, which increased their purchasing and market power.
Organizational autonomy. To preserve the strategic capability of the merge, autonomy is not essential. Yet, Continental has the autonomy to create value. Absorption. Mergers have to make sure that the acquisition is completed. Preservation. The new company has to nurture the acquired benefits.
Symbiosis. Management must start the gradual process of permeability and preservation.
Holding. A total integration is required to create value and not only financial transfers or risk sharing.

3. Discuss the United-Continental merger from the perspective of the Competitive Advantage

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