Bargaining power of buyers: LOW
- Consumers have almost no bargaining power over Wal*Mart.
Bargaining power of suppliers: MEDIUM
- Wal*Mart is a powerful organization and bargains hard with its
suppliers to obtain better prices.
- Wal*Mart is currently engaged in a battle with its suppliers
of labor, represented by the United
Food and Commercial Workers Canada (UFCW)
- Although most of the public blame focuses on Wal*Mart, an investigation
by the CBC found
that the union is using questionable methods to intimidate workers.
- Québec is one of the few places where a workplace can
be unionized by decree against the will of the majority of the
workers. A vote is not even necessary and the union obtains a
monopoly position.
- The investigation found that the provincial office in charge
of certifying union accreditation is very tolerant of questionable
practices that would trigger watchdog
intervention if they were used by any other market player.
Barriers to entry: LOW
- Barriers to entry into a local market are low for Wal*Mart
as they are for its established competitors.
- In some area, barriers have been erected in the form of
building permit restriction. This is politically motivated.
- Wal*Mart has been outsmarted by some of its opponents who
managed to rally consumers and politicians to their cause.
|
Barriers to exit: LOW
- Barriers to exit are low, though the exit of Wal*Mart from a
store in Jonquière,
Québec did cost the company a lot of goodwill.
Threat of substitution: HIGH
- Although Wal*Mart is very powerful, it still represents only
8% of total retail sales in America.
- There are enough potential substitutes and competition is healthy.
- In Québec, Wal*Mart competes among others with Canadian
Tire, Maxi, SuperC, Loblaws.
- As long as Wal*Mart is a threat to other retailers and they
are a threat to Wal*Mart, consumers are the main beneficiary of
the better terms extracted from suppliers.
Conclusion
- Consumers, 100% of the population, benefit from Wal*Mart's pressure
on prices.
- Wal*Mart shopper benefit directly of lower prices.
- Shopper that prefer other outlets benefits indirectly. Their
store has to be competitive to stay in business.
- Only a small part of the population is negatively affected by
Wal*Mart: its suppliers and its competitors, who are driven to
more efficiency.
- As long as free markets ensure that most of the extracted bargain
is passed on to the consumer, the overal effect of Wal*Mart's
power is positive.
|
