Walmart Term Paper Example | Topics and Well Written Essays - 500 words - 1

Walmart - Term Paper Example Therefore, substitutes of products and services impose constrain the ability of the firm to adjust their prices to achieve their target profit margin. In this case, Wal-Mart has a wide range of products with substitutes, for instance, when a customer wants to buy groceries, they can go to Safeway, Albertsons. However, there are substitutes for electronic products such as Frys, Circuit City. On the other hand, the substitutes for clothing are Target, Costco, JC Penny (Slater & Olson, 2002). Nevertheless, it is evident that numerous competitors are not able to provide their customers with convenient and low prices for services and products. Therefore, the customers have the choice of fetching their products and services from numerous specialty stores, thereby decreasing the chances of finding the low pricing offered by Wal-Mart. In this case, the free market offers buyer a chance to choose among numerous alternatives; thus, the source of substitutes attribute to the same product or service being sourced by two or more distributors (Porter, 1985). Moreover, full substitute of product and services are attributed having different manufactures, but serving the same purpose. For instance, there is a product such as Kellog’s corn flakes offered by Wal-Mart while other competitors may offer a generic brand of corn flakes. On the other hand, there are partial substitutes of products and services, whereby service and products are not directly related but they can serve the same purpose in the market. It is evident that threat of substitute has a typical impact on the industry through price competition. However, there are other concerns in assessing the concern raised by the threat of a substitute to a company like Wal-Mart. In this case, given that Wal-Mart provides customers with cheap products from rivals, this can result to a