Wal-Mart

Discuss the importance of changes in the external environment to an organization like WalMart.

The discount department store industry has been a growing industry in the United States for years and WalMart has established itself as the leader of the pack. Fierce competition among retailers has forced down prices and has allowed WalMart to become the most dominant retailer in the US. Many changes in the external environment have made this possible.

Several economic trends beginning in the late 1980s helped WalMart to gain market share in the industry. The economic slowdown that lasted into the mid 1990s forced retailers to drop their prices to draw in customers. When the economy returned to prosperity in the late 1990s, this competition only increased. Companies such as Sears, Roebuck and Co. met this competition by restructuring and focusing more on their retail business. WalMart was now forced to compete with companies designed to better serve the consumer. Companies such as Target Stores began to shift its focus to its national markets by carrying more fashionable merchandise. Many companies, such as Caldor and Woolworth Company, were unable to stay with the competition and closed down entirely. WalMart was able to buy up many of stores and expand its own market.

New retail formats emerged and changed the face of retailing. The superstore was introduced in the United States and it saw immediate success. WalMart was able to enter this market easily and has seen much success.

Kmart Corporation, the third largest retailer in the US, has recently been having problems competing with WalMart and other large retailers. They failed to change in a changing market and they have recently just gone bankrupt. If Kmart Corporation is unable to reorganize in the next few years, WalMart will most likely increase its customer base with Kmart customers.

WalMart success has often come at the expense of local merchants in many rural areas. When WalMart announces the building of a new store in a specific area, many local businesses close up. They just are not able to compete with the low prices that WalMart can provide to its customers.