Competition between Loblaw and Wal-Mart Essay Example | Topics and Well Written Essays - 1500 words

Competition between Loblaw and Wal-Mart - Essay ExampleThe Executive Chairman of the confederation is Galen Weston who at the time of the launching of these stores was just five month into the new position. He succeeded his father W. Galen Weston. The Executive Chairman is in a very demanding place at the moment. He not hardly has to flip the tables for the company but also has to save the familys reputation. He supporting executives have let him down very badly with awfully maltreat recommendations, now he has taken the reins of the organisational strategy in his own hands. He believes that he can turn the fortune of the company around because according to him the company has been through much more difficult times than this and it has always managed to c roughl back up. And there is no reason to believe that the company would not do the same now when it faces a similar crisis situation (Besanko, Dranove, Shanley, and Schaefer, 2007). BARRIERS TO ENTRY Barriers to entry are place d by an real business of an exertion in the industry to discourage other interested entrant from entering the industry (Ferguson and Ferguson, 1994). The existing business can discourage a new entrant in a number of ways, for instance its can fabricate certain situations in the industry which would require a new entrant to put up huge capital investment before entering the industry (Leamer, 2009). The existing business can also put up a show of its strong brand paleness in the marketplace, which can also discourage a new entrant from entering (Barthwal, 2000). Michael E. Porter (2008), while analysing the competitive environment of an industry identified cardinal entry barriers 1. Economies of scale This occurs when unit price of a product decreases when a certain level of production volume is reached by a business (Mankiw, 2009). When existing players in the industry gain this advantage they force the new entrant to either find a competitive production volume or usurp the hig h unit cost. Other similar cost advantages which the existing player would have on his side include proprietary information, favourable location, experience, excess to raw material, government subsidies and etc (Arnold, 2008). 2. Product Differentiation Since existing businesses in an industry have an established brand equity and identity, this fact makes it important for new entrant to tell apart up with a different product. In this regard the new entrant has to invest a lot of resources, which can be very discouraging for him (Wessels, 2000). 3. working capital Requirement This is a requirement which comes up when new entrant wants to enter an industry. They have to commit huge amount of capital to acquire operational stipulation (Johnson & Scholes 2001). 4. Switching Cost This cost has to deal with customers, who have to bear this cost when they switch to a different provider of the same product. Certain industries have a very high switching cost which makes it important for th e new entrant to offer customers some relief or incentives so that the customers find some motivation to switch (Borodzicz, 2005). 5. Access to Distribution Channels In an industry the established players have a dominating position when it comes to influencing the members of distribution channels. Through long rest relationship agreements an established business erects a hurdle for a new entrant, who has to