Current Market Conditions Competitive Analysis Essay Example

with diverse sellers and offerings. An essential element of Wal-Mart's success is their skillful differentiation of products through effective advertising. Advertising plays a vital role in the retail industry by attracting customers to stores. Despite the differing costs and benefits linked to advertising, Wal-Mart's ability to advertise products at low cost has ensured their ongoing competitiveness.

Wal-Mart's use of advertising focuses on promoting competition by providing detailed information about pricing and availability. Their tactics involve attracting shoppers with discounted items and enticing them further with additional discounts and product availability. Recently, Wal-Mart's larger stores have made it convenient for customers to fulfill their grocery and general household supply needs in one place. This competitive advantage over rivals like Target plays a significant role in Wal-Mart's success.

The cross-price elasticity of demand explains that when prices for similar products increase, the demand for substitutes also increases. This concept is crucial to Wal-Mart's success as they offer similar products found at competitor's stores but at a lower cost. When comparing toothpaste prices at Target, consumers also consider the price of the same or similar product at Wal-Mart. Since Wal-Mart provides the same or similar item for a lower price, consumers are more likely to choose Wal-Mart for their shopping needs. Particularly during economic downturns, consumers are making greater efforts to save money whenever possible.

Wal-Mart has become the preferred option for budget-conscious consumers because of its consistently lower prices, despite having similar products as its competitors. However, criticism arises due to issues such as a high volume of shoppers, lengthy checkout lines, and limited availability of cashiers. Nevertheless, Wal-Mart remains at the forefront as the leading

discount retailer in the industry. The primary concern for consumers is cost-savings resulting from cross-price elasticity of demand rather than the shopping experience provided by Wal-Mart. This leads us to consider how new companies entering the market will impact this.

There are currently around 7,800 Wal-Mart stores worldwide (Wal-Mart, 2012), spread across 16 different global markets. With over 2 million employees and a customer base of over 100 million per year, Wal-Mart is a significant player in the retail industry. Potential competitors looking to enter the same market as Wal-Mart would have to deal with its massive size and reach and would probably need to adopt a long-term strategy similar to that of Wal-Mart. It would take many years for them to achieve parity with Wal-Mart and they would likely have to compromise on the quality of their operations and offerings.

Wal-Mart's market dominance has the potential to render other companies insignificant unless they provide something unique. The company's influence extends even further as it expands into different sectors, including groceries. Wal-Mart incurs variable costs for materials, labor, supplies, and utilities, which are influenced by factors such as productivity and fluctuations in labor supply and demand.

When it comes to businesses that handle labor supply and demand, it is important for management or ownership to understand the significance of maintaining a balance between accessible labor and the necessary work. If this equilibrium is not achieved, businesses in need of more workers will not be able to reach their maximum potential in terms of productivity and earnings. Therefore, identifying the key factors that impact labor supply and demand is vital for achieving success.

Labor demand pertains to the number of workers required to accomplish a specific task.

Labor demand is the decision on the number of employees or labor hours required for a task, driven by financial considerations. Companies strive to minimize labor usage while achieving their workload to save money. Labor supply refers to worker availability to a business at any given time. Limited labor supply makes it harder to retain employees due to alternative job opportunities and a smaller pool of unemployed individuals. The wage factor greatly influences both labor supply and demand.

The norm is not working for fun; usually, people work for money. The amount of money they get is crucial in deciding whether they will accept or stay in a job. Higher wages make a job more attractive to a wider range of people, thus increasing the labor supply for a company. Labor costs vary greatly depending on various factors. In the case of Wal-Mart, labor expenses are significantly influenced by market seasons. This is evident during holiday seasons when retail businesses hire extra seasonal staff to handle the increase in shoppers.

The increased labor cost during holiday seasons like Thanksgiving and Christmas necessitates additional sales assistance on the floors. To accommodate this, the business should hire more assistants before the seasons to handle the demand for materials. The cost of materials varies based on the quantity of products produced, so it is crucial for the business to purchase enough materials to meet the expected increase in production. These numbers should be determined from a forecasted demand amount provided.

Wal-Mart plans to sell 150 heaters in June and over

1,000 heaters in December. The cost of materials for producing the heaters will be lower in June than in December. Barriers to entry can impact labor supply and demand. If a business has specific skill requirements or strict hiring criteria, it may face a decrease in labor supply. Wal-Mart's corporate and store leadership positions necessitate highly qualified individuals, including those with educational degrees.

Regardless of a potential decrease in candidates, the company will make sure to hire the most qualified individuals to contribute to its future. Fixed costs, as defined by Colander (2010), are costs that cannot be changed within a specified period. On the other hand, in the long run, all inputs and their associated costs are flexible, implying that there are no fixed costs (Colander, 2010). As a result, these costs may not yield any return on investment. One factor that can affect fixed costs is demand.

If a company has a machine that is no longer in demand and cannot be altered, it becomes a fixed cost. The amount of production also impacts fixed costs. In the case of Wal-Mart, there are various factors that can affect fixed costs. For instance, with several competitors offering price matching and advertising it, Wal-Mart may lose customers and certain items may become potential fixed costs due to low cost. Nevertheless, fixed costs are not permanent as the company can discover methods to make them variable to maximize profits.