Walmart and Network Exchange Theory
http://panmore.com/walmart-five-forces-analysis-porters-model-case-study
This article discusses the strength of Walmart as the largest retailer in the world and the factors of the related market that could be potential threats to Walmart’s increased success. This article examined Walmart using “Porter’s Five Forces” analysis. This included strong competitive rivalry or competition, weak bargaining power of buyers, weak bargaining power of suppliers, weak threat of substitutes or substitution, and finally a strong threat of new entrants. The recommendations made to Walmart to combat these forces were to create new strategies that will help Walmart stay a competitive retailer over the long term.
This relates to the bargaining power of networks/network exchange theory that was discussed in class. One of the strong forces discussed in the article was the threat of new entrants into the market. They can compete on basis of convenience and location for example. These new entrants are creating outside options for customers in the network, which could in turn decrease the relative power of Walmart because instead of going to Walmart for their supplies like they usually would, customers can now opt out and buy from one of the outside options that presents a better value for them in terms of convenience, specialty, etc. The increase in value of the outside option makes collaboration with Walmart less appealing for the customer so the chances of doing business with Walmart also decreases. It is in this way that strength of Walmart as a retailer when looking at new retail entries into the market is related to topics that we have learned in class.