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Market Power and Demand Elasticity Showed by Wal-Mart
Compared to the company mentioned in the text, one of the best examples to oppose such demand elasticity might be Wal-Mart. The key reason for such comparison is the mogul retailers initial impact on smaller firms that get careworn under the influence of natural sales generated by Wal-Mart (Allgrunn & Weinandt, 2016). Nevertheless, more prominent firms might also suffer from adverse outcomes when competing with Wal-Mart because of the ever-changing supplier size and respective measurements that contribute to the difference in profits at the end of the day. Irrespective of whether the supplier size or gross margin percent is used to measure its profits, Wal-Mart is still going to conquer the competition due to the incredible cash cycle that improves its market value and power. Therefore, the existing market power displayed by Wal-Mart is what allows them to extract most benefits and stay ahead of the competition.
On the other hand, it should be stated that Wal-Mart is not the only industry mogul that pays close attention to its profits and ensures that its market power continues to grow. The company that has the most potential to overtake Wal-Mart and redefine the concept of market power is Amazon. Nevertheless, the influence that Wal-Mart has over its suppliers is the crucial advantage that helps the companys management to outplay Amazon when it comes to grocery. Amazon Prime Now and Amazon Fresh seem to be too weak to respond to Wal-Marts almost $300 billion annual income. It proves that the management perfectly understands the grocery moguls demand elasticity and capitalizes on it to destroy other major market players. As a company that assembled the most market power across the industry, Wal-Mart is most likely to continue dominating the grocery sector while Amazon will focus on exploring other niches.
Reference
Allgrunn, M., & Weinandt, M. (2016). Is shopping at Walmart an inferior good? Evidence from 1997-2010. The Journal of Applied Business and Economics, 18(1), 77-83.
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