Jannefah Irish H.

Saglayan 10/16/19
Financial Management BSA-2A

WALMART

Brief History
In 1962 Sam Walton open his first Wal-Mart in Rogers, Arkansas. His low price approach to retail soon
became a model that all Wal-Mart stores would follow.
By the 1980's Wal-Mart had over 300 stores and had accumulated over 1 billion dollars in sales. By then,
Walmart had 276 stores, 21,000 associates, and had opened the first Sam's Club in Midwest City, Oklahoma. At
the end of the 80's, "Walmart had opened it's first supercenter, combining general merchandise and a full-scale
supermarket to provide one-stop shopping convenience." (Walmart: Heritage, 2013)
By 1990, Walmart was the nation's number-one retailer. As the Walmart Supercenter redefined
convenience and one-stop shopping, Every Day Low Prices went international. It employed from 371,000
associates to more than a million by the 2000's. Now Walmart offers more than ever from groceries to prescription
medication to even mechanical work on your car. Walmart caters to the ultimate customer with its wide range of
store product options and services. No wonder it is ranked #1, according to the Fortune 500.

SWOT Analysis
Walmart’s Strengths (Internal Forces)
 Brand Image
 Financial strength
 Sharp growth in the recent years
 Excellent infrastructure
 Large customer base

Walmart’s main strength is its brand image. It has been on the Fortune 500 list for 22 years and is known
to be one of the biggest retail brands in the industry. Financially it is in a very strong position. During the recent
years, Walmart made some remarkable changes to its approach. This change has resulted in an increase in profits
and revenue. Overall, in the recent years it achieved sharper growth in profits and revenue. The brand has an
excellent IT infrastructure in place to support its fast pace of growth. Apart from that in US as well as
internationally the brand has acquired quite a large customer base.

Walmart’s Weaknesses (Internal Forces)

 Thin profit margins
 Weak HR record
 Some of its brands are facing stiff competition
 Slow growing e-commerce
 Walmart has adopted the ‘EDLP’ pricing strategy. This is also its key point of differentiation. Under the
EDLP strategy, it keeps the everyday prices for its products low. While this strategy helps the brand achieve large
sales, the margins remain relatively thin compared to the competitors who sell at higher prices. Apart from that,
the brand does not have a very good record in terms of HR either. It has always tried to compensate for the thin
margins by paying the staff less. Some of its brands like the Sam’s Club are struggling against their rivals. In the
area of E-commerce too Wal-Mart’s growth is weaker compared to Amazon.

Opportunities for Walmart (External Forces)

 Improvement in HR policies
 Expansion into the emerging Asian markets
 Partnership with the local brands in the emerging markets

HR is an important area where the brand can make major improvements. It has not been able to
achieve something highly significant in terms of HR apart from improving the wages recently. A large scope for
further changes still remains in terms of improving the work conditions and employee morale. The emerging Asian
markets also present major opportunities for the brand. It can gain by forming strategic partnerships with the
local brands in these markets.

Threats Facing Walmart (External Forces)

 Competition from rivals in and out of US
 stronger Dollar internationally affecting profits

Being a big brand is not easy and the brands like Walmart have to face significant competition domestically
and internationally. Competition poses a major threat to Walmart and especially that from Amazon and Costco.
Another major threat is that of a stronger dollar. A stronger dollar internationally means that the profits will be
low for Wal-Mart. The recent years saw dollar grow stronger internationally which meant that the profits of the
international division of Wal-Mart had to suffer.

REFERENCES:

http://www.studymode.com/essays/Walmart-Brief-History-92897.html
https://notesmatic.com/2016/07/wal-mart-rising-competition-from-amazon-and-costco/
Critique

Walmart’s SWOT analysis shows that the company’s leading position in the international retail industry is
based on the utilization of organizational strengths and corresponding competitive advantages. These business
advantages are used in countering the impacts of competing retailers and digital content distribution firms. In this
case of Walmart, the SWOT analysis gives insights on the internal and external forces significant in the company’s
strategy development in the retail industry. While these factors vary over time, the company’s growth depends
on its ability to capitalize on its retail operational effectiveness and strengths. Also, in spite of the company’s
weaknesses, its strengths are far more significant considerations. Walmart can use these strengths to exploit its
opportunities in the retail market. The firm can also use its strengths to counteract the threats to its retail business,
especially its e-commerce operations. Strategic implementations based on the SWOT factors are important in
ensuring Walmart’s competitiveness and continued leadership as the biggest retailer in the world.

Walmart’s business approach has changed a lot recently. Based upon this change, the company has
gained in terms of customer base and financial strength. Walmart showed significant improvement in several
areas. Recommendations for Walmart’s SWOT analysis is that apart from focusing more on E-commerce, Wal-
Mart needs to revive its Sam’s Club strategy. There is also a need to attend to other needs like working on
improving employee morale to make the brand image stronger. Overall, Walmart has been doing well in terms of
low prices. However, it’s time that it made serious attempts to revive the brand image which has been tarnished
by its continued lack of attention to the human resource issues.