REPORT ON WALMART

Group B
C19Y3068,
C17Y1031,C18Y1101,C18Y1109
Table of Contents
1.Introduction........................................................................................................................................... 2
2.Corporate Strategy ............................................................................................................................... 3
3.CSF’s and proposed Key Performance Indicators (KPI’s) to drive Shareholder wealth........................... 3
3.1 Single focus to keep prices low....................................................................................................... 3
3.2 Increasing Employee Engagement ................................................................................................. 4
3.3 Efficient Supply Chain Management ............................................................................................... 4
3.4 Keeping Pace with On-Time Delivery.............................................................................................. 5
4.The environmental influence over the company .................................................................................... 6
4.1 PESTEL Analysis ........................................................................................................................... 6
4.1.1 Political Factors ....................................................................................................................... 7
4.1.2 Economic factors ..................................................................................................................... 7
4.1.3 Social Factors .......................................................................................................................... 8
4.1.4 Technological factors ............................................................................................................... 8
4.1.5 Environmental factors .............................................................................................................. 8
4.1.6 Legal factors ............................................................................................................................ 9
4.2Porter’s five forces .......................................................................................................................... 9
4.2.1 Bargaining power of buyers .................................................................................................... 10
4.2.2 Bargaining power of suppliers ............................................................................................. 10
4.2.3 Threat of new entrants ........................................................................................................... 10
4.2.4 Threat of substitute products .................................................................................................. 10
4.2.5 Existing Rivalry ..................................................................................................................... 11
5.Importance of Information Technology to the Company over Long run. ............................................... 11
5.1 Improve Performance: .................................................................................................................. 11
5.2Importance in Decision Making: ..................................................................................................... 12
5.3Behavioral Change: ....................................................................................................................... 12
6.Conclusion ......................................................................................................................................... 13
7.References ......................................................................................................................................... 14

Table of Figures
Figure 1-Introduction................................................................................................................................ 2
Figure 2-Low Prices................................................................................................................................. 3
Figure 3-Supply Chain ............................................................................................................................. 5
Figure 4-OTIF .......................................................................................................................................... 5
Figure 5- PESTEL ................................................................................................................................... 6
Figure 6-Porter's Five Forces................................................................................................................... 9
Figure 7-Technology.............................................................................................................................. 12

1|Page
 1. Introduction

From a humble beginning as a small discount retailer in the heart of Arkansas to becoming one of the most
renowned retailers across The United States with a revenue of over $388 billion, Walmart’s success has
revolved around low prices and efficient sales. Through innovation they are allowing customers to
experience anytime, anywhere shopping across the globe. Walmart operates approximately 11,500 stores
under 56 banners in 27 countries and ecommerce websites in 10 countries and they employ approximately
2.2 million associates around the world — 1.5 million in the U.S. alone. (Walmart, 2020). They plan on
expanding in Canada, Mexico and in China as well.

Walmart has stores in 50 states and Puerto Rico offering low prices on the broadest assortment of products
through a variety of formats including the Supercenter Discount Store and Neighborhood Market (Walmart,
2020). In the past year 2019, they doubled the number of stored offering online grocery pickup to more than
1000 locations (Walmart, 2020).

Walmart's 150+ distribution centers are hubs of activity for their business. It is one of the largest in the world
servicing stores, clubs and direct delivery to customers.

 Their distribution network ships general merchandise, dry groceries and perishables to their
customers daily.
 There are 6 disaster distribution centers, strategically located across the country and stocked to
provide rapid response to struggling communities

Figure 1-Introduction

2|Page GROUP B
2.Corporate Strategy

Walmart has built around the philosophy of EDLP (Every Day Low Price), where they would charge low
prices from customers, so that customers trust their prices and will not change under frequent promotional
activity. In today’s world customers prefer one stop shopping. From grocery and entertainment to sporting
goods and crafts, whether they are shopping online through their website or through one of their mobile
apps or in a shopping store.

3. CSF’s and proposed Key Performance Indicators (KPI’s) to

drive Shareholder wealth.

3.1 Single focus to keep prices low

A key CSF for Walmart is to keep prices low and the brand has stayed true to its purpose and
consistently striven to offer low everyday prices to its customers. As a result of this, Walmart
has built for itself a strong and loyal customer base. Customers walking into any Walmart store
know that they can count on low prices. (Anon., 2018)

Walmart’s obsession to help people save more money has ensured the growth of the business
and is able to improve its P&L every time a customer saves money as the frequency of
patronizing increases. (Efron, 2017)

In terms of a KPI to ensure low prices, sourcing needs to be measured by the highest value
provider for the lowest cost. This metric will enable them to keep prices low without
compromising on quality and due to the bargaining power possessed by Walmart.

Figure 2-Low Prices

3|Page GROUP B
 3.2 Increasing Employee Engagement

In the organization structure, each member of the organization possess a sense of empowerment and duty
which increases engagement levels and loyal of the staff towards the company. Further, utmost
transparency is maintained where every sales associate is informed on how much their
department sells, what its inventory and expenses are, and how much profit it makes. (Anon., 2018)

Walmart uses a profit sharing mechanism via a system of performance-linked compensation

and a bonus structure. This allows employees to be awarded with a share of earnings and profits
earned by the organization within the period and drives employees to contribute to the
organization as well as maintain their loyalty. (ICMR, 2018)(Anon., 2018)

A key KPI is to measure employee loyalty through a Net Promoter survey (NPS) which
measures the extent an employee will consider recommending the organization to a peer or
close friend.

3.3 Efficient Supply Chain Management

According to Kantar retail, Walmart is considered to be the pioneer and best retailer when it
comes to Supply Chain Management according to a survey conducted among manufacturers.
80% of the surveyed sample considered Walmart to be among the best owing to the brands
dedication and expediency in the area.

In terms of this CSF organization introduced cross-docking in its supply chain strategy which refers to the
practice of moving products from a supplier or manufacturer directly to the customer or the retail chain, with
very little handling or storage, reduced lead times and costs. Walmart has laid out its distribution centers
within close proximity to stores which they supply (Anon., 2018)

Considering a KPI, Walmart can focus on implementing a cost and time saved in supplication
of goods to Walmart stores by the use of cross docking. This will enable them to identify to
what extent the implementation of the system has been successful and what the benefit to the
organization is.

4|Page GROUP B
 Figure 3-Supply Chain

3.4 Keeping Pace with On-Time Delivery

There is newly implemented policy to enhance the pace in rapid delivery which is On Time in Full (OTIF)
policy inbound deliveries to its distribution centers. The company influence to delivery that standards which
their suppliers looking for ways to remain compliant and in Walmart’s good graces. According to their OTIF
policy suppliers have two days from the requested date on the order to deliver to their various distribution
centers. Anything that arrives after the two-day window will be fined. (Bolduc, 2018)

The new is aimed to improve Walmart’s product and service availability and it lead to the reduction in
inventory in their warehouse. With the view of this Just in Time inventory strategy should keep the quality
of the products high since which is key value driver.

In terms of KPI’s Walmart measures the percentage of shipments that are picked up, departed, and

delivered on time and rate of 90% or higher is generally considered acceptable.

Figure 4-OTIF

5|Page GROUP B
4.The environmental influence over the company

As mentioned in the above sections, Walmart being one of the biggest retailers of the world, has the
influence of the environmental factors as for any business when conducting its business operations. The
scale of its operations and the policies it has adapted might bring out a difference in the extent to which the
environmental influences has over the company.

4.1 PESTEL Analysis

The PESTEL analysis, which is also known as the PEST analysis is a tool that is used to screen the macro-
environmental factors that affects an organization’s operations. It is often used for analysing the
environmental impacts a business has to handle while running its operations and it is widely used along
with tools such as the Porter’s five forces and the SWOT analysis (Anon, 2016).

The word PESTEL is an acronym for Political, Economic, Social, Technological, Environmental and Legal
factors. These factors impact businesses in different levels depending on the operations of the business.

Figure 5- PESTEL

6|Page GROUP B
 4.1.1 Political Factors

The factors that fall under this category are about how and how much a government mediates in the
economy or a specific industry. Essentially all the impacts that a government has on a business could be
classified here. These factors could consist of the government policy and changes in them, political stability
in the country, labour and other related laws imposed on industries etc… All these factors will have to be
considered by businesses when analysing the external environmental impacts for decision making (Anon,
2016) .

In addition to the political factors in its mother country, the USA, Walmart has to pay attention to the political
factors of countries like Arica, Argentina, Central America, Canada, India, Chile, Mexico, United Kingdom
and Japan since it operate retail stores in those countries too (Walmart Inc., 2020) .

4.1.2 Economic factors

The factors that impact on the economy and the performance of the economy, which thus directly impacts
on the organization and its operations fall under this category. Factors such as economic growth, inflation
rates, exchange rates, disposable income etc… fall under this category (OXFORD College Of Marketing,
n.d.).

The above factors could directly or indirectly have a long term impact on a company, since the purchasing
power of individuals in an economy is affected which then affects the demand and supply forces in the
economy. Consequently this would affect the products offered by the company.

The stability of the economies, the continuous growth in developing countries and the translation gains from
foreign currencies can be taken as some of the major opportunities that Walmart has while the global
economic crisis due to the COVID 19 pandemic which has led to the shutting down of a number of
economies can be seen as major threats Walmart faces at present.

7|Page GROUP B
 4.1.3 Social Factors

The demographic factors such as population growth and age distribution along with the norms, customs
and values of the population fall under this segment of the PESTEL analysis. Paying attention to these
factors is vital for Walmart in planning its marketing strategies to reach out to its customers.

Trends such as healthy lifestyle and cultural diversity can be considered as opportunities for Walmart if it is
able to increase its range of healthy products and by increasing the variety of products to match the variety
of cultures and their preferences (ROWLAND, 2019).

4.1.4 Technological factors

The pace of technological advancement and developments that could influence a market or industry fall
under this category. Factors could include automation, research and development and changes in
technology.

For companies such as Walmart, increasing business automation, big data and the increasing use of mobile
devices among the consumers can be taken as opportunities while constant changes in technology making
the existing technology within the business can be taken as threats it has to deal with (ROWLAND, 2019).

4.1.5 Environmental factors

The environmental factors that are significant in Walmart's business relate to environmental preservation
concerns. Environmental protection is presently a mainstream principle.

The trend for business sustainability can be exploited by Walmart by improving its operational efficiency
with the help of technological innovations. Focusing on the sale of environment friendly products while
improving the policies and standards of the products can also contribute to strengthen the ability of walmart
in exploiting the environmental factors (Anon, 2016).

8|Page GROUP B
 4.1.6 Legal factors

The laws enforced by the government and regulatory authorities which are compulsory to compile with,
such as employment legislation, health and safety, consumer law etc… fall under this category. These
factors might at times seen as overlapping with the factors that fall under the political factors and the
distinction between the two ate that the government policies fall under the political factors and the factors
that must be complied with fall under the legal factors.

Walmart could consider food safety regulations as an opportunity to improve the quality standards while
employee related laws can be taken as an opportunity and a threat which will depend on the circumstances.
A major threat that Walmart has to deal with is the laws related to taxation in different countries (ROWLAND,
2019).

4.2 Porter’s five forces

Porter’s Five Forces is a model that recognizes and breaks down five serious forces that shape each
industry and decides an industry's shortcomings and strengths. Five Forces analysis is every now and
again used to distinguish an industry's structure to decide corporate strategy (Chappelow, 2020).

Figure 6-Porter's Five Forces

9|Page GROUP B
 4.2.1 Bargaining power of buyers

In Walmart's case, the buyers’ bargaining power is not strong, as individual customers still make no major
purchases. In top of this, shopping conveniences and costs are significant factors this limit shoppers'
bargaining power. The switching costs for consumers are very small because of the fact that they find the
same commodity easily at lower prices and the comfort is greater (Pratap, 2018).

4.2.2 Bargaining power of suppliers

In the case of the Walmart, suppliers ' negotiating power is rather insubstantial, primarily because of the
reach and scale of the company. To maintain its cost leadership and achieve competitive advantage,
Walmart aims to negotiate the suppliers' least possible costs. In addition to offering the goods at low prices,
Walmart's suppliers also required to meet the wide range of technical standards related to employee
benefits, employee welfare, food safety and other factors (Anon, 2019).

4.2.3 Threat of new entrants

The new entrants' threat is very low as it exerts a medium pressure level on Walmart. It's because of
Walmart's position as one of the top supermarket brands and it takes a massive amount of capitalization to
create the brand like that (Pratap, 2018).

4.2.4 Threat of substitute products

Walmart is one of the largest retailers dealing in dozens of items and selling a wide range of individual
products. It deals in entertainment, food, hardware, fitness, pharmacy, furniture, luggage, clothing, kitchen
appliances and home furnishings in several categories. Substitute products' threat is a poor force for
Walmart and insignificant due to the large number of items sold by the retailer. Competitors like Target,
however, which also function like Walmart, can be a threat because it will attract the customers (Dudovskiy,
2016).

10 | P a g e GROUP B
 4.2.5 Existing Rivalry

The strength of retail industry rivalries is very high. There are many companies such as Target Corporation,
Sears Holdings corporation, Costco Wholesale Company, etc ... and they operate in the business setting
on different sizes. There are external forces that are important in the strategic decision of the Walmart like;
multiple retail sector firms, high retail companies aggressiveness, and large retail firms amount. There are
businesses in the sector who are seeking to impose the challenges in creating cost advantages for Walmart.
Walmart is fairly effective in establishing itself as one of the top retailers in the global market (Anon, 2019).

5. Importance of Information Technology to the Company

over Long run.

Existence of Information Technology plays an important role in major businesses. Information Technology
creates valuable data with the application of computers, internet and latest technology for administrative
and decision making purposes where Managers and Top level staff will find it beneficial for the company
(Rouse, 2019). Managers at Walmart need access to quality information in order to be able to effectively
control the activities. Therefore a wide range of quality and reliable information is required to perform the
responsibilities. Updating the organization with modern technology will create morale of efficient working
patters within employees as it will eventually make the organization effective in its performance. IT is utilized
in a number of different contexts and for many different purposes. However the main objective of modern
information technology is to perform an organization much efficiently which drives for better revenue growth
and achieve cost benefit.

5.1 Improve Performance:

Walmart could introduce a Management Information System that could achieve performance and control of
the business, A Management Information System is capable of Converts internal and external data into
useful information which can be communicated. MIS also helps to achieving a cost/benefit analysis where
modern IT systems have reduced the cost significantly. It is an added benefit for companies like Walmart
to analyze the relationship between cost and other variances. Thus Management Information Systems
analyse between costs can be differentiated wisely therefore it will be useful when stating on the financial
statements. (PUBLISHING, 2020)

11 | P a g e GROUP B
 5.2 Importance in Decision Making:

All Daily operations of an organization can be organized in an electronic form which could be reliable for
Employees to access and gain information for any purpose. There is a slight risk when all employee could
access administrational information, however the importance of quick access for decision making is a
benefit through Information Systems. Walmart as a large multinational retail corporation needs access to
quality and reliable information for its higher management to make decisions. (UKEssays, 2018)

5.3 Behavioral Change:

Through behavioral application, Information Systems could reduce the barrier between Top and Lower level
Management. Where all employees will have access to new notices on decisions and discussions
(UKEssays, 2018). This will additionally motivate the employees to perform better in the work place as they
are entitled to the roles of higher management. As a change, Walmart could innovate their network within
customer by computer aided design in the operated through the system to precisely forecast demand, track
and predict inventory levels, create highly efficient transportation routes, and manage customer
relationships and service response logistics. Therefore a loyal service towards its customers are
guaranteed. (IPL, 2020)

Figure 7-Technology

12 | P a g e GROUP B
 6. Conclusion

In this assignment it has been explained the analysis of the annual report of Walmart PLC. The introduction
at the beginning of this report demonstrated the overall picture and its exposures of the company. As
Walmart is a large operator in the US, the competitive strategy behind critical success factors and key
performance indicators are analyzed. A few CSF’s are explained that have been applied in the operation
of Walmart. Therefore the explained CSF’s measure how effective it applies to KPI’s at Walmart and how
it increases shareholder wealth of the company.

On the other hand two models of Environmental factors could that could affect the operation of the company
is been followed. In this assignment, it has been explained how environmental impacts could influence the
main operation of the organization. The PESTEL Analysis the demonstration of 6 factors that can affect the
company’s operations in any means have been explained. The choice of PESTEL analysis is because it
covers the main factors that a company could be influenced in main forms such as, political, environmental,
social, technological, and legal. The next model considered was the Porters Five Forces, which analysis
the economic forces that derive an organizations competition. This model explains the basic 5 factors of
porter.

The technological importance plays a major role in modern organizations. Therefore the importance of
technology for Walmart is been explained and how it could be a benefit for the future of Walmart.
Considering key points for the importance of technology the combination with the current operation is
demonstrated and how they could use technology to improve the organization.

13 | P a g e GROUP B
 7. References
Anon., 2018. Profitworks. [Online]
Available at: https://profitworks.ca/blog/marketing-strategy/579-sam-walton-wal-mart-what-is-wal-mart-s-
secret-to-success.html
[Accessed 21 July 2020].

Anon, 2016. Business-to-you. [Online]

Available at: https://www.business-to-you.com/scanning-the-environment-pestel-analysis/
[Accessed 21 July 2020].

Anon, 2019. Porter Analysis. [Online]

Available at: https://www.porteranalysis.com/porter-five-force-analysis-of-walmart/
[Accessed 24 July 2020].

Bolduc, S., 2018. SupplyChain247. [Online]

Available at:
https://www.supplychain247.com/article/keeping_pace_with_walmarts_on_time_delivery_requirements
[Accessed 21 July 2020].

Chappelow, J., 2020. Investopedia. [Online]

Available at: https://www.investopedia.com/terms/p/porter.asp
[Accessed 23 July 2020].

Dudovskiy, J., 2016. Research Methodology. [Online]

Available at: https://research-methodology.net/walmart-porters-five-forces-analysis/
[Accessed 24 July 2020].

Efron, L., 2017. Forbes. [Online]

Available at: https://www.forbes.com/sites/louisefron/2017/05/31/why-wal-mart-is-winning-in-a-losing-
industry/#5076da5244d5
[Accessed 21 July 2020].

ICMR, 2018. ICMR. [Online]

Available at: http://www.icmrindia.org/casestudies/catalogue/Human%20Resource%20and%20Organizati
[Accessed 21 July 2020].

IPL, 2020. The Importance Of Information Technology In Walmart. [Online].

OXFORD College Of Marketing, n.d.. OXFORD College Of Marketing. [Online]

Available at: https://blog.oxfordcollegeofmarketing.com/2016/06/30/pestel-
analysis/#:~:text=A%20PESTEL%20analysis%20is%20an,can%20be%20added%20(e.g.%20Ethical)
[Accessed 21 July 2020].

14 | P a g e GROUP B
Pratap, A., 2018. notesmatic. [Online]
Available at: https://notesmatic.com/2017/02/walmart-five-forces-analysis/
[Accessed 23 July 2020].

PUBLISHING, K., 2020. The impact of, s.l.: KAPLAN PUBLISHING.

Rouse, M., 2019. Information Technology (IT). [Online]

Available at: https://searchdatacenter.techtarget.com/definition/IT

ROWLAND, C., 2019. Panmore Institute. [Online]

Available at: http://panmore.com/walmart-pestel-analysis-recommendations-case-study
[Accessed 21 July 2020].

UKEssays, 2018. The importance of information systems. [Online]

[Accessed July 2020].

Walmart Inc., 2020. Walmart Inc. | 2020 Annual Report, s.l.: Walmart Inc..

Walmart, 2018. Walmart 2018 Annual Report, s.l.: Walmart .

Walmart, 2020. Walmart Corperate. [Online]

Available at: https://corporate.walmart.com/our-story/our-business
[Accessed July 22 2020].

15 | P a g e GROUP B