Running Head: WALMART

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WALMART Name Course Instructor Date

Running Head: WALMART

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Contents
WALMART.................................................................................................................... 1 Contents..................................................................................................................... 2 B. Executive Summary ...............................................................................................4 ................................................................................................................................... 4 C. External Analysis ....................................................................................................4 Industry analysis...................................................................................................... 4 Competitive analysis................................................................................................6 MACRO ENVIRONMENT ............................................................................................6 PEST ANALYSIS OF GENERAL MERCHANISE RETAILERS .........................................6 D. Internal Analysis .................................................................................................... 9 Functional audit....................................................................................................... 9 E. Strategy Formulation ............................................................................................11 Strengths............................................................................................................... 11 Weaknesses...........................................................................................................11 Opportunities.........................................................................................................12

............................. 12 F....................................15 Growth through expansion within the US and internationally......................................................................................................................... Strategic direction and selection ..... Strategic Plan ...................................................................................................................16 Venturing into new retailing sectors........................................19 K..........................................................................................................................................14 Company purpose..................................................14 Strategic Vision .........................................................................................................................................................................................13 G.............................................15 Name recognition and creating a positive brand.... Implementation and monitoring................................. 20 ........................ 20 .......................................................................................................................................................Running Head: WALMART 3 Threats........................................................................................................ Appendix –................................................... References – ................................................. 16 H..................................17 I......................... Conclusion – ......................................................14 Retail market domination.......................................... 18 ............................................................................................. 19 J....................16 Selected strategies...........................................

The paper then covers the SWOT analysis of the whole company. It commences by carrying out an external analysis of the industry in which Wal-Mart operates. Finally. Executive Summary This paper comprehensively analyses Wal-Mart. External Analysis Industry analysis Wal-Mart operates in a very unique competitive environment. It then looks at the macro environment of the company by carrying outa PEST analysis of the retail industry. An internal analysis of the company and in particular the functional audit s discussed at length. C. supermarket . It also looks at the strategies adopted by the company in surviving the competitive climate.Running Head: WALMART 4 B. Despite the fact that most of the competition facing Wal-Mart emanates from the general merchandise retailers. the paper ends with a conclusion.

Wal-Mart also competes fervently with the large supermarkets. however. Circuit City and bed. Generally. Such large scale functions provide the top players with huge cost advantages over their small scale competitors (Kneer. attributes such as price quality and variety are very important in remaining competitive (Kneer. Beyond and Bath also pose some competitive challenge on Wal-Mart. The dominance of Costco may be as a result of better innovation. Most of the Costco customers frequently shop at Costco than is the case with Sam’s club customers.Running Head: WALMART retailers and warehouse clubs also exert a lot of competitive pressure on it. In such a competitive environment. Generally. in merchandising retailing. purchasing and manufacturing.For the largest competitors they compete at the national and international arena. 2009). Despite the fact that Costco has slightly fewer warehouses. the major competitors of Wal-Mart are Kmart and Target. Costco competes harshly with Wal-Mart’s Sam’s club. store size. that is. In the grocery sector. advertising. it manages to generate great sales and revenues. it was the first retailer to sell fresh produce and meat as well as gasoline and this innovation enabled the company to develop loyal customers. production capacity is very populated and as such Wal-Mart is a serious threat to the large and . pricing. the industry is characterized by economies of scale since the top retailers tend to vertically integrate functions such as shipping. merchandise mix. layout and environment and the overall image.it should be noted that the discount retail industry is quite substantial and continues to experience phenomenal growth . retail superstores. Wal-Mart. However. 2009). there is fervent competition on location. technology and 5 innovation. continues to be favored relative to the other stores because it offers high quality goods low prices and a wide variety of products to choose from. Consequently. Within the warehouse segment.

Kroger. whenever there is political instability. Hence. the government was quite hesitant to allow Wal-Mart into their economy because thy feared that the company would lead to a closure of several indigenous supermarkets.Running Head: WALMART 6 small supermarkets. The information flow within the company is very efficient and as such this facilitates decision making. MACRO ENVIRONMENT PEST ANALYSIS OF GENERAL MERCHANISE RETAILERS Political The general merchandise industry is affected by politics and the political regime in place. the issue of political stability is very fundamental. the company’s corporate culture plays a very significant role in facilitating the activities of the company. in some counties such as China. Most of the stores mainly make marginal profits from the goods they sell and therefore they highly rely on volume of sales to boost their bottom line. 2006). Additionally. Secondly. For instance. it must be noted that for the large chain of stores such as Wal-Mart with operations beyond their domicile. A result of the competitive nature of the industry. Competitive analysis Wal-Mart’s competitive position is based on the company’s unique organization of its distribution and logistics system. they will . governments across the globe have to regulate the extent of competition to create a level playing field and avoid the emergence of a monopoly in the industry. Since the industry is highly crowded. the large supermarkets are resorting to differentiation to enable them remain afloat (Canak. Safeway and Albertson are increasingly finding it very hard t compete with Wal-Mart due to the low prices offered by Wal-Mart.

most of the retailers with expansionist policies have embarked on setting shop in these countries to benefit from the huge market presented and the disposable incomes (Kneer. . in the event of political turmoil in the countries will suffocate the supply chain and heavily impact on the company’s performance (Canak. To commence. in the United States. To begin with. economic growth coupled with increased disposable incomes will tremendously increase the marginal propensity to consume of the workers and this will make the stores to increase their revenues. consumers tend to shun items that they consider to be luxuries and instead opt to buy essentials that they need for their survival. Consequently. Inflation is the general rise in prices over time. For instance. it is imperative for the company to employ a certain percentage of company executives from the local communities.Running Head: WALMART tend to of very minimal sales and this will greatly impact on their profits. In the international arena. This is a prerequisite that has to be followed to the letter. the fact that 7 most of the large stores rely heavily on outside countries to provide them with raw materials and in some instances finished products. Economic The economy greatly impacts on the performance of the industry. In addition. With high rate of inflation. for companies wishing to set shop in countries such as China. Third. the BRIC countries re experiencing high economic rates of growth and therefore most of the people have huge disposable incomes that they can use to spend. it is a regulation that the composition of a company’s employees must reflect the diversity of the nation. It greatly affects the industry since increases in prices of goods results in diminished volumes purchased.2006). governments have in most cases put certain employment laws to govern how most of the retailers should select their staff. 2009).

Since most of them seek to increase profits by increasing their volume of sales. First and 8 foremost. Research has proved that young middleclass consumers account for most of the sales in the luxury segment. then they will be able to increase the volume of sales they make.Running Head: WALMART Social Cultural and social factors greatly influence the merchandise retail industry. Russia and China together constitute half of the global economy. income distribution will determine the spending patterns in the markets within which the company operates. Technology The industry is hugely impacted by the technological advancements in the industry which play a significant role in facilitating business transactions. For instance countries like India Brazil. This is also buoyed by the changes in lifestyles of the young middle class who tend to do shopping as a hobby or pastime activity. Identification of opportunities and threats The general merchandise retail sector has numerous opportunities that remain to be fully optimized. they therefore opt to locate their stores in areas with burgeoning population. Hence. Additionally it . Demography is another consideration for most retailers. Changes in information technology greatly assist retailers to expediently handle their large branches operations spread across different geographical areas. the retailers tend to locate their stores in areas that have young people with huge disposable incomes. They are therefore the favorite locations for the retailers seeking to spread their tentacles beyond their domicile. If the retailers increase their product ranges and ensure that the quality of their products is above board.

Hence. inflation. . These companies already enjoy goodwill and as such they seriously need to venture into countries across the continents with high economic growth rate and high marginal propensity to consume. Offering prices at low costs is one of the leading strategies adopted by Wal-Mart. employment and price stability.Running Head: WALMART must be notes that the industry is mainly dominated by a few large players such as Wal-Mart and Target. Internal Analysis Functional audit. 9 The industry is highly threatened as a result of the fact that it mainly engages in an area that is so dependent on economic fundamentals such as interest rates. D. This is a serious challenge due to the fact that some of the macroeconomic variables are determined by sentiment and this can cause the industry to witness a slump.

the advertising costs tend to be minimal. the company’s supply chain is one of the most cost effective. in the inventory or even at the cash register in a real time basis. Superstores. Wal-Mart has very little expenditure channeled to advertising than its competitors. The company mainly relies on word of mouth to gain market share in the large cities that it establishes stores. service and supply chain . distribution. Hence. due to the closeness of the stores.They facilitate the smooth operation of this departments in the realization of the company goals and objectives. This is mainly achieved by clustering its stores within a very small area. In the operations and distribution departments. neighborhood markets and Sam’s clubs (Canak. at the operation level. 2006). The company. . strategies adopted have been very instrumental in enabling Wal-Mart to achieve low prices. sales and marketing. The company has an elaborate ability to track product movement along the entire value chain. discount stores. The service department and the marketing department work hand in hand in ensuring that the company provides high standards of service to the consumers Departments such as general administration.Running Head: WALMART 10 the company’s value chain is very important in identifying the activities behind Wal-Mart’s ability to achieve the strategies stipulated. human resource management. First and foremost. As a result of locating stores close together. Wal-Mart has the ability of tracking a product whether it is on shipment. distribution costs tend to be below average. The strategy of the company has mainly been to locate its stores within large cities and within range of 200 miles from the existing stores. meets the needs of different customers by focusing on four retail alternatives. and research and development provide support to the operations.

This has been a key strength because it has enabled the company to have many visitors to its stores and as such it manages to increase its profit margins. The company’s brand name is strength as it is a large company known to provide goods at discounted prices which enables it to attract customers on the basis of quality and price. This has also tarnished its reputation. Strategy Formulation Strengths Wal-Mart has a very powerful strategy of countering competition and remaining 11 competitive. Its strategy of providing a wide variety of merchandise at relatively low prices ensures that the company is able to attract customers. The company also has a very wide geographical network that has enabled it to serve a huge clientele and as such it is able to reap from areas less covered by their services (Kneer. Third. Secondly.2009). it is able to reap huge economies of scale in procurement.Running Head: WALMART E. hence it benefits from huge discounts which it finally translates into cheaper merchandise. Weaknesses Despite the fact that Wal-Mart has a strong brand name. as a result of being anti union. the company is anti union and as such it tends to prevent unions from agitating for salary review. the company is able to enjoy economies of scale in areas such as advertising and marketing. the staff turnover rate in the company tends to be phenomenally high and as such this makes the company to incur huge costs in training new employees time and again. As a result of the partnership the company has with other companies such as McDonalds. it also has a very weak reputation. This is because of ethical issues surrounding its operations such as accusations of being racist in the deployment of senior company executives. In addition due its huge size. Secondly. the company has a very strong financial condition that enables it to be able to buy goods and merchandise in bulk. The failure of the management to come to a settlement with unions on .

the industry is experiencing very slow market growth. the company needs to serve new market segments that remain to be highly underexploited to diversify its revenue sources. For instance. Third. as a result of technological advancements. Secondly. Finally. Sixth. There are also new entrants in the industry who are threatening the market share of the company. new markets have been to be exploited. Fourth. most economies have liberalized their economies and as such. Third. there . The 12 company also fails by not being consistent in surveying their customers. the BRIC economies present numerous challenges that can be exploited to provide markets for the company. Threats The first and major threat the company has to confront is the issue of increased competition. these countries have rising consumer demand as a result of increased disposable incomes of the consumers. by choosing to sell at very low prices. The major players in the industry and notably Target are a threat to the market share of the company. Fifth.Running Head: WALMART issues of salary and other benefits is a great flaw on their part and as such it is a weakness. the strategy adopted by the company is overly complex. In terms of E-Business the company still continues to lag behind other players in the industry such as Target. the company needs to increase its geographical presence into areas such as Asia and Africa to enable it tap into these underexploited markets. the company needs to look for ways of increasing its online sales segment. the sustainability of their strategy comes into the fore. Opportunities First. This means that the company may not be able to increase its turnover as expected. the growing bargaining power of suppliers and customers threatens the company’s power to determine price. the company has numerous growth opportunities through acquiring its rival firms or entering into alliances that will enable it increase its stake in the global industry (Canak. Secondly. 2006). Finally.

c s a o t o g m m e m m e e r s e n t r c e s t e t r a t e g y r i v a s a n u r i c e o o x o o i d t r o v a r i v a t i o n i v e p t o g a t i .u t Opportunities O R S E I n F A E E a c n x p i s e x c e i n n g g n a g i r i n r i n l o g g s d e t r a g i n m c a o n i n r k n e g o d n e s w i n l i n b l a e w e u t m m t o e a a s h e a r r k n s e a r e d e w l e r s s n c c h e n s o l o g i e s s i n f o r e i g e t m s g e e a g o n d m g e r a n p I n S t s E h L i co G n G A R N c l o n r e w t r y a m o f s e a d r k n a b a a e e c e Threats o t w l e s r g r g m t r a t o a a o d r y m g c p r o o t o i n i n g e r e m s i n i n r a p q p o u e w p u g g h t i t i o t h e b p p i c l i c i r e t i t o s o o r s t e e e h s m e n t s a r r n s o o g f f e s c s u u p s p t o l i e m r s e r s n r v i n p r e l l i n q t e p u a sa sr e oa f s s r o rm o d e e w w a v e s w i n g t i t u w w c i e r r i e f i r m l l i a t e ri k e t s n g b r s e d t i v e g u r i v a t o n t r i c r e i t i n l a F. such as is the case in China. which limits the ability of the company to operate in their markets. Summary Strengths P S S E C P I n G G W S o w e n n n t i n p d d e n g e s c g r f u g g o a g n u u e d m d l f i n b r a y v a a s p s o e d n s a n o t r a n d f t a n a l y m r a l e p r S g c t e i a n c e t a d c e h n g l a a s g v e h r i c e a s e y c m l e o s r t i s i n e c t w m r v i c o o v e r k v e o i n a e r a g e r v e g n a g e m r i v a r l s o e n d i t i o n O H W B D l s Q A e e o u n n v e i g e h e e h a k i n s s n d 't n i o r l y t u c r n r e p o o u t r o t r o c o o s 13 Weaknesses m p v e t a l s r v e b l e l e r x r a t i o i n y m c a n e u n . in every location in which Wal-Mart sets shop. This is because the company seems to be ruthless in the manner in which it opens its stores. Strategic direction and selection Wal-Mart has embraced a very aggressive corporate strategy. Notably.Running Head: WALMART are certain regulatory and restrictive trade policies. most of the existing business people end up being displaced. However. despite the challenges posed by the rapid expansion of . The scale and magnitude of Wal-Mart’s expansion has raised a lot of eyebrows and created resentment among other industry players.

G. you can always be assured you and that genuine customer service you have come to expect from any department of any store…. it has continued to use its corporate strategy of expansion in a very elaborate manner. our success will always be attributed to our culture. the company has been able to increase its market share and this has really impacted on its balance sheet." Wal-Mart’s corporate mission As Wal-Mart continues to grow into new areas and new Mediums. By opening up branches internationally and expanding the local ones. Whether you walk into a Wal-Mart store in your one across the country while on vacation. Strategic Plan Strategic Vision Wal-Mart’s mission statement and its advertising slogan are Similar: "We save people money so they can live better. • • • Domination of the retail market in every place that it has some presence Growing by expansion both in the United States and internationally Create name recognition and facilitate customer satisfaction by using the Wal-Mart brand hometown or are getting low prices us.that’s our culture. we’ll lower the cost of living for everyone…we’ll give the world an opportunity to see what it’s like to save and have a better life. Company purpose “If we work together.. You will feel at home in .” Wal-Mart has four man strategic goals and these are.Running Head: WALMART 14 the company.

Mexico. In essence. pharmacies. the goal of Wal-Mart is to expand.Running Head: WALMART • Venturing into new retailing sectors such as automotive. Internationally. United Kingdom and Germany. Korea. admittedly. 2007). the strategy also seeks to inject competitiveness in every unit that it deals with. it has managed to do over the years.Primarily. The corporate takeover strategy places the company in an advantageous position of penetrating into new markets. the company is currently ranked first and the company seeks to dominate the market in every sphere. Growth through expansion within the US and internationally Strategically. The company currently employs over 1. grocery and repair sales. In some instances. Secondly. Each and every store is under immense pressure to compete with other stores until Wal-Mart manages to become the unparalleled market leader in the industry. This. the company can effectively implement the strategy (Canak. . The company is able to build its brand familiarity while at the same time retaining the initial outlets (Chen. 2006). Brazil. Argentina. the philosophy here is to cut prices to the bare minimum hence cutting down on the markup and earn their profits on the basis of increased volume of sales (Chen. The company has over the years adopted an aggressive international strategy. Retail market domination 15 Wal-Mart intends to dominate the retail market . 2007). Making use of its size and buying power. it has expanded into other countries by adopting a corporate takeover of national retailers.5 million employees with more than one million being in the United States alone. In terms of sales. the retailer has operations in Canada. Wal-Mart is a discount retailer mainly because it sells most of its products at very low costs.

Running Head: WALMART Name recognition and creating a positive brand The aim of the company is to create positive impression by meeting the needs of the customers by using the Wal-Mart brand. the company seeks to refine its image by engaging in social . In this regard the company enters into partnerships and adopts the use of cobranding. Selected strategies Corporate strategy The corporate strategy of Wal-Mart is to fully dominate the retail industry by offering its customers with low prices. office supplies. Secondly. There are also other departments such as hardware. Thirdly. The philosophy of the company is that once a company expands in form of infrastructure. the company is able to drive the information to its existing and potential customers. Recently. magazines confectionary. the company has focused on the sale of discount and cheap housewares. most of the Wal-Mart stores harbor a McDonald’s resident within their premises. then it must begin branching out and compete with other established businesses. a pharmacy and a grocery store. by using mass 16 media. The company aggressively established neighborhood markets whereby it competed with businesses in the areas that it operated in. the company has developed a motor repair shop. the company seeks to expand both in the United States and in the international arena. This caused most of the local businesses to close shop. For instance. Traditionally. shoes. jewelry sales among other consumer goods. cosmetics and toiletries. paint supplies. Venturing into new retailing sectors Wal-Mart has in the recent past ventured into other retail sectors. The most notable and controversial foray made by Wal-Mart has been its venture into the groceries industry. books. The aim of the company is to have the customers recognize that it provides the best prices with strict adherence to quality. Hence.

Compared to other retailers such as Kmart. the decision of the company to open several branches in almost every city within the US has really been very beneficial and this has been an anchor in terms of the strategies adopted by the company. For instance. Wal-Mart has managed to set shop in virtually every continent across the globe. the company seeks to open up other sectors not covered by the company to the retailers 17 Despite the competitive environment that Wal-Mart has operated in. the company has had to contend with numerous protests by most local businesses that see Wal-Mart as a threat to the survival of their businesses. Finally. it has still remained to be competitive. Wal-Mart is way much cheaper (Leeman.Running Head: WALMART responsibility and engaging in community projects. which is 10% expensive. The company strives very hard to increase revenues and dominate its rivals in virtually every field. Wal-Mart has managed to use its pricing strategy to remain dominant in the industry. It has enabled the company to compete favorably with most of its competitors in the field. some businesses have completely been eliminated from business as a result of Wal-Mart’s aggressive stance. In fact. The decision by the company to foray into highly populous countries such as China is one of the best strategies adopted by the retailer. The company has over the years remained to be one of the most resilient companies in the sense that it has maintained its corporate strategy. . Notably. In fact. In its expansionist approach.2010). Wal-Mart operates by building more stores and increasing the size of the existing stores. H. the company decision to sell its products at a much subsidized prize has really paid over the years. Implementation and monitoring Typically. The Chinese market offers numerous opportunities considering that it is a growing economy with most people having huge disposable incomes and changing lifestyles.

Wal-Mart remains to be the leading retailer within the United States. Additionally. However. Wal-Mart remains to be a very formidable company with a very strong corporate strategy. Hence each year. this is not the case since it also leads to some of the stores shutting down leaving many people to be unemployed. For the company to remain competitive. the company has also made forays into other sectors such as grocery. it must also be noted that the company must deal with certain pertinent issues that threaten to destroy the company boasts of being an employer in the areas that it established its operations. The company has several avenues that if well exploited.Running Head: WALMART Balanced scorecard Financial Return on equity customer Customer satisfaction Internal business Labor utilization rate 18 Learning and growth Employee participation Return on investment Revenues Market share Response time On time delivery Average lead time Turnover rate Training and investment Gross margin Customer loyalty Average cost per transaction Employee suggestion I. The company continues to expand its foothold both nationally and internationally. . However. the number of stakeholders in Wal-Mart continues to grow at a very fast rate. Conclusion – In conclusion. electronics. it is important for the company to keep following the company’s corporate strategy Admittedly. it can really rev up its profits and become the global retailer. gas stations and auto maintenance.

Chen. C.The Wal-Mart Success Story.J.(2006). J.(2010).New York: GRIN Verlag. Wal Mart Business Case Study.(2009).Running Head: WALMART 19 J.Boston: Routledge Canak.N. Leeman.Wal-Mart world: the world's biggest corporation in the global economy. New York: GRIN Verlag.(2006). References – Brunn.China operation.Wal-Mart case study. . Kneer.BoD – Books on Demand. New York: GRIN Verlag. Supply Chain Management.S.(2007).

Running Head: WALMART K. Appendix – 20 .

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