Executive Summary
Walmart is an American global retail organization that operates countless grocery stores, department stores, and chains of super and hypermarkets. Founded by Sam Walton in 1962, Walmart is the world’s largest company by revenue, with US$514.405 billion in 2020. As of October 31, 2020, Walmart has 11,501 stores and clubs in 27 countries, operating under 55 different names. It has wholly owned operations in Argentina, Chile, Canada, and South Africa. The company also owns and operates the Sam’s Club retail warehouses.
Current Situation
Performance
The company is currently the world’s largest retailer and the largest grocery store chain in the United States. In the past fiscal year, Walmart generated nearly $500 billion in revenue. The company is also one of the most profitable retailers in the world, with a net income of over $14 billion in its most recent fiscal year. Walmart’s current performance can be attributed to its aggressive expansion strategy, which has resulted in the company opening thousands of new stores in recent years.
Strategic Position
To maintain its position as the world’s largest retailer, Walmart must continually adapt its strategic posture. The company has a history of being an early adopter of new technologies and using its scale to drive down costs. It is also quick to enter new markets and experiment with new formats. Walmart’s strategic posture is, therefore, one of continual innovation and adaptation. The company continually seeks new ways to enhance its operations and expand its reach, which means that it continually experiments and tests new ideas. It is also willing to take risks, which has sometimes led to failures but has also allowed it to stay ahead of the competition.
External Environment: Opportunities and Threats
Natural Physical Environment: Sustainability Issues
Walmart is a large corporation that operates many retail stores. The company has a sustainability issue in that it is a large contributor to greenhouse gas emissions. The company’s emissions come from its manufacturing and transportation processes, as well as from the use of its products by consumers (Neebe, 2020). Walmart is working to reduce its emissions, but it still faces criticism for its environmental impact.
Societal Environment
The current economic conditions are favorable for Walmart. Low unemployment rates and inflationary pressures are driving consumer spending, which benefits Walmart (Neebe, 2020). Additionally, Walmart’s low prices are appealing to consumers seeking to save money. Walmart can maintain its low prices due to its efficient supply chain and effective use of technology.
Walmart has invested heavily in technology, including artificial intelligence and robotics, to automate its operations (He et al., 2021). This has allowed Walmart to keep its costs down and pass the savings on to consumers. The Trump administration’s tax cuts have benefited Walmart by lowering its tax burden (Neebe, 2020). Additionally, the administration’s deregulatory agenda has enabled Walmart to reduce its compliance costs, thereby saving money.
Task Environment
The threat of new entrants is low, while the barriers to entry in the retail sector are high. Walmart has a significant competitive advantage due to its size and scale. The bargaining power of buyers is high. Walmart has many competitors, such as Amazon, that offer similar products and services (Seaman & Bowman, 2022). This gives consumers the ability to compare prices and shop around for the best deals. The threat of substitute products and services is low (He et al., 2021). Walmart offers a wide variety of products and services that are difficult to replace.
Internal Environment: Strengths and Weaknesses
Corporate Structure
The corporate structure of Walmart is hierarchical in nature. The company has a board of directors, which serves as the highest decision-making body within the company. The board is responsible for appointing the CEO, setting the company’s strategic direction, and overseeing its overall performance (Chang & Hu, 2020).
Below the board is the executive management team, which is responsible for executing the strategies and policies set by the board. The CEO heads the executive management team and includes the CFO, COO, and other senior executives (Seaman & Bowman, 2022). Below the executive management team are the regional managers, who are responsible for managing the operations of the stores in their respective regions.
Corporate Culture
The corporate culture of Walmart is founded on a set of core values that include respect for individuals, service to customers, and a commitment to excellence. Walmart employees are expected to be friendly and helpful, and they are often praised for their customer service skills (Wang, 2021). Walmart also has a tradition of promoting from within, which means that many of its employees have been with the company for a long time and have a deep understanding of its culture and values.
Corporate Resources
Walmart’s marketing strategy is focused on price, convenience, and selection. The company advertises “Everyday Low Prices” and offers a wide variety of merchandise. Wal-Mart also offers convenient locations and extended hours. The company has a solid balance sheet and generates strong cash flow. The company can fund its operations and growth with internally generated cash flow (Chang & Hu, 2020). Walmart has a large workforce and a small research and development department, which focuses on ensuring operational efficiency and improving its supply chain (Wang, 2021). The company has a variety of programs and policies in place to attract and retain employees.
Strategic Factors
Situational Analysis
The company has achieved considerable success in the past, but there are areas where it can still improve. The primary areas that require attention are the company’s customer service, online presence, and ability to compete with other retailers (Seaman & Bowman, 2022). Customer service is one of the most important aspects of any company, and Walmart is no exception. The company has been criticized in the past for its subpar customer service, and this is an area that needs improvement.
To enhance customer service, Walmart must prioritize employee training and ensure that they consistently deliver the best possible service to customers. The company’s online presence is also very important (Seaman & Bowman, 2022). In today’s world, more and more people are shopping online, and Walmart needs to make sure it is visible to these customers. The company needs to enhance its website to ensure it is easy to use and navigate (Chang & Hu, 2020). Additionally, Walmart needs to ensure that it offers competitive prices on the products it sells online.
Mission and Objectives
Walmart’s mission is “to help people save money so they can live better.” The company claims that its purpose is to help its customers save money and live better lives.
Walmart has several objectives, including:
- to be the low-price leader in the retail industry;
- to provide excellent customer service;
- to expand its presence in the global marketplace;
- to increase its online sales;
- to increase its market share in the grocery business.
Strategic Alternatives
- To attract wealthier clients, the company should expand its selection to include a greater variety of premium products.
- Expanding its international presence would give Walmart access to new markets and customers.
- Increasing its focus on e-commerce and online sales would enable Walmart to reach a broader customer base and compete more effectively with Amazon.
- Improving its customer service and in-store experience would make Walmart a more attractive shopping destination for all customers.
Recommended Strategy
One recommendation is that the company should diversify its product offerings to include more high-end items. This strategy could help attract a more affluent customer base. This would allow Walmart to better compete against Amazon, which has been increasingly targeting higher-income shoppers. By offering more upscale products, Walmart could make itself a more attractive shopping destination for a wider range of customers.
This strategy could be implemented by working with suppliers to stock more high-end items in stores and by promoting these items through marketing and advertising. Walmart could also create dedicated sections or aisles in its stores for these products and train staff on how to effectively sell them. Once the strategy has been implemented, Walmart should evaluate its effectiveness and make any necessary adjustments.
Some indicators that could be used to assess the success of the strategy include sales data, customer satisfaction surveys, and changes in market share. If the strategy does not achieve the desired results, Walmart should modify its approach (Seaman & Bowman, 2022). For example, if sales of high-end items are not increasing, Walmart could consider offering more promotions or discounts on these items.
References
Chang, Y., & Hu, J. (2020). Analysis of the mode of Multinational Retail Enterprises entering the Chinese Market—Take Walmart, Carrefour, and metro as examples. Modern Economy, 11(01), 17–27. Web.
He, Z., Ding, Y., & Liu, W. (2021). The states quo of Walmart and challenges and opportunities of their online transformation in China based on SWOT analysis. Proceedings of the 2021 International Conference on Financial Management and Economic Transition (FMET 2021). Web.
Neebe, K. (2020). Sustainability at Walmart: Success over the Long Haul. Journal of Applied Corporate Finance, 32(2), 64–71. Web.
Seaman, B., & Bowman, J. (2022). Applicability of the M5 to forecasting at Walmart. International Journal of Forecasting, 38(4), 1468–1472. Web.
Wang, Z. (2021). Business Analysis on Sustainable Competitive Advantages. E3S Web of Conferences, 235, 03009. Web.
