Executive Summary
Over the years, the area of approach has expanded considerably, and firms have attained an improved grasp of their fierce competition to create organizational and competitive benefits and retain their lead in competitive challenges. This report evaluates the internal and external factors affecting Walmart company using the SWOT analysis. In the internal analysis of Walmart, this report provides the strengths that make the company have a competitive advantage. Furthermore, Walmart’s weaknesses are discussed in the internal analysis section. A VRIO framework is provided and explained with methods in which the approach provides a competitive edge to Walmart. In the external analysis section, opportunities and threats that would impact Walmart’s operations are extensively discussed. The PESTEL framework is employed in the report and acts as a checklist in providing macro-environmental factors that influence Walmart’s operations. The opportunities and threats are explained to understand how they impact the company’s ability to be sustainable and socially responsible. Furthermore, the aggressive and defensive strategies are addressed in this research paper. Under the aggressive strategy, there are interactions on how Walmart’s strengths can result in opportunities. While the defensive strategy explains and identifies where Walmart is vulnerable to the potential threats due to the company’s weaknesses.
Internal Analysis
The better an entrepreneur identifies their skills and shortcomings and then develops ways to optimize those abilities, the more likely they are to establish something significant. Strengths are features that place an organization apart from its rivals. These characteristics give the company a significant edge over competitors. SWOT evaluation may assist uncover a firm’s exclusive marketing strategy, which acts as the framework for the firm’s financial position and retains it abreast of its industry competition. Weaknesses, like strengths, are internal aspects of a company, and understanding them may aid in finding opportunities for progress. Additionally, doing so allows firms to build methods to correct and manage their weaker spots, allowing the organization to thrive.
Strengths
Walmart is among the globe’s most profitable corporations and the planet’s biggest retailer. It has become United States’ largest private enterprise with over two million employees (He, Ding and Liu, 2021). The company is a retail business champion in the United States and a major competitor in its geographic territories. Walmart Inc. makes it possible for people all over the universe to save cash and reside happier by allowing them to buy in retail locations and online. The firm tries to provide a customer-centric approach that effectively links e-commerce and physical outlets in an omnichannel solution that saves money and time for its consumers via innovation. According to He, Ding and Liu (2021), Walmart services about two hundred and fifty million consumers every week under fifty-four banners in 25 countries, with roughly eleven thousand five hundred shops and multiple e-commerce platforms.
In 1992, Walmart launched Sam’s Lounge in Mexico Capital as part of a collaborative partnership with Cifra, a commercial institution. Ever since, the firm has developed into the planet’s largest multinational retailer, with six thousand stores in twenty-five nations throughout the world. Seiyu outlet in Japan, ASDA stores in the United Kingdom, and Walmex in Mexico are some of the institution’s brand identities (Ofori-Nyarko, Wang and Annoh, 2020). Walmart’s non-U.S. earnings hit over one hundred billion dollars in 2021, accounting for twenty-two percent of overall revenues, making it a substantial cash flow generator (Harrison, 2019). Walmart’s worldwide growth plan assists the company develop whereas bolstering its operation dominance status. Developing overseas enables the firms to diversify its revenue flows, achieve crucial new knowledge, and take advantage of economies of scale.
Weaknesses
Walmart’s profit percentage is essentially relatively minimal for a company with impressive purchase rates and earnings. Providing customers such minimal prices, even with reduced initial manufacturing costs, implies that the proportionate profit per commodity purchased is gradually reduced than at other merchants (Ofori-Nyarko, Wang and Annoh, 2020). Walmart attains its significant purchases and profits statistics by depending on huge economies of scale in its selling techniques, which, although dependable, are not the best economic circumstances to function under.
Notwithstanding its continuous achievements, Walmart’s business approach is not very creative. It caters to a broad range of clients by providing a comprehensive variety of commodities at reasonable costs. Competing supermarket stores may openly emulate its diversity, and a range of businesses can focus on one of the myriads of item groups Walmart offers, often providing nicer merchandise for little money. Though Walmart may have mastered the large box shop technique, other businesses are catching up (Ge et al., 2019). Walmart’s employees have been the topic of numerous critiques and complaints. Low wages, inadequate medical care, and a poor operating environment are problems that have been raised in court.
VRIO Framework
Walmart Inc.’s worldwide supply chain and operational administration experience are important assets in its value network, allowing the company to maintain a competitive edge in the global retail market. This company’s VRIO study and value chain assessment has discovered such competitive advantages. The VRIO assessment provides information to decision-makers regarding the corporate resources and competencies that underpin long-term competitive opportunities. Walmart’s extensive and worldwide supply chain network allows the corporation to offer a wide choice of products that none of its competitors can match (Ge et al., 2019). Walmart can fight fierce competition because of its strong negotiation strength and pricing advantage. The firm’s superior bargaining position is precious, uncommon, and difficult to duplicate. Walmart’s tremendous bargaining strength enables it to acquire things in bulk at extremely low prices from its producers, then transfer the savings to customers throughout the world.
Excellent inventory control techniques are a key competitive advantage for Walmart. Its multinational network of providers, distributors, and retail outlets functions as a single entity. Cross-docking and applying technologies to control the proper inventory levels are two other strategies the organization has employed for successful inventory handling. Walmart may minimize shipping time and avoid other inconsistencies that might drive up inventory administration expenses by using cross-docking. Such systems are a tactical asset created expressly for Walmart Inc.’s requirements to reduce inventory constraints and expenditures (Park and Li, 2021). Furthermore, these solutions assist the retail industry in maximizing profit advantages. Walmart’s ability to maintain its pricing dominance in the retail business has been aided by successful inventory handling.
External Analysis
Opportunities
Although its achievements, Walmart should not relax; rather, it should aggressively pursue various development prospects. Walmart may take advantage of the opportunity by extending its operations into other regions. The Middle East, China, and East Africa may be among them (Chang and Hu, 2020) Political variables such as governmental stability and political backing for industrialization create chances for Walmart to open stores and generate income. Frequently, inexpensive commodities result in poor performance; however, Walmart has the opportunity to enhance the value of its merchandise to meet customer medical conditions. Walmart’s activities will be able to flourish if leading economies remain stable and developing ones continue to thrive. Walmart is already in the healthcare business, with four healthcare facilities across the United States. It can increase healthcare services to capitalize on the sector’s needs. In Walmart’s latest introduction into the medical field, the company launched the establishment of Walmart Insurance Services, a health coverage agency.
The development of ethnic diversity and urban movement is sociocultural variables that will allow Walmart to expand. Walmart should execute a wise strategy to acquire a competitive advantage by offering healthier meals to the health-conscious populace. Implementing robotics is a form of digital revolution that includes deploying automated technologies to boost firm operations. With the organizational size of Walmart, robotics is a foregone conclusion (Park and Li, 2021). Workers may concentrate on sales activities without being distracted by monotonous tasks managed by the robots. Increasing customer mobile smartphone usage is an advantage that stimulates online delivery and targets a larger audience. Ecological conservation is becoming a popular notion, and Walmart must engage in initiatives that save the environment to achieve commercial sustainability. Walmart should employ food safety restrictions as an opportunity to enhance value. Walmart’s activities must address challenges by utilizing the possibilities discovered in the retail industry environment.
Threats
Walmart remains to resist the possible negative consequences of challenges in its operations’ geopolitical, commercial, cultural, technical, environmental, and regulatory elements as a retail sector leader. The danger of increasing wages is the biggest political challenge that Walmart faces. This is a threat because it goes against Walmart’s general cost administrative objective, that demands lowering cost. Walmart has been involved in various political debates, the most recent of which stemmed over the Impeach 45-item T-shirts. The Impeach 45 commodities, which suggests that the 45th American president should be removed from office, caused anger and sadness, which led to a campaign to blacklist Walmart (Penrod and Crow, 2018). The company’s activities might be hampered if it does not function in politically favorable areas. Walmart faces danger from economic stability because when the economy is struggling, it may be necessary to increase production, which would increase the price of items, making customers dissatisfied.
Despite its international notoriety, Walmart is not always a popular shopping destination. Consumer lifestyles, culture, and shifting conduct are sociocultural concerns that might affect Walmart’s marketing strategy, development, and effectiveness. For instance, Walmart lost approximately one billion dollars because of Germany’s absence of enthusiasm. The company did not meet the German consumers’ cultural needs resulting in poor sales. It was more of a Walmart issue since they did not effectively advertise to German customers. As a result of regular technical failures on its webpage, Walmart’s latest e-commerce initiatives may lose customers (Shen, 2020). Clients have complained about the disarray of the item categorization and the website’s sluggish loading speed. Walmart could lose digital consumers to Amazon and Alibaba, which are quick, efficient, and dependable. Tax reform, for example, might pose a concern if it results in increased tax rates. Walmart has come under fire for inappropriately dumping pesticides and toxic fertilizers into the sewer system, thus an environmental threat.
Strategies
Aggressive Strategy
As individuals devote greater time online, putting together the pieces that make up a strong brand recognition framework is becoming more difficult. Walmart’s eCommerce success may allow the corporation to grow in other areas. Company recognition is a formidable factor that propels the entire narrative of the brand. Walmart’s eCommerce platform provides the company with various benefits, including marketing possibilities, product expansion, and increased revenue (Shen, 2020). Furthermore, with an efficient and well-developed web page, Walmart can accomplish these objectives and provide its clients with a comfortable, round-the-clock experience, which may help the company grow.
Walmart is a large retailer and among of the globe’s most lucrative enterprises. By 2020, Walmart had sales figures totaling more than five hundred and sixty billion dollars in the United States. Walmart is likely to recruit top-tier staff due to this strength, which will help the company boost its commercial productivity and outcomes. Interested, competent, and driven workers are more likely to operate in the course of the firm’s business objectives, which improves customer happiness and financial results (Shen, 2020). Furthermore, attracting a talented workforce necessitates strategic talent management, which assists the business in keeping its personnel engaged, giving them extra reasons to remain with the firm and complete their duties.
Defensive Strategy
Personnel at Walmart raise concerns of not being capable to get full-time jobs, a scarcity of healthcare coverage, and unpredictable planning that renders their lives tough. Although most of the two billion dollars turnaround plan was executed, workers’ hours were reduced, resulting in reduced net compensation. Stressed labor might have negative consequences for the company. Staff at Walmart may lose enthusiasm, develop disputes, and have difficulties finishing duties (Penrod and Crow, 2018). Poor psychological concentration, sleep deprivation, and exhaustion are frequent work-related anxiety side effects. Walmart’s webpage has had technical challenges as a result of the flaw. Clients have complained about the disorder of item classification and the website’s slow loading speed due to poor working conditions.
A smaller profit range depicts minimal revenue is accessible to finance the organization’s running expenditures, including advertising and management staff. Slower growth will result from the firm not being capable of investing as much in advertising as its rivals. Walmart is facing the danger of workers requesting salary increases due to the company’s low-profit margins making the company have legal problems. Furthermore, Walmart’s low revenues prevent it from funding environmental initiatives (Shen, 2020). Walmart shops release harmful greenhouse gases that exacerbate the climate issue because they lack the cash to install contemporary environmental equipment.
Reference List
Chang, Y., and Hu, J. (2020) ‘Analysis on the mode of multinational retail enterprises entering Chinese market’, Modern Economy, 11(1), pp. 3-9.
Ge, H., Pan, Y., Shen, Z., Wu, D., Yuan, R., and Zhang, C. (2019) ‘Retail supply chain management: A review of theories and practices’, Journal of Data, Information and Management, 1, pp. 45-64.
Harrison, V. (2019) ‘Legitimizing private legal systems through CSR communication: A Walmart case study’, Corporate Communication International Journal, 24(3), pp. 439-455.
He, Z., Ding, Y., and Liu, W. (2021) ‘Proceedings of the 2021 international conference on financial management and economic transition’, Advances in Economics, Business and Management Research, 21(4), pp. 230-256.
Ofori-Nyarko, N. S., Wang, F., and Annoh, W. O. (2020) ‘SWOT analysis: Walmart stores Inc’, International Journal of Recent Research in Commerce Economics and Management, 7(3), 32-35.
Park, A., and Li, H. (2021) ‘The effect of blockchain technology on supply chain sustainability performances’, Information Systems and Digital Business Strategy, 13(4), pp. 172-189.
Penrod, C., and Crow, M. (2018) ‘The biggest have of them all: Walmart and its litigation outcomes in slip and fall cases’, American Business Law Journal, 55(2), pp. 223-259.
Shen, Q. (2020) ‘The research of Walmart global expansion’, Journal of Finance Research, 4(1), pp. 33-35.
