A Strategic Analysis of Walmart Inc.
Name: Amal Khalifa
Walmart Inc. is a company that participates in wholesale and retail of household products. The organization majorly operates within the United States of America and is a significant player in the retail chain-store industry. Since the inception of the company, it has increased and diversified the range of the products that it offers to consumers. Currently, it operates under different trade names, such as Sam’s Club, Walmart International, and Walmart U.S. Each of the segments of the organization concentrates on a different niche of the market. Walmart Inc.’s top position in the 2017 Fortune 500 Companies asserts its dominance in the market; however, SWOT analysis conducted confirms that expanding to other markets and improving its public image are required strategies to maintain the competitive position.
Walmart has many stores across the United States and overseas. The company expanded rapidly due to its endeavor to provide low-cost products to consumers. Consequently, it gained wide popularity and attracted many customers to its stores. However, the organization realized that the customers had different demands, thus it differentiated its services and formed the three sub-companies to deliver its services. Walmart U.S operates within the United States of America and has many stores across the country. Additionally, the segment facilitates online shopping to assist the company in taking advantage of digital retailing in the U.S market. The Walmart International, one of the segments of the company, works in foreign countries and provides both wholesale and retail services (Collins, 2015). The Sam’s Club division of the company is an exclusive members-only association that specializes in a wide range of services. Through its numerous subsidiaries, Walmart Inc. has dominated the retail and wholesale sectors of the American market.
Walmart’s size is a major strength that gives it added advantages over other participants in the market. The company’s large size allows it enjoying economies of scale when purchasing products. Therefore, it can easily sell its commodities at low prices without impacting negatively on its profit margin. This advantage can serve well should the organization decide to expand further and establish retail chains in different parts of the world. The size of Walmart makes it a significant player in the industry because it accords it competitive bargaining power both against suppliers and customers (Meeks ; Chen, 2011). The global position of the company also improves its access to talented employees who can assist it in completing specific tasks as people feel more comfortable when they work for large companies.
The market share that Walmart controls is another strength that facilitates its continued position among the top retailers in the United States. Apparently, the organization is the leader in most of the niches in which it operates. Consequently, it is the largest retail store in the world (Muñoz, Kenny, ; Stecher, 2018). The large market share of the firm accords it slight monopoly over some products, thereby, enabling it to reduce competition through price wars and other strategies. The market share of the firm suggests that it makes adequate profits and, therefore, can hardly experience losses in the sales of its products.
The organization’s strategy of selling its products at reduced prices means that it has thin profit margins. Therefore, the organization depends on making high sales before it realizes significant profits. Evidently, it is not easy to meet high sales volume every time because of the dynamism of the economy. Therefore, the organization stands a risk of reducing its revenues if its sales volumes drop by a small margin.
Walmart has many stores that require large number of personnel to run. The stores of Walmart are both in the United States and outside of the country. Hiring many employees increases the organization’s cost of operation, thereby, reducing its profit margins. In the large stores that it has, the employees are crucial for tasks such as shelving products, attending to customers, cleaning the stores, among other casual jobs that require human aid. Nonetheless, hiring people boosts the local economies (Bonanno ; Goetz, 2012). The dependency on labor reduces the flexibility of the organization, especially when it comes to the introduction of new services. The labor-intensive strategy also means that the organization is likely to face various law-suits from employees and experience other factors that could reduce their morale.
Walmart can expand into developing countries where the retail markets are not congested. This market has high spending powers that can sustain Walmart stores (Mun ; Yazdanifard, 2012). Moreover, since the company offers highly discounted products, customers in the developing countries can easy afford the products.
The organization has received various complaints about its human resource practices in the past. Therefore, it has the opportunity to rectify the situation and improve its image (Collins, 2015). Since the organization is dependent on workers to achieve its objectives, it is prudent that the management ensures the employees’ grievances are addressed.
The model of business that the organization uses is easy to imitate, which led to the establishment of many similar stores. Consequently, the company faces stiff competition in the market sections in which it operates that limit its ability to expand. Additionally, the competition provides an easy alternative for products to the customers, thus, threatening the sale volumes of the institution.
The trend of adopting healthy lifestyle among consumers affected the sales that the firm had been making. Apparently, many people are concerned about the effects that certain products have on their health, thereby, leading most customers to opt for organic products. The increased health-consciousness of the customers has made the institution to re-strategize multiple times in the bid to retain loyal customers.
The SWOT analysis reveals that Walmart can improve its business by venturing into the developing economies because of the high potential for growth that they have. Such markets present an opportunity to accomplish company goals because they are unsaturated, and in some cases, the governments have friendly policies for foreign investments. Taking advantage of such an opportunity is a preemptive step that the organization can take to establish its dominance of the retail and wholesale markets of the world. The developing economies had adequate labor that can meet the employee-demand of the organization.
Another recommendation is to rectify the operation of its human resource department to improve its image for both the public and to investors. Public image has become an important factor that determines the success of brands. The poor reputation that the organization has because of the implications of its human resource department with wrong doing can harm its business. Therefore, recommending that it resolves the issues that plague its human resource department aims to increase its appeal to customers, a factor that will assist in entering new markets if it opts to venture into developing economies.
Bonanno, A., & Goetz, S. J. (2012). Walmart and local economic development: A
survey. Economic Development Quarterly, 26(4), 285-297.
Collins, J. (2015). Walmart, American consumer-citizenship and the erasure of
class. In J.G. Carrier & D. Kalb (Eds.), Anthropologies of class: power, practice and inequality. (pp. 89-101). Cambridge, UK: Cambridge University Press.
Meeks, M., & Chen R., (2011). Can Walmart integrate values with value? From sustainability
to sustainable business. Journal of Sustainable Development, 4(5), 62-66.
Mun, L. Y., & Yazdanifard, R. (2012). Walmart success in Mexico, Canada and China: Global
expansion, strategies, entry modes, threats and opportunities. Retrieved from Research Gate (Accession Number B1000922)
Muñoz, C. B., Kenny, B., & Stecher, A. (Eds.). (2018). Walmart in the global south: Workplace
culture, labor politics, and supply chains. Austin: University of Texas Press.