Essay

Walmart: SWOT Analysis

Wal-Mart is an international retail company that sells goods and products for general consumption. Based in the USA, the largest private employer is deservedly described as the most valuable global company that opened its first store in Arkansas over fifty years ago. Wal-Mart’s activity has been dedicated to distinguishing and improving the people’s life. The company’s business is based on the leadership of its founder Sam Walton along with associates that always focused on helping communities and ordinary people save their money and live better. This rich legacy defines what Wal-Mart does today and what are the plans and goals it sets for the future. The public company’s mission statement and advertising slogan are almost the same. In addition to its mission, the retailer has the main purpose. In order to fulfill its mission, the largest retailer has developed unique policy, procedures, processes, standards and principles that form the corporate culture of the company’s stores. The paper represents the SWOT analysis with various opportunities, weaknesses, strengths, and threats that Wal-Mart currently faces. 

The first strength of the company is the scale of operations

According to the Associated Press (2012), Wal-Mart is the largest retailer with more than four hundred billion dollars in revenue and over ten thousand stores operating across the world. Consumers’ trust differentiates the famous retailer from its competitors. The high position on the domestic and international markets is a major strength that makes Wal-Mart the reputable giant incomparable with any other global retailer. Because of significant scale of operations, the corporate company can take into account the fact that the strong power of buyers will have some impact on suppliers to lower their prices. It can also achieve greater cost savings as compared to the rivals because of its huge size.

The second strength is the cost leadership strategy that helped Wal-Mart become the leader of the low-cost goods entering the market. The comprehensive strategy that the company developed is based on selling production at the lowest prices and providing quality services to achieve high economy and attract millions of consumers across the world. It is exactly what the company is doing nowadays (Robbins & Coulter, 2013). In comparison with the rivals, Wal-Mart builds warehouse- type hypermarkets containing extensive range of commodities to its clientele. Owing to its low cost leadership strategy, Wal-Mart offers the grocery production at affordable prices about 12% lower in comparison with the competitors operating on the market. The retailer’s strategy guarantees a stable stream of clients for its commodities and groceries, making Wal-Mart inexpensive manufacturer and keeping continuous pressure on competitors.

The first Wal-Mart’s weakness is the labor related lawsuits

The global retailer annually faces labor related lawsuits incurring losses in millions of dollars. The company has repeatedly defied criticism for female discrimination, unpaid overtime, low wages, and poor working conditions. In addition to the litigation expenses, the company’s reputation has been damaged and fewer experienced employees are willing to work there. Because of the failure to ensure better and dignified workplace for its personnel, the company’s goodwill has been damaged, and Wal-Mart was forced to pay millions of dollars of fines and lawsuits. In order to minimize this weakness, it is important for the company to conduct periodic audits, train supervisors, consider alternate solutions, implement programs based on the positive relationship between employees, and demonstrate consistency (Adler, 2007).

The second weakness of Wal-Mart is high employee turnover 

The company’s business is suffering from high employee turnover, increasing costs and training new workers. The basic reason for the high turnover rate is low-skilled and low-paid jobs. Many experts agree that employing the right individuals from the start is the perfect way to diminish employee turnover. It is important to interview candidates and check them carefully, not only ensure that they have necessary skills. Moreover, it is important to provide benefits and set the right compensation. 

The first Wal-Mart’s opportunity is the growth of retail markets in the emerging countries. Retail markets have grown by almost 5% on average, opening up great opportunities for the company’s revenue growth. According to Berg and Roberts (2012), the largest retailer currently operates in India, China, Mexico, and Brazil. In order to stimulate the future growth, Wal-Mart should strengthen its presence in the global markets.

The second opportunity is to increase acceptance of private label production. The sales of own label commodities have doubled over the last years. Consumers increasingly accept the supermarket’s chain production in comparison with the national grocery brand. Wal-Mart has a great opportunity to enlarge label production sold at the stores and gain high profits.

The first company’s threat is the growing competition from online and non-network rivals. Best Buy plans to implement the option of home delivery on the day of purchase like Wal-Mart did. Moreover, Tesco, Amazon, and Target continue to put huge efforts to reduce difference in prices that the largest retailer enjoys. Except the low price, Wal-Mart does not differ from other companies, and it will face high competition from them in the near future. 

The second threat is the increasing resistance from the local community. Wal-Mart stores negatively affected communities and local retailers. Therefore, the majority of local retailers closed their business, when Wal-Mart opened its new stores in a particular region. It has affected not only the retailers, but the whole communities and employees’ families. Because of this circumstance, the company continues to face resistance from retailers and communities, and it has become quite difficult for Wal-Mart to open its stores today. 

According to De Kluyver (2010), Wal-Mart has a strong opportunity to enter Asian and European markets. In order to meet various demands, Wal-Mart needs to focus its main strategy on the product expansion. As for the international expansion, the company has to focus on the Mexican and Canadian markets that demonstrate high results. Moreover, the retailer needs to drop any international market that is not performing well. Before entering the European and Asian markets, Wal-Mart has to conduct thorough market research and focus only on those markets that have the great potential and minor competition.  The last international expansion of the global retailer encountered organizational and strategic issues, and, consequently, its success was inconsistent abroad. In this case, the lost focus and control are evident. 

If Wal-Mart maintains its strengths, it can beat the main competitors and eventually minimize threats. Undoubtedly, the comprehensive programs of environmental sustainability and ethical sourcing should continue to function.  By continuously searching for a way to improve operational efficiency and double its strengths, Wal-Mart will outpace price competition and deter potential rivals from entering the market.

You may find it interesting:

The Culture Analysis of Aruba Why GMO Foods should be banned in U.S