|Type of paper:||Essay|
|Categories:||Leadership analysis Walmart SWOT analysis Business strategy|
Walmart is a Fortune 500 American international corporation that owns chains of hypermarkets, department stores, and also grocery stores. The company is headquartered in Arkansas and was founded in 1962 by Sam Walton. Walmart is a perfect example of what the American dream is all about. It also offers an insight into how much impact the market system in America and globally can accomplish with the right management and virtues being the pillars of the business. Walmart has been able to provide high-quality goods at competitive prices. Therefore this has helped them expand their operations in the United States and more recently throughout the world. Block (2015) attributes the efficiency achieved by Walmart to the efficiency in operation. The store utilizes the time, resources, and talent at its disposal to make positive steps towards achieving technological advancement and more efficient techniques in operations.
Walmart is not only just a big company; it is among the world's largest corporations. As of 2005, Walmart had accumulated revenue of $285 billion, and with a workforce of 1.6 million spread across its 3,600 stores (Neumark et al., 2007). In perspective, the number of Walmart employees as of 2005 represented 1% of the total workforce in the United States and over 10% of the retail workers in the country. Furthermore, the workforce exceeds the total number of high school and middle school teachers (Neumark et al., 2007). The success achieved by the corporation can be attributed to the business decisions and practices that the business has been undertaking and continues to undertake, thus providing them with the competitive advantage that they need to stay ahead of their competitors.
The company continues to make profits through the discounted rates that they offer to their customers and the prices that they offer to people who buy in bulk from their stores. The company changed and continues to change the face of retail business in the United States and has expanded to other countries in the world. This paper will examine the factors from within and outside the organization that help the organization to stay ahead of its competitors.
Walmart’s Business Strategy
The primary business strategy that Walmart operates on is the low prices it offers to its customers daily. Their mantra is `daily low prices,’ and they, therefore, offer comparably low prices to those offered by their competitors. Additionally, Walmart provides a wide range of goods under one roof, therefore providing their customers with the advantage of the variety and saving time whenever they shop in their stores. They have also been able to advance their business through their investment in technology and innovative measures of doing business (Smith, 2016). The details of the business strategies that help in the success of Walmart have been discussed below.
The main selling point of Walmart is the low prices that they offer to their buyers. The company sells a variety of goods in its stores and offers the best prices in the market for the goods. Their goal is to achieve profits through the vast volumes of sales that will help in the achievement of the business goals. Therefore, through the store, shoppers are assured of convenience, affordable prices in the goods that are stocked, and quality in the goods (Smith, 2016). The store also provides a large assortment of goods under one roof, hence providing their customers with the advantage of getting all the products that they need under a single roof. The quality checks that the business performs for its goods and services help in providing them with the advantage of getting quality for the goods that they receive at a considerably lower price than the ones that they can get from competing outlets.
The company has also been able to formulate a business strategy that has enabled them to achieve profits in their endeavors. Therefore, Walmart has set some other business strategies that have continued to enable them to thrive in the market. For example, they encourage buying in bulk instead of the goods being sold in single units. Through the volumes, they can get profits since they buy their goods in bulk too. They also have a highly efficient and effective supply chain system, which helps them in maximizing productivity in the company and reducing the levels of outlays. They also maintain low operational costs so that their levels of income are significantly more than the expenses, hence creating a situation of profit achievement at all times. The business also uses its dominance in the market to control their suppliers (Smith, 2016). Therefore, the business has been able to achieve more profits, since they set their prices when they source for goods from their suppliers. The suppliers are left with no option but comply with the demands of Walmart since they are also assured of large sales from Walmart in the course of their transactions. Through these strategies, the company has been able to achieve the business success that they have currently.
Porter’s 5 Analysis of Walmart
The retail industry that the company operates in has stiff competition. This being so, Walmart has had to engage in business strategies that enable them to grow exponentially and fight the threat of being driven out of business by the competition that they face from other retailers (Brunn, 2006). The availability of many retail businesses in the retail market increases the levels of competition in the industry. Therefore Walmart has to achieve aggressiveness in its business activities so that it can maintain its place position in the market.
Customer’s Bargaining Power: Weak
The large number of customers who flock the store means that they are unable to impose any significant pressure on the store to reduce their prices. Additionally, the store has low prices already, and therefore, the customers do not have many complaints in terms of the pricing of the products in stock. The existence of individual buyers in the store and other outlets offering similar services means that the pressure from consumers to regulate prices is significantly low (Brunn, 2006). Also, the diversity of the customers means that they are unable to form a block that would successfully force the store to regulate their prices.
Bargaining Power of Suppliers: Weak
The market dominance and the size of Walmart mean that the suppliers have less influence in setting the prices of the goods they supply to Walmart. Walmart can control the influence of suppliers in their market through the large number of suppliers who are ready and willing to supply to Walmart at the prices that the store will set, which shows the stiffness of the competition among the suppliers in the market (Brunn, 2006). Also, the availability of suppliers in case the current ones refuse to supply at the prices that Walmart determines reduces the influence of suppliers over the merchant.
The threat of Substitutes: Weak
The threat of substitutes taking the place of Walmart is significantly reduced since the outlets offer a variety of goods, which makes the possibility of another supplier who would provide the specific categories of goods as Walmart does difficult. The lack of a viable substitute means that the company has been able to maintain its position at the top of the market and therefore enjoy business success. Although there exist substitutes to the goods that Walmart provides, it is impossible at the moment to provide goods in the same manner that the store does, hence giving them the competitive advantage that they need.
Threats from New Entrants: Strong
As mentioned earlier, the retail industry has stiff competition, and therefore Walmart continues to face the threat of competition from other outlets. Therefore, although the company remains to be a leader in the industry in terms of their size and the advantages that they enjoy due to their experience and size, they have to recognize the possibility of the new entrants in the market coming up with strategies that may pose a threat to their dominance (Brunn, 2006). The company also has to stay wary of the mergers and acquisitions that may form strong competitors that may bring them down.
SWOT Analysis of Walmart
First, the company enjoys the brand recognition that comes with their large size and their existence in the industry for a more extended period than the companies that are there. Also, the global presence of the company gives them the ability to reach different markets, which gives them the ability to make more profits. The ability to make more profits also helps the organization to expand exponentially inside the US and worldwide (David et al., 2019). The organization also boasts of a large and competent workforce, which helps them to achieve their organizational goals. The company has also invested heavily in technology, which helps them in serving their customers better and also in streamlining their internal operations.
First, the company suffers from the weakness of offering their employees deplorable working conditions and mistreating them. There have been complaints about how the company treats its employees, and this reduces the positive image that the organization has worked to build through their low prices. Also, the large size of the organization brings the problem of controlling the branches effectively, which has proven to be nearly impossible (David et al., 2019). There are also cases of gender discrimination from the management, which further worsens the public image of the company. Finally, the business faces the threat of imitations, whereby the competitors can easily copy the business structure of the business and successfully overtake Walmart.
Walmart’s financial power offers them the possibility of expansion into other markets, which will, in turn, increase their market presence even further. Also, the business can strategically form alliances that will, in turn, strengthen their position in the market. Therefore, the company can invest in mergers and other partnerships that can improve their business presence and success. There is also the possibility of the company improving its human resources management practices, hence increasing the productivity of the workforce, in turn resulting in business success for the organization (David et al., 2019). Finally, the organization has the opportunity of increasing the quality of the goods that they provide. When an organization provides low-priced goods, the quality is sometimes low, and therefore, Walmart can review their prices so that they can increase the quality of goods that they provide.
First, the company has been under constant negative light through the controversies that they have been implicated in. The cases of poor employee treatment have been threatening the public image of the organization, and this threatens the patronage to the outlets. Also, the company faces the threat of unfavorable business practices that harm the business’s profit margins. There is also the threat from e-commerce platforms that offer shopping from various suppliers and offering delivery services, hence putting Walmart at a disadvantage.
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