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Background
Walmart established its first e-commerce initiative in 2000 then invested in its international business development and purchased a large stake in the Indian e-commerce website Flipkart. On June 30, 2008, Walmart introduced the company with the new Walmart logo. In early 2009, Walmart entered Chile with the acquisition of D&S SA Distribution and Service. In May 2009, Walmart partnered with Bharti to gain access to the Indian market. On February 22, 2010, the company confirmed and valued $ 100 million. In June 2011, Walmart acquired 51% of Masmart Holdings. This acquisition gives the company access to the following African countries. Walmart offers its customers a wide range of quality goods and services at reasonable prices. The main reason why the brand has achieved a leading position in the retail market is its attractive pricing strategy. Walmart employs 2.3 million people worldwide, including 1.5 million in the US not only creates opportunities but also brings value to customers and communities worldwide.
Scope of Report
This report will discuss the information about Walmart and key strategic issues facing the organization. The resources and key capabilities of the company will also be analyzed with a particular focus on what gives it a competitive advantage in its industry, these will explored using Porters forces and SWOT analysis. Using VRIO and VRIN analysis and value chain analysis of the company informs decision-makers about the organizational resources and will create an innovative strategy for improvement that will be suggested.
Purpose
The purpose of this report is to explore the recent strategic issues of Walmart and understand if there are competitive advantages in addressing these issues or not.
Objectives
Technology is evolving Walmart is using it and integrating it with its mission and vision to better serve its target segment. And that is why Walmart is increasingly becoming a digital company.
External Environment of Walmart
Technology, operational efficiency, and customer service are some of the factors that have continued to grow in the retail industry. Retail sales are expected to exceed $ 28 billion by 2020. Walmart, Kroger, Costco, and Home Depot are some of the brands with the largest market share in the US retail sector. Also, demographic and technological factors, are affecting US retail sales and growth. The changing demographic makeup of the US population is also affecting sales. As we know is a generation of technology experts who enjoy online shopping, Brands that invest in technologies such as AI, robotics and virtual reality are seeing revenue and financial growth. Increasing online sales is also a sign that brands must harness the power of the internet to grow.
Porters Five Forces Analysis of the US Retail Industry
Walmart develops strategies to protect the business from challenges in its industry environment, such as those related to external factors identified in this five-company strength analysis. Michael E. Porters Five Forces analysis model is a strategic management tool that assesses the impact of external factors shaping the competitive landscape of the industry. These external factors determine the strength of customers’ or buyers’ shopping, the strength of suppliers’ shopping, the risk of replacement, the risk of new entrants, and their competition.
Bargaining power of suppliers: Many retailers compete for limited space in retail stores. High supply availability prevents suppliers from influencing Walmart’s strategic growth.
Bargaining power of buyers: The large number of shoppers is a weak force for Walmart and retailers. The low strength of the variety of buyers and the low strength of modest single purchases further weaken the strength of customer shopping. The greater variety of buyers makes it difficult for customers to exert collective pressure on society.
Threat of substitute products and brands: Some substitutes for Walmarts goods are easily available. The external factor of replacement diversity prevents consumers from moving away from products offered by retailers such as Walmart, but some substitute products are more expensive than the low-cost goods and services that are offered by the company’s branches. According to Porter’s five-force analysis model is a low risk to replace Walmart’s industrial environment.
Threat of New Entrants:
Small retailers have lower transaction costs compared to large enterprises. This situation allows many small retailers to compete with Walmart. These external factors in the context of the Five Forces analysis indicate that new entrants continue to operate and pose potential threats to companies such as Walmart.
Level of competitive rivalry in the retail industry: External factors are key considerations in Walmart’s strategic management of competitive strength. We can name three key components: a large number of companies in the retail market, a large variety of retailers, strong retailer aggressiveness
Walmart SWOT Analysis:
Strength: The company has a key competence in using information technology to support its international logistics system. The strategy is focused on human resource management and development. Employees are key to Walmart’s business. They spend time and money on training and retaining their development staff.
Weakness: Some small retailers, particularly dollar stores such as Family Dollar and General Dollar, have managed to find a small niche market and compete with Walmart for sales to home customers. Walmart is the largest grocery retailer in the world, and controlling your empire can make you weak despite IT benefits in some areas due to the large area of control.
Opportunity: Walmart has a great opportunity to expand its store and online presence. Walmart has already begun to adopt some of the biggest e-commerce giants, such as Flipkart, etc., to sell their products through digital channels.
Threaten: The biggest threat to Walmart is competition from companies such as Target, Costco, Amazon, Tesco and Microsoft, Carrefour because they have the same business model as Walmart and ensure that organizations reduce the price difference between them. The growing social threats posed by Walmart’s presence in the local community can be detrimental to small business owners who cannot compete with one another in terms of prices and choices. The increase in labor costs and employee training affect the company’s profit margins and force the brand to rethink its pricing strategy.
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