Analysis, Pages 8 (1905 words)
Walmart Stores, Inc. is a multinational retail organization that runs a chain of large discount department, grocery, warehouse, and online stores. Walmart was found by Sam Walton in 1962, and it was incorporated on October 31st, 1969 (Slater, The Wal – Mart Decade, 2003). Walmart has a total of 11,718 stores and clubs in 28 different countries as of January 31, 2018, also operating under 59 different names (Nelson & Quick, 2010). For example, it operates under Walmart in the US and Canada; however, it is known as Walmart de Mexico y Centro America (also known as Walmex) in Mexico and Central America.
With only one discount store and the idea to sell more products for less money, Walmart started very small. That one small store has now expanded its wings in 28 different countries. Walmart is the world’s largest public corporation, according to the Fortune Global 500 list in 2013 (Slater, The Wal-Mart Decade, 2003, 28). Walmart is not only the biggest private employer with over two million employees but also the largest retailer store around the globe (Bianco, 2006, 82).
Like any other company, Walmart has its strengths, weaknesses, opportunities, and threats.
Walmart’s SWOT analysis will show that the leading position of the company in the international retail industry is based on the use of organizational strengths and the corresponding competitive advantages. In this Walmart case, the SWOT analysis will provide insights into the internal and external forces that are important in the development of the company’s retail industry strategy. The recognized brand, the international presence, the lawsuits, the high turnover, E-Commerce, Customer satisfaction, the competition, local communities are contributed to the SWOT analysis of Walmart.
While these factors vary over time, the growth of the company depends on its ability to capitalize on the effectiveness and strengths of its retail operations.
Strength: Recognized Brands
Walmart is known as the world’s largest company by revenue and by being the largest distributor within the world. It is additionally the world’s largest employer with 2.3 million employees. Wal-Mart is a trusted and known brand; therefore, the customers are comfortable to shop there. Walmart’s revenue reached US$500.343 billion in 2017, more than Costco, Tesco and Amazon revenues combined. Forbes listed Walmart as the 24th most worthy brand within the world in 2018, value of US$24.1 billion.
Strength: International Presence
Walmart went international in 1992 through a venture with Cifra, a Mexican retail company, opening a Sam’s Club in Mexico City. Since then, the corporate has enlarged globally to become the biggest international distributor by revenue. They have a total of 360 stores in about 27 countries outside the U.S. The company operates under completely different names, like ASDA within the U.K., and as Walmex in North American, Seiyu, and Japan. They have reached US$119.763 billion or 23.9% in revenue of its total non U.S. sales in 2018.
Walmart focuses on its international phase as this provides a chance for the company to increase operations. The corporate additional 47 new supermarkets/stores in Central America, 15 in Chile, 4 in China and 11 within the United Kingdom of Great Britain and Northern Ireland in 2017; that allowed it to grow its international sales. Walmart’s international growth strategy not solely helps the corporate to grow but also strengthens the company’s retail leadership position. By growing internationally, the corporate diversifies its financial gain sources, gains valuable new expertise and more edges from economies of scale.
Walmart has experienced numerous lawsuits related to its treatment of employees, including discrimination, unequal wages, unfair promotions, unpaid overtime, poor benefits and poor work environments. This has caused the retailer significant money as well as tarnished its brand reputation. In 2001, a lawsuit was filed against Walmart in San Francisco because of their promotion policies. Most women who were working at Walmart at the time would not get a promotion; not because of lack of potential but because they were women. Also, the women’s pay rates were extremely low compared to men. If both of them are doing the same amount of work, if both of them dedicate their time and love to the job, they should both get the same treatment, the same respect, and the same opportunities. It should not be about who they think should get the job, but who deserves it.
Walmart has faced $50 million lawsuit when about 69,000 current and former employees claimed that they worked and did not receive any compensation. The lawsuits allegedly continued when many more employees filed against Walmart for forcing them to work overtime while clocking out or on break and still receive no compensation. There was a total of 11 states that had lawsuits pending due to employees that did not get paid for their work. Walmart has forced the employees to work off the clock by asking them to punch out with their time cards, yet made sure they had continued with their work. It does not matter how much work is needed to be done at the end of the day; if during the eight hours shifts it was not completed, employees should not have to stay and work without compensation after their shifts are over.
Weaknesses: High Turnover
The company has high employee turnover and a lack of motivation among existing employees due to this lack of social responsibility towards its workers. This also reflects on the company’s image. Regardless its success, Walmart has a very high employee turnover which costs more money and time for the company to train the new employees. Once a company does not take care of its employees, it is always possible to have a high employee turnover. As mentioned earlier, Walmart used to make its employees work overtime or during their break without any type of compensation. Wal-Mart’s employers do not show any type of appreciation towards their employees, and it is common knowledge that if someone is not being appreciated, he/she will never stay.
Also, there is a lack of motivation among the employees. If every time they do something good, they are not recognized for their hard work and appreciated for what they did good, they will feel like they do not matter and that the only thing they are needed for is to do the tasks that are assigned to them. It makes perfect sense to keep the employees happy in order to get the business going. If the employees are not happy, customers will feel neglected because the employees will not be helpful. Wal-Mart needs to start doing employee recognition; such as giving them incentives, selecting employees of the month, start doing outings once a month to show appreciation to all its employees. In order for employees to be happy, they need to feel loved and welcomed by their employers, they need to feel like they are part of a family. That way, they will always be happy, customers satisfaction will increase while employee turnover decreases.
Opportunity – Expanding E-commerce Market
Since internet usage is increasing, and many stores are offering these types of services, Walmart needs to increase its online services as well. In the US, online retail class is growing really fast. Many people prefer to purchase online than to walk in stores. Everyone is busy with school and work, and they rather have their items delivered to them instead of them going to the store and wait in lines. Customer’s leaning towards online buying to force retailers to extend their activity in online structure. Although Walmart has online store through its own websites, e-commerce applications, and third-party retail partnership channels, they need to promote and improve the online business so it can be more like Amazon. That way, the customers will have options, and from there, they can have a preference.
Opportunity – Focus on Improving Customer Experience & Satisfaction
Walmart is trying to increase client satisfaction and customer experience. To do so, Walmart can do studies to measure levels of satisfaction for its shoppers each month and look at factors such as, speed at check-out, store cleanliness, whether items are in stock, and the helpfulness of workers. Attention to small detail like greeting customers with a smile on the sales floor, helping them understand how to find promotions on the app, or letting them know what products are on sale are key things that can help improve their customer experience and satisfaction.
Threat: Competition from Local and National Retailer
Walmart is facing more threats from the competition, including global retailers like Target, Costco, Tesco, Carrefour, and Amazon. These retailers are working on making their organizations more efficient to change their price difference between them and Walmart while offering a more enjoyable shopping experience with friendlier services and amenities, as well as higher quality products. Due to its wide store network and presence in multiple formats, Walmart faces competition from both local and national retailers. Amazon’s acquisition of Whole Foods, and Carrefour’s acquisition of stake in Showroomprive are the most recent examples from the marketing business witnessing consolidation through acquisitions, mergers, and partnerships. There is also an increasing social threat from local communities that do not like Walmart coming into their area and hurts the small business owner, which means shutting them down because they cannot compete on price and selection. If this reaction continues throughout the world, it can lead to a tarnished brand reputation for Walmart.
In conclusion, Walmart stores, Inc. is a multinational retail organization that runs a chain of large discount department, grocery, warehouse, and online stores. The company’s durable market position inside North American provides economies of scale and enhances the whole image of the company. It derived nearly 75 percent of revenue from the North American market. However, the company faces stiff competition with native players which can adversely influence the revenue and profitability of Wal-Mart. Therefore, for Wal-Mart to stay at the best of their game and follow the company strategy and win their key policy goals, they need to make sure that they are guarding their name well even with the critics by community groups, women’s rights groups, and alleged discrimination. This SWOT analysis of Walmart shows that the corporate will have higher success potential through aggressive world enlargement, particularly in retail markets in developing countries. The company’s internal strategic factors (strengths and weaknesses) represent capabilities for this sort of enlargement. However, the firm’s external strategic factors (opportunities and threats) need the creation of additional price through the retail service value chain, to beat the competitors, particularly strong local and regional companies.
This SWOT analysis shows that Walmart needs to prioritize using its strengths to take advantage of opportunities in the global retail market. Secondary priorities should be the weaknesses and threats of the company. To improve firm performance, Walmart can enhance its HR management standards and product quality standards. Based on its global organizational size, global supply chain, and high supply chain efficiency, Walmart’s strengths can support aggressive global foreign market expansion. Nevertheless, to prepare the business for the long – term developments of a globalized and increasingly online retail market, the company must implement strategic changes based on the weaknesses and threats presented in this SWOT analysis. Also, despite the weaknesses of the company, its strengths are far more important. Walmart can use these strengths to take advantage of its retail market opportunities. The company can also use its strengths to balance the threats to its retail business, particularly its e-commerce operations.