Sam Walton opened the first Wal-Mart store in Rogers, Arkansas in 1962 and it was officially incorporated as Wal-Mart Stores Inc. on October 31, 1969. By the late 1960s, Wal-Mart had expanded to include 276 stores across 11 states and went public in 1972.
Since its establishment in Mexico City in 1991, Wal-Mart has consistently grown. Currently, there are 8,446 store and club locations operated by Wal-Mart in 15 countries, serving over 176 million customers annually (walmartstores.com).
No matter their size, every company faces strengths, weaknesses, opportunities, and threats; this also applies to Wal-Mart.
The website walmartstores.com offers information on the strengths, weaknesses, opportunities, and threats of Wal-Mart. This retail giant is widely recognized for its strong brand presence in the industry. It provides customers with convenience and value by offering a wide range of products under one roof. The brand is famous for its affordable and discounted prices. Wal-Mart caters to diverse customers by providing clothing, electronics, jewelry, gardening equipment, and more.
Wal-Mart’s extensive store network allows it to be accessible to a diverse range of individuals. The company has experienced significant growth and global expansion, including the acquisition of ASDA in the United Kingdom. One of Wal-Mart’s strengths is its use of information technology to support its international logistics system, which enables seamless tracking of product performance across stores and countries. Information technology is also vital for facilitating efficient procurement at Wal-Mart. Additionally, the company prioritizes human resource management and development through a targeted strategy.
Wal-Mart places emphasis on its employees through investments in their training, retention, and development. The company also offers stock ownership and profit sharing plans to its workforce. Utilizing its bulk purchasing power, Wal-Mart acquires discounts that are exclusive to the organization, which are then passed on to customers, solidifying the company’s reputation as a discount retailer. Nevertheless, there are weaknesses associated with Wal-Mart. Despite possessing technological advantages, the company’s extensive control may hinder flexibility when compared to specialized competitors like Best Buy. Furthermore, while operating globally, Wal-Mart has limited presence in various countries across the world. Legal challenges from employees have had adverse effects on Wal-Mart’s employer image, particularly allegations of unfair employment practices from female workers. Additionally, the company has faced litigation concerning opposition towards unionization among its American workforce. Negative publicity has emerged due to aggressive negotiation tactics employed by Wal-Mart with suppliers. It is important to highlight that Wal-Mart has faced scrutiny for selling products from Chinese suppliers linked to health and safety risks recently.
Considering Wal-Mart’s limited presence in certain countries, there is potential for further growth in China, India, and Europe – all of which are thriving consumer markets. Expanding into these regions can be accomplished through multiple strategies like acquiring or merging with other companies, as well as forming strategic alliances with both global and local retailers operating within those areas.
Based on the textbook (page 125), if Wal-Mart decides to adopt a growth strategy, it could pursue horizontal related integration. This involves acquiring other companies in the same industry and is a form of external growth (pages 126-127). Furthermore, given the current economic crisis, many people have experienced a decrease in disposable income. Consequently, individuals and households have adjusted their expectations and opt for bargain shopping. In this scenario, Wal-Mart has the potential to benefit.
Wal-Mart offers customers even bigger bargains by purchasing products at a cheap rate from suppliers, motivating them to shop at its stores. Additionally, the company’s strategy of large, super centers provides a convenient one-stop shopping experience. This approach appeals to customers by making shopping easier and ensuring that they can find what they want when they want it.
Convenient presentation and the right level of service are provided by Wal-Mart each time the customer shops, which helps appeal to an even larger market. According to pages 151 and 152 in the textbook, this opportunity would become apparent if Wal-Mart employed a low-cost strategy, producing basic, no-frills products for a large market of price-sensitive shoppers. Wal-Mart has diversified its locations and store types to take advantage of market development. This includes expanding beyond large super centers to local and mall-based sites such as their Wal-Mart Neighborhood Markets and Marketside stores.
Using a focus-low-cost strategy as described on page 153 of the textbook, Wal-Mart has found an opportunity to appeal to customers who prefer the experience of shopping in smaller stores rather than the large supercenters it is known for. In addition, Wal-Mart has chosen to employ an external growth strategy through unrelated diversification on pages 126 to 127, by introducing Marketside stores in a different industry than its regular retail stores. Another opportunity for Wal-Mart is the growing trend of internet shopping, which it must prioritize in order to capitalize on.
Wal-Mart can ensure a positive customer experience by offering friendly site designs, efficient order fulfillment, fast delivery, and professional customer response. They also handle returns, refunds, and rebates promptly. To achieve this goal, Wal-Mart can implement a stability strategy (as mentioned on page 129) by focusing on improving the customer shopping experience on their website. This will help them maintain their current business while attracting new customers. However, Wal-Mart faces competition from major retailers like JCPenney who offer significant discounts such as 50% off sales. Due to its lower profit margins per unit sold, Wal-Mart may face challenges in competing with these sales.
Wal-Mart’s main source of revenue is from the sale of various products, but a decline in customers’ disposable income and concerns about job security have resulted in reduced shopping expenses. This situation presents both potential advantages and risks for Wal-Mart since it heavily relies on consumer spending. Moreover, being a prominent competitor in the market makes Wal-Mart susceptible to competition at local and global scales. As an international retailer, Wal-Mart also encounters political obstacles in its operating countries. Additionally, the company has successfully decreased manufacturing costs by outsourcing production to inexpensive regions worldwide.
The intense price competition among competitors has caused price deflation in certain ranges, posing a threat to Wal-Mart. In addition to competition, theft by customers and employees also threatens the company, resulting in losses in merchandise and increased security costs. Wal-Mart also faces regulatory challenges from foreign governments, notably China, as it expands globally. Skepticism from local populations when entering international markets is another threat encountered during global expansion.
Wal-Mart has quickly become a renowned American brand and global force within less than 50 years. Through cost reduction methods, the company has been able to offer affordable prices, attracting budget-conscious shoppers. The introduction of Wal-Mart Supercenters has also appealed to those seeking convenient shopping experiences. As we move further into the 21st Century, Wal-Mart appears to be poised for continued expansion. With its effective current strategy and abundant opportunities in today’s market, it is certain that Wal-Mart will continue to achieve remarkable success.