Wal-Mart: SWOT Analysis
Wal-Mart is one of the biggest companies receiving a large revenue and number of loyal customers in numerous stores located in different countries around the globe. The company is known as the leading grocery retailer, and is recognized by the Fortune Global 500 as the largest public corporation in terms of revenue. Today, Wal-Mart is still able to maintain the recognitions continuing to grow and stay at the top of the competition.
Internal Analysis: Strengths and Weaknesses
Wal-Mart can be considered as one of the strengths of the company.
Basically, Wal-Mart was able to dominate the retail industry by gaining the loyalty of its customers. Wal-Mart also controls most of the consumer goods from different prominent product manufacturers. Moreover, the company was able to hold the top rank in the marketplace by restructuring their business plans and operations. They remodeled their stores, invested more on technology, replaced warehouses, and eliminated irrelevant job positions. The actions were done in order to execute another plan for a more expanded and successful business.
(Bianco, et al. 2007)
Aside from shifting the focus to products and customers, Wal-Mart focuses on bridging the cultural diversities among the workers of the company. Hispanic and African- American women were added to the company to create more effective relationships despite cultural differences and make the company have a representative from other countries.
The success of Wal-Mart in the marketplace has been very transparent for both the customers and competitors alike. In fact, the company’s competitors cannot easily beat or even reach Wal-Mart’s revenue. In thousands of Wal-Mart’s stores located in different countries, the customers are able to enter and purchase in at least one of those retail stores. Wal-Mart was also able to dominate the suppliers and build good business relationships with them. The pricing pressure of Wal-Mart serves as a blessing for the suppliers of products in the market.
Moreover, the construction of more super centers in the future is included in the marketing plan of the company. Although many Wal-Mart stores will be relocated as part of the company’s business operation, the company will still be as eager to build more stores in order to accomplish their goals and objectives (Economist). However, the stores built will be smaller than the existing Wal-Mart stores (Graff, 2004).
Unfortunately, the idea of relocating the stores and constructing new super centers somehow became complicated especially for the company’s growth. Many stores already exist, and the company often observes that Wal-Mart competes with itself. The company continuously builds new stores, which in turn becomes a threat for its competitors. However, such bold move may cause the business to deplete in growth. Wal-Mart, on the other hand, was able to penetrate other markets by making the business grow globally and gaining more customers from different countries.
In addition to this, the company’s entry to Germany’s market was the opposite of what Wal-Mart expected. Price controls, tough zoning regulations, and rigid labor laws made it difficult to control and dominate the market. In other words, the company lacked strategies in penetrating the said market. The marketing plan of the company has always been put in question because of the unending issues that are being thrown toward them. Some of these issues talk about the labor policy and violation of laws of the company. A company on its highest level of success, like Wal-Mart often fails to recognize the small problems that always end up to the biggest threats for growth (The Economist, n.d.).
External Analysis: Opportunities and Threats
Building value from the external networks is one of the greatest activities that the company can do to expand the business. The company should look for other alternatives, at the same time, improve the supply chain. This should be done in order to make the communications with the supplier and customers healthier than how the company anticipated it would be. The connection with the external networks will definitely boost the company’s business to a more successful and highly-profited one (McPhee, 2006).
In this aspect, Wal-Mart was able to build good relationships with the manufacturers. Today, more companies are trying to penetrate the market and introduce new products for their target market. As a matter of fact, many suppliers believe that Wal-Mart is advantageous in penetrating the market, both inside and outside the country, and in strengthening the market positions (Bloom & Perry, 1999). In so doing, the constant penetration of manufacturers and development of products in the market could definitely boost the business of Wal-Mart.
However, the success of Wal-Mart is also viewed as threat to the company. Regardless of the recognition and large revenue, Wal-Mart is still criticized in the market. Regardless of having the largest number of loyal customers, many of them still remain skeptical towards the objective of the company. This factor can be considered as a threat to the company, for the customers are the primary targets in the business world. In this regard, the good reputation set by the company is slowly being damaged because of the numerous accusations thrown against them.
Furthermore, the rising legal and labor compliance problems of the company have greatly affected the business. Aside from the bad reputation that these law suits can bring to the company, Wal-Mart also needs to allot time to fix these problems, greatly affecting their business plan. Thus, the lawsuits have become the very core of damaging the quality of products and services that Wal-Mart can provide to its customers (Bianco,2003).
Three important clusters that have a strong impact for business growth are influenced by this kind of problem. First is the good relationship with the suppliers of the products that company offers to the market. The existence of other retail companies in the world may encourage the manufacturers to find for other alternatives of distributing the products and reaching their target markets. Just like Wal-Mart, Carrefour and Best Buy have been recognized as credible distributors of goods and gained established positions in the marketplace. Apparently, the weaknesses of Wal-Mart can be taken as the strengths of its competitors. The competitors of the company have been continuing to grow, finding ways to expand their businesses, and dominate the market. The reputation Wal-Mart created for its manufacturers may provide good opportunities for the competitors to achieve their company’s goals and objectives.
Aside from the competitors, the people also play an important role in this problem. People willing to work for the company may have negative impressions because of the labor problems. This may be attributed to the fact that Wal-Mart employees are said to be underpaid but still work beyond their work hours. The services that Wal-Mart renders for the customers establish not only a good relationship with them but also credibility in having the best workplace for their employees. Lastly, the negative feedbacks of the company would also affect the buying behavior of the customers.
Wal-Mart has gained the loyalty of their customers because of the low cost of products for the market. Unfortunately, the company fails to recognize the other factors that affect the behavior of the customers in purchasing the goods found in store shelves. Many customers buy products because of their affordability, while some still consider the style, quality, and services before purchasing. Apparently, Wal-Mart focuses on the prices of their
their products, which hinders the fast growth of the company.
The competition in the marketplace has always been the biggest threat for the companies. Whether the company has just started the business or already established a position in the market, the intense competition often becomes one of the most important factors to be considered. Since the market continues to discover new ways of selling and purchasing the products, companies like Wal-Mart should develop strategic plans to persuade their customers into patronizing their products allowing them to gain more in the future.
Undeniably, Wal-Mart has dominated the market with its thousands of locations and wide variety of consumers’ products. However, large companies, such as Wal-Mart, should also consider all the aspects of marketing in order to grow and gain more revenue without being criticized by its primary target market.
Bianco, A., Der Hovanesian, M., Young, L., & Gogoi, P. (2007). Wal-Mart’s Midlife Crisis; Declining growth, increasing competition, and not an easy fix in site. Business Week. New York, April 30, 2007, Issue 4032, page 46.
Bianco, A., Zellner, W., Brady, D., France, M., Lowry, T., Byrnes, N., & Zegel, S., Arndt, M., Berner, R., & Palmer, T., A. (2003). Is Wal-Mart Too Powerful? Business Week. New York: Oct 6, 2003., Iss. 3852; pg. 100
Bloom, P. & Perry, V. (1999). Retailer Power and Supplier Welfare: The Case of Wal-Mart. Journal of Retailing. USA: Elsevier Science Inc. Vol. 77, Issue 3 pp.379-396
Graff, T. (2004). The Locations of Wal-Mart and K-Mart Supercenters: Contrasting Corporate Strategies. The Professional Geographer. USA: Association of American Geographers. Vol. 50 Issue 1, pp. 46-57
McPhee, Wayne & Wheeler, David (2006). Making the case for the added-value chain. Strategy and Leadership. Chicago Vol 34, Issue 4
Special Report: How big can it grow? – Wal-Mart. The Economist. London Apr 17, 2004.Vol.371, Iss. 8371; pg. 74
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