It is already given that Wal-Mart Stores is the most successful retail chain in the world with operation spanning the countries across continents like United Kingdom, Japan, Canada, Brazil, Mexico, and China (Datamonitor, 2007). Its operational strategy of being a retail stores follow a different format. Its interests includes supercenters, community markets, and discount stores. In spite that the company has many store branches scattered all over the world, its main operation is focused in the United States.
Its home-base is located at Bentoville, Arkansas, and right now, an estimated two million people are under its payroll. As brief overview, the Wal-Mart reached an earnings and revenue of $348,650 million during the fiscal year of 2007. This is an increase of an estimated 11. 7% compared to what it had earned during 2006 (Datamonitor, 2007). In 2007, the profit by which the company was operating is reported to balloon at $20,497 million. Meanwhile, the net profit of the company has reached $11,284 million.
This number is a hike of 0. 5% compared with 2006 (Datamonitor, 2007). The success of Wal-Mart as a giant retail company and its advantage over competitors can be attributed to its business strategy of reduction of operational costs for it to apply an “always low prices” formula for its merchandise (Rugman, 2005). Successful and a giant in the retailing industry Wal-Mart may be, there are still several threats that the company continue to face.
One of the biggest challenges of the retailer company is the stiff competition presented by large number of retailers in the industry worldwide. Among these top competitors that threaten to topple Wal-Mart on top include the companies of Carrefour, Tesco, Home Depot, Target, Sears and other local companies. The company’s segment of stores closely competes with other retailers who are luring customers by offering discount. Among this list of competitors, the number one that gives the company a stiff competition is Carrefour.
At the present, Carrefour is considered as the world’s second largest retailer company in terms of revenue earnings. This competitor of Wal-Mart has an estimated 7,000 stores located strategically in 29 countries around the world (Datamonitor, 2007). Carrefour is considered as a serious a serious threat to Wal-Mart since the former is observed to be more adept in the aspect of pursuing international business compared to the latter. Furthermore, Carrefour is able to snatch the leadership position in retail industry in China.
Upon a cursory observation, the increase in competition brought by the local retailers in United States and Carrefour at the same time is seen to have a significant negative effect on the revenue base and capability to earn profit by Wal-Mart. These are just one of the major problems that the company of Wal-Mart ought to face. More than these, another threat against the company is the growing bad media it is experiencing from the local communities.
Right now, there is a growing opposition, as well as resistance, from communities from the business strategies being planned by Wal-Mart. Since Wal-Mart plans for expansion by opening new retail stores across the country, this plan is getting a negative reaction from the local communities because of some social and business issues. The problem with this business scheme of Wal-Mart is the fact that small retailers located in the target cities and towns by the firm fear that the presence and competition that Wal-Mart would bring to them will make them run out of business.