Excellent business model
Wal-Mart primarily nurtured on the strength of an excellent business model with an extensive combination of in-stock commodities and offering outstanding customer service as its foundation. It was also able to form special partnerships with suppliers like Procter & Gamble and to obtain brand-name products in larger package sizes, which gave Wal-Mart a lower price-per-ounce for these products than its rivals could offer. Today, Wal-Mart is the biggest global retailer, with a market cap more than five times greater than its nearest rival (Brunn, 2006).
The company has also built commanding presence in consumer electronics, and its movement into children’s toys has landed leading competitors on the ropes. For Wal-Mart, its operational efficiency combined with its seemingly unstoppable ability to expand to new offerings seems to be the perfect formula for success. Weaknesses One of Wal-Mart’s noted weakness is that even though the firm has a distinctive competence in information technology, it has done poorly in the internet. The reason for such is that Wal-Mart does not promote the website well.
People do not recognize the website because no promotion method is done for it to be known. Another reason for Wal-Mart doing poorly in the internet is that most consumers of Wal-Mart are those who belong in the middle income group and have large families. As such, they tend to buy more things at the company’s physical store rather than use the website for shopping because obviously, the products in the website cost more. Another major weakness seen is that Wal-Mart is risking eroding its market position because it seems to lack an understanding of its employee values that drive relationships and loyalty.
Wal-Mart is at present involved in a variety of class action suits because of failure to comply with state wager laws. Particularly, it was sued by its employees for exploitation, and faced the largest class action suit for sex discrimination in U. S. history. This strained the relationships with most of its employees as well as stakeholders, which no matter how much Wal-Mart denies it, has affected its operational excellence recently. Opportunities Probably the biggest opportunity for Wal-Mart is the potential conversion in many stores of gross space to sales floor space (Spotts and Greenwald, 2005).
Despite the sizes of the store portfolios on acquisition, Wal-Mart still needs to expand both sales floor space (as opposed to back room space) and total floor space (for all stores in the chain) to gain sales volume to allow its product offerings to be introduced and to impact the competition. The addition in the number of stores would boost the closeness to customers’ area. This would result to rise in traffic and as a consequence, more profit for the business.
In addition to these opportunities, online shopping has grown progressively when it comes to attractiveness in the United States, and Wal-Mart is in position to gain from the anticipated boost in sales generated by online customers. Threats Perhaps the biggest peril to the company is local governments supporting labor groups in the latter’s fight to save jobs. This is primarily because it is a national rule of thumb that two smaller rival supermarkets close down for every single Wal-Mart superstore that gets established in the area.
Wal-Mart’s campaign of founding new retail stores in the U. S. might also be opposed by local population. Smaller retailers are afraid that the cheap prices by Wal-Mart may drive them to close down. In other states, inhabitants and local governments are putting forth worries regarding augmented traffic congestion and the necessity to protect their open spaces. This increasing resistance to opening new stores coming from the local population and access to global markets is possible to prevent or hinder Wal-Mart’s plans to expand, which, in turn, could hinder the company from generating more revenues from these potential stores.