Strategic management: internal analysis
Wal-Mart is a big US retailer with $ 345 billion turnover in 2006. Nearly one- third of the US population visit Wal-Mart stores in US. It is the world’s largest public corporation by revenues according to 2007 Fortune Global 500. It has more than 6200 facilities including 3800 stores in US and 2800 in international locations, employing in all about 1. 6 million associates. International stores in 14 countries account for 20. 1% of the total sales. According to Global Insight, owing to Wal-Mart’s low prices, the savings per head in 2006 on an average are $957 which works out to $287 billion in total.
But, Wal-Mart is lagging behind Home Depot, Dell, Target, Costco, and Kroger in terms of profitability. The Wal-Mart’s Marketing Manager is seeking solutions to its problems in growth, profitability and public image. SWOT ANALYSIS In this paper, I have taken two tools of analysis- SWOT analysis and Value Chain analysis- out of many such tools available, to identify the bases of strategy and course of action. SWOT, according to Mourik, J. ( 1999, pp. 40-41) can elicit many ideas from different perspectives and lead to a more action-oriented form of analysis.
Strengths Low prices are the main strength of Wal-Mart. Because of this, about 45 million low-income Americans shop at Wal-Mart frequently. It has a strong apparatus as well as the bargaining power to extract the lowest prices from the manufacturers. It has a robust logistics and distribution system which meticulously keep track of back-end operations – the supplies from the manufacturer to the delivery counter. But all this is done cost-effectively, if not with the lowest cost. About 40% of its sales come from its store brands.
It sub-contracts manufacturing to third parties and gets the supplies for sales under its brand name. Weaknesses The slow growth rate is due to the aging of the outlets; the sales that come from five years or older outlets are 44% in 2006 and 17% in 2000. Stock-outs are everyday phenomenon. The stores often go out of stock on important items like textiles. The stores are failing in maintaining cleanliness and minimizing check-out time. Middle-income people don’t buy as much wares as low income people do since the Wal-Mart stores have a lot to be desired on store aesthetics, styles, quality and customer service.