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Walmart: SWOT analysis

Walmart: SWOT analysis

Walmart is a multinational retail corporation, an American company. The company was founded by Sam Walton in the year of 1962 and incorporated on October 31, 1969. Headquarter is situated in Bentonville, Arkansas. Wal-Mart conducts a chain of discount department stores, hypermarkets, and grocery stores. The Wal-Mart is the world’s largest retail industry. As of 2016, Walmart has 11,527 stores and clubs in 28 countries, under a total of 63 banners. Also, Walmart is the largest private employer in the United States of America. The company operates under the Walmart name in the United States and Canada. An uncommon feature of Walmart is that it is virtually recession proof. The reason behind it is, in times of economic recession, consumers flock discount retailers.

Walmart is the world’s largest company by revenue – approximately $480 billion according to the Fortune Global 500 list in 2016 – as well as the largest private employer in the world with 2.3 million employees.

The SWOT analysis of Wal-Mart elaborates the strength, weakness, opportunities, threats for the company. It will provide a visual overview that will prompt discussion around the company’s strategy, situation, and potentiality.

Strengths

Wal-Mart is a powerful retail brand that represents value and quality. It offers value for money and convenience by offering a wide range of products. Through its associates, the company has developed the one stop shopping policy emulated by other retail stores worldwide. This strength enhances Wal-Mart’s ability- to attract new customers and maintain customer loyalty.

Walmart is estimated to be No.24 World’s Most Valuable Brand with the market capitalization brand value of USD 221.1 billion. High brand value is a clear indication of a solid health of the business, as well as, a high level of consumer loyalty. Furthermore, Walmart’s immense brand value is a clear indication of the relevance of its business model in general and its competitive advantages in particular.

Sophisticated supply chain operations is another point of strengths that contributes to Walmart’s competitive advantage. A set of efficient supply chain principles used by Walmart includes using fewer links in the supply chain, forming strategic vendor partnership and employing cross docking as an efficient inventory tactic. Moreover, Walmart supply chain operations immensely benefit from the economies of scale due to the massive scope and scale of its operations. Walmart can efficiently control and monitor its goods.

Weaknesses

Wal-Mart has also shown a weakness in the area of human resource management practices. Wal-Mart’s pursuit of its low-cost strategy has seen the company adopt some human resource policies that are not favorable to the employees. In several occasions, Wal-Mart has had to deal with labor relation conflicts, especially in the United States market. In many of these occasions, Wal-Mart has been accused of poor remuneration of workers and long working hours. Wal-Mart weak HR policies have had various impacts on the company. One of these impacts is tarnished the image of the company.

The products of Wal-Mart are known as low priced products. And for this low price, it has been dominating the industry. If the price goes up, people will start leaving the products of Wal-Mart. That’s why the company cannot offer bigger price and make more profit. Also, the business model of Wal-Mart is easily understandable. The model can be copied by anyone, even by the new companies who want to enter the market. As a result, it can make more competitors in the market which may lessen the profit margin.

Wal-Mart has experienced numerous lawsuits related to its treatment of employees, including discrimination, unequal wages, unfair promotions, unpaid overtime, poor benefits and poor work environments. This has caused the retailer significant money as well as tarnished its brand reputation.

Opportunities

The stores are currently only trade in a relatively small number of countries. Therefore ?continuing international expansion is a tremendous opportunity for Wal-Mart. This could be done in two forms. Establishing operations in new countries, and increasing market share in countries where it has operations. There are fourteen countries in South America where Wal-Mart has not operations, but it has the expertise obtained from Mexico, Chile, and others, and it has the knowledge to do that. Wal-Mart has not operations in continental Europe, and this is a huge market to be attended. On the other hand, there is actually a great opportunity for growth in developing countries and Asian markets. Increasing market share in these countries could support the Wal-Mart’s growth.

Wal-Mart has the opportunity to expand its online store and presence, including more of the emerging economies that are considering how to do their shopping online. This low overhead strategy can further the retailer’s revenue.

With its vast resources, Wal-Mart has the opportunity to take over, merge with, or form strategic alliances with other global retailers. The Wal-Mart stores are currently in a relatively small number of countries. There are therefore huge opportunities for future business in expanding consumer markets in emerging economic powerhouses including developing countries.

Threats

Wal-Mart is facing stiff competition from a large number of companies in the retail market worldwide including global retailers like TESCO, Amazon, Costco, Target, Carrefour and local stores. Intense competition could adversely affect the revenues and profitability of Wal-Mart. They face opposition and resistance from communities by local and international market like a small retailer in US and opposition of shopkeepers and retailers on introduction of Wal-Mart in India. Growing opposition to opening new stores from local communities and entry into international markets is likely to hold back expansion plans of Wal-Mart.

Wal-Mart’s entrance into the global market exposes it to political problems in the countries that you operate in. Wal-Mart is a global retailer that needs to adapt to foreign regulations and standards so as to penetrate in the global market. The company is vulnerable to the issues that would affect the country it operates in, particularly political and economic issues. Competitors in these countries may use their influence in the government to counter Wal-Mart’s penetration. They may also result to malpractices under government protection to fight off competition.

Another major threat is that of a stronger dollar. A stronger dollar internationally means that the profits will be low for Wal-Mart. The recent years saw dollar grow stronger internationally which meant that the profits of the international division of Wal-Mart had to suffer.

The Wal-Mart’s success is a case that deserves be studied. This company has reached a very strong competitive position and remarkable global-wide operations. The base for this success has been the management who has performed very well the functions of planning, organizing, leading and controlling. The today situation of the company in all of its business aspects is enviable for its competitors. However, the past success does not guarantee the next success, and Wal-Mart has a lot of work to do. Maintaining the first place is as challenging, or more, than getting there. It has great strengths and big opportunities, and its weaknesses and threats are challenging but not overwhelming. These weaknesses and threats require attention and could be turned, by an effective management, in new opportunities and strengths.

References

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