Wal-mart: SWOT analysis
Wal-Mart is a company that has a core competence involving its use of information technology to support its international logistics system. For example, it can see how individual products are performing country-wide, store-by-store at a glance. IT also supports Wal-Mart’s efficient procurement. This company has grown from a single store in Rogers, Arkansas to almost 2,000 bright, attractive stores in 43 states is legendary in American business (Antoni, 2007). It was build by Sam Walton with a focus of adding value to the customers and empowering employees.
The company is recognized by the retail industry as having the best information systems for basic inventory and supply management. Due to the company’s high investment in information technology it has continued working hard to keep its competitors from obtaining their secret. The company’s culture is strengthened by getting the recent information regarding what customers want, getting best ideas from employees about the running of the stores and profit haring with the employees (Antoni, 2007).
Its operation is based on the quest to increase profits to the employees. It uses telecommunications that links it directly from its stores to its central computer system and from that system to its supplier’s computers (Kneer, 2009). The use of telecommunication in this company gives room for automatic reordering and proper coordination. They are therefore aware of what they are selling with closer coordination with its customers which makes the company use less money in the stock than their competitors.
The company’s strategy of catching up was a point of sale system which is a computerized system that identifies each item that it’s sold and search for its price in a computerized database. This computerized system creates an accurate sales receipt for the customers and later stores this information that will later be used for analyzing sales and reordering inventory. Despite from handling information efficiently, effectual use of this information helps Wal-Mart avoid overstocking by learning what merchandise is.
Wal-mart has bar code scanners that make it easier to record sales of each item and make that information available immediately for reordering and sales analysis. Bar codes are very essential to companies that deal with large grocery stores and retailers. The use of bar codes in this company has brought a number of problems along with the benefits that wal-mart gets and the customers. It made the stamping of price unnecessary on each item.
As a result there was reduction of cost but on the other hand some the clerks who were doing the stamping lost their jobs (Kneer, 2009). Due to its tremendous growth, many merchants have been overwhelmed by the small stores in the outskirts of small towns. The company is so large that it can sell its products and get profit in a price less than small town merchant’s costs (Kneer, 2009). Customers who live in these towns obtain benefits from the best selection and pricing but at the same time they lose the benefits of living in small towns.
Due to the company’s competence and the use of information technology, there is a reduced cost of manufacturing which is a threat. The manufacturing cost fall due to outsourcing to low cost regions of the world. The consequence of declined cost of manufacturing is price competition and deflated prices at some intervals (Kneer, 2009).
Kneer, C. (2009). The Wal-Mart Success Story. Deutschland, GRIN Verlag. Antoni, A. (2007). The Impact of Wal-Mart on the British Retail Market. Deutschland, GRIN Verlag.