Strategy Report for Walmart Company

free essayWalmart Company was founded by Sam Walton in 1962. It means that the company has a large experience in the international market. Walmart is the second largest public corporation in the world that has more than 10, 000 stores in 27 countries, 200 million customers each week, and 2.2 million employees (About Walmart 2015). The competitive advantage of Walmart Company is that it provides the variety of products and services to its customers making their life different and easier. The key objectives of Walmart Company are to satisfy customers’ needs and demands and sustain its competitive advantage. However, with the increase of competition in the global market there is the necessity for further development and growth.

Macro & Micro Context

PESTLE Analysis

To understand the peculiarities of the macro context of Walmart Company, it is necessary to use PESTLE analysis that is based on the political, legislation, economical, socio-cultural, environmental, and technological factors (Cameron & Green 2012). Political and legislation factors are the most influential for Walmart Company. As Walmart operates in the global market, it should follow the political and statutory laws of many countries. Moreover, the company should follow the tax and pricing policies of the countries to receive support from their governments. Walmart’s profitability and operation are affected by labor training laws, taxation laws, and competition laws. It is worth mentioning that Walmart Company deals with the problem of discrimination among employees. Women are not allowed to occupy managerial and supervisory positions. Consequently, Walmart can bear  legal responsibility for such inequality.

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Economic factors are crucial for Walmart Company as they provide many opportunities and become the restraining forces at the same time. The global economic crisis had a negative influence even on such a successful company as Walmart causing unemployment, the increase of fuel prices, and the loss of customers. However, Walmart is ready to any crisis reducing its operating costs, increasing the roof insulation, and collaborating with many suppliers. On the other hand, Walmart Company is sensitive towards the economic processes. Consequently, the inflation, unemployment, and economic crisis have the negative impact on it.

The socio-cultural environment of Walmart Company relates to its global status. It means that the corporation can easily adapt the social and cultural differences of many cultures and reflect them in their products and services. The fact that the company is American does not mean that it can impose Americanization in the foreign countries especially in African, Asian, and European ones because of the heterogeneity of cultures, needs, languages, and perceptions. The socio-cultural factors include cultural values and society’s attitudes. It means that Walmart Company should locate its stores and supermarkets not only in big cities but unexplored regions.

In addition, environmental and technological factors play a significant role in company’s operation in the global market (Mason 2007). These aspects can improve customers’ satisfaction in their observation and shopping experience. Walmart Company is supposed to be the fastest retailer. It means that it adopts the latest innovative technologies in its business operations. For example, the company uses RFIT (radio frequency identification technology) to reduce its out-of-stock goods. Walmart Company also uses management information systems to improve its operations. Moreover, the company is proud of its ecological policy that is based on using thin film solar technology to produce clean energy (About Walmart 2015).

Porter’s Five Forces Analysis

To reveal the peculiarities of the micro environment of Walmart Company, it necessary to use Porter’s five forces analysis that is based on the analysis of the following aspects: the threat of substitute, the threat of entry, competitive rivalry, bargaining power of buyers, and bargaining power of suppliers (Ferrel & Hartline 2011).

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Threat of Substitute

Despite the fact that Walmart Company is a successful and highly competitive business, it can deal with the problem of substitute goods and services. It should be noted that the threat of substitution in grocery stores and supermarkets can be lower in foodstuffs. However, it can be moderate and even high in non-foodstuffs. The aspect of substitution can be determined by the convenience of the location of stores. In addition, there is no direct threat of substitute for Walmart Company.

Threat of Entry of New Competitors

In grocery stores and supermarkets of Walmart, the threat of entry is low as new entrants need money to create the competitive advantage and build up the brand name. However, Aeon Carrefour and Tesco managed to do this and secured its brand name globally. Moreover, Walmart Company should take into consideration the fact that the government protectionism on local goods can benefit the entry of new competitors.

Competitive Rivalry

The competitive rivalry is high and intensive as there is a direct competition against local and multinational supermarkets such as Aeon, Carrefour, and Tesco. These retailers will compete with promotion, distribution, product, and pricing strategies of Walmart Company. However, Walmart’s emphasis on foodstuffs helps it to survive the economic crisis and deal with the competitive rivalry in a proper way. To avoid the competitive rivalry, Walmart Company should consider the following factors: high aggressiveness of retail firms, the large variety of retail companies, and the large number of organizations in the market. To remain in a competitive position, Walmart should keep its growth pace.

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Bargaining Power of Buyers

Walmart Company depends on the bargaining power of buyers that is moderately high. It is evident that foodstuffs provided by Walmart can be easily substituted by the products of other brands that use lower pricing strategy. It is worth noting that consumers are very sensitive to prices and quality. It means that Walmart Company should take into consideration this aspect to avoid the loss of customers. Walmart should address the following factors: small size of individual purchases, high diversity of buyers, and the large population of buyers. Consequently, Walmart should study the market and segment customers according to their preferences, age, and gender.

Bargaining Power of Suppliers

The bargaining power of suppliers is quite low as suppliers are interested in having such a giant retailer as Walmart. It is very comfortable for Walmart as it can easily obtain new suppliers with the lowest prices. It means that Walmart is a leader in retailing. The bargaining power of suppliers is weak in the retail industry.  Consequently, Walmart should address the following factors: high availability of supply, tough competition among suppliers, and a large population of suppliers.

SWOT Analysis

Another technique that should be used for the description of the micro environment of Walmart Company is SWOT analysis that reveals strengths, weaknesses, opportunities, and threats of the corporation.

Strengths

Walmart Company is characterized by the following strengths:

  1. Predatory pricing.
  2. The application of IT and innovative communication systems.
  3. Practicing cross-docking technique.
  4. Owning private transportation system.
  5. Obtaining goods directly from manufacturers.
  6. Competent supplier chain.
  7. Broad offerings.
  8. Strong brand name.
  9. An individual approach to every consumer.

These strengths prove that Walmart Company has the endless possibilities for further development and growth. It means that the corporation is competitive and has a well-organized system of collaboration with suppliers and consumers. Taking into account the above mentioned strengths of the company, it is recommended to improve international and business strategies. Low prices and high quality are the features that distinguish the company from its competitors. Consequently, the company should continue to follow it as the consumers have chosen Walmart exactly for this reason.

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Weaknesses

Despite the strengths, the company has the following weaknesses:

  1. High lawsuits.
  2. Difficulties in comprehension of the local cultures and traditions of the foreign countries.
  3. Difficulties in market protectionism.
  4. Inability to adapt in different countries.
  5. Failure to penetrate into China and Germany.
  6. Inability to monopolize the supply chain.
  7. High demand for human, financial, and physical resources.
  8. Dependence on many suppliers.

These weaknesses prove that Walmart Company has to make improvements to avoid such problems as high rivalry and the threat of new entrants. Moreover, the company should recognize the macro-environmental differences of other countries to penetrate into them successfully. Intercultural competence in the foreign culture is a key condition for further development and growth there. The weaknesses of Walmart Company prove that there are changes in the market that should be taken into consideration. Consequently, the organization should look for the locations that are more spacious and comfortable for consumers.

Opportunities

Walmart Company has numerous opportunities for the development worldwide:

  1. The reduction of unemployment.
  2. The increase in consumer purchasing.
  3. Market expansion.
  4. Providing the products for the low prices in developing countries.
  5. Making the international strategy a key one.
  6. Development of intercultural competence.
  7. Increasing online shopping.
  8. The increase of sales.
  9. Human resource development (About Walmart 2015).

These opportunities prove that Walmart Company may not only benefit from its image and reputation but help to decrease the unemployment level. Moreover, it can improve online shopping service as many consumers prefer it to save time. Additionally, the company should follow the trend toward healthy eating to satisfy customers’ tastes. Such opportunities prove that Walmart Company should move forward expanding its business and improving human and physical resources. The opportunities of the organization are endless, proving that the company has a chance to penetrate into the Asian and African market that can cause cultural challenges.

Threats

  1. Rising commodity pricing.
  2. Increasing resistance from local communities.
  3. Increasing competition.
  4. Bad publicity.
  5. Healthy lifestyle trend.
  6. Damage of reputation and image (About Walmart 2015).

The above mentioned threats prove that Walmart Company has to make a lot of improvements to remain profitable and competitive. It is evident that the corporation needs the strategic changes in its policy and improves its quality standards.

How It Works

Strategic Capabilities

Strategic capabilities of Walmart Company are based on product, price, distribution, and promotion strategies. Product strategy of the corporation is aimed to satisfy customers’ needs and demands. Retail service is a key product of Walmart Company. The advantage of product strategy is that it attracts customers by providing effective and convenient services. The product component depends on customer experience. The aspect of convenience is achieved with the help of a wide variety of goods provided in the stores. Walmart Company should diversify its service and product development process through collaboration with other companies specializing in new products and services. The diversification of product strategy will increase the interest in Walmart Company and satisfy consumers’ needs and demands.

Pricing strategy of Walmart Company is based on Everyday Low Price (EDLP) (Scott 2011). Walmart stores advertise their products underlining their low prices. The objective of this pricing strategy is based on the attraction of large populations of customers. However, the pricing strategy of Walmart Company presupposes not only low prices but high ones. It is worth noting that pricing strategy contributes to Walmart’s competitiveness. In addition, such pricing policy promotes the large sales and enables the company to generate profits. The price policy of Walmart Company is reasonable. Consequently, the number of consumers is increasing. Moreover, the corporation should follow this price strategy to attract as many customers as possible. One recommends offering a flexible system of reductions. The industry should be sensitive to competitors’ prices and offer better products for the similar prices to competitors as it will attract more customers. The pricing strategy has to reflect the value of service or product. In detail, the product value should determine if the quality provided falls on a higher or a lower budget product scale.

Promotion strategy of Walmart Company is based on public relations, personal selling, sales promotions, and advertisement. Walmart advertises its products and services on websites and newspapers. The corporation uses special deals and discounts for sales promotions. Personal selling is possible in stores and supermarkets where shoppers can provide more detailed information about products and services (Reiss 2012). Walmart Company uses press releases as a kind of public relations. Moreover, the corporation can also sponsor charity programs. As a result, promotion strategy of Walmart Company builds brand recall and attracts customers to buy its products and services.

Distribution strategy of Walmart Company is intensive and is based on the well-organized distribution channels. It can be stated that distribution strategy of corporation is particular as the same variety of products and services are provided in diverse stores. Moreover, the employees’ roles and responsibilities are also the same. The distribution strategy attracts more customers and makes shopping more convenient.

Culture

Walmart’s organizational culture is based on the following beliefs: (1) action with integrity, (2) strive for excellence, (3) respect for the individual, and (4) service to customers (Kapferer 2008). In terms of service delivery, customers are given the key priority at Walmart Company. It means that the company studies customers’ interests to provide them with better products and services. In addition, Walmart tries to contribute to each employee. Therefore, the company strives for excellent performance of the entire organization. Moreover, the corporation promotes the virtues of fairness, honesty, and impartiality in decision making.

It is evident that the level of corporate values and culture is high in the company as it is based on ethical principles and social responsibility (Greer & Ford 2009). The organization promotes tolerant and respectful attitude to every consumer as it helps to reinforce corporate values. Organizational culture of the company provides understanding and support to customers as well as employees. It is obvious that Walmart’s approach to the culture is compelling as it promotes respect and tolerance. The development of corporate culture is an essential aspect of Walmart’s policy as the high cultural level benefits the growth of company’s image and reputation in the market.

The cultural aspect is evident in HR policy of Walmart Company that is based on the following principles: ethics, freedom of making decisions, and morality. For example, the noble objective of Walmart is to encourage consumers to eat and stay healthy. It means that corporate culture is seen in the desire to be eco-friendly and respond to the needs of the community. Respect, honesty, and openness are the key factors in decision making (Kotler et al. 2009). In addition, the employees of Walmart Company follow the organizational culture saving the corporate secrets and promoting the commitment to the consumers. As the company has a hierarchical functional organizational structure, the development of the culture of equality is crucial for the employees not to feel oppressed and abused.

Business Strategies

Business strategies are based on differentiation and combination strategy of cost leadership (Barney 2012). The advantage of business strategies is that they provide many services and products with the same or even better quality but at the cheaper prices. Walmart Company always intends to find the ways to lower their costs rethinking the primary and support activities. The successful supply chain management is a way to implement the cost leadership strategy. To achieve these business strategies, Walmart Company uses just-in-time inventory and effective inbound logistics. Another way to fulfilling business strategies is to cut costs by decreasing empty miles, getting more pallets on a load, and creating better fuel efficiency.

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According to Bingham et al. (2005), the following generic business strategies can be distinguished: overall cost leadership strategy, the differentiation strategy, and the focus strategy. The focus strategy presupposes offering products and services to a specific geographic market, within a segment of a product line, and to a particular buyer group. This business strategy is effective for winning a new market. Walmart Company uses the differentiation strategy when presenting a new or particular product or service in the market. The overall cost leadership strategy is used to offer the same product or the product of the better quality. It can be also the product at a lower price than in competitors (Price 2009).

Supply chain management is the best way to achieve these generic business strategies. The advantage of the application of these business strategies is that they establish the high entry barriers for competitors. The complex of usage of all strategies can help to fulfil the following objectives: (1) deliver a great experience, (2) be competitive, (3) invest to differentiate on access, (4) and lead on price (Hughes 2010). Moreover, the competitive advantage of Walmart Company is the result of successful implementation of business strategies and its constant improvement.

International Strategy

The international business strategy of Walmart Company is defined by the following factors: strategic management, human resource management, cooperation with different organizations and culture in which the company operates. International strategy is a key strategy of Walmart Company as its implementation helps to operate worldwide. One should say that this strategy is successful as the company enters into the global market. International strategy presupposes the involvement of customers from different countries and treatment them in a proper way (Senior & Swailes 2010). Hence, international strategy provides the high level of profitability and productivity. It is important for Walmart Company to cater for differences in every region. It is evident that globalization encourages the implementation of international strategy. At first, Walmart Company faced the challenges of globalization. However, international strategy helped to overcome them. The company expands to other countries and has different suppliers as they should target different markets (Howe 2014).

It is crucial for Walmart Company to understand the culture as it can influence company’s operations and provoke such challenges as culture collisions, pricing difficulties, and language problems. The integration of Walmart Company into the global market presupposes new opportunities and threats. For example, if the international strategy of Walmart Company works for Mexican and Canadian markets, it can fail in China and Germany. Walmart Company can also merge with culturally diverse companies, but it can provoke the following cultural differences: ethical values, mentality, and traditions of business (Jeannet & Hennessey 2001). However, Walmart relies on its international strategy that presupposes studying these differences and overcoming the possible challenges. Without a doubt, it is easier to collaborate with the countries that have similar cultural values and traditions.

International business strategy of Walmart Company is based on the following aspects: (1) culture and technology, (2) strategic intent, (3) global strategy and actions, (4) management vision, (5) economic integration, (6) cost, (7) market needs, (8) market needs, and (9) free markets (Hooley et al. 2008).

Strategic Options

To enhance competitiveness in future, Walmart Company should determine certain strategic options to maintain profitability and performance. The strategic options should be based on the short-term and long-term actions (Schermerhorn et al. 2013). The short-term actions presuppose implementing new products being eco-friendly and promoting healthy lifestyle as well as corresponding to the tastes of diverse consumers. The long-term actions include development of Walmart brand awareness through advertisement and public relations. Moreover, it is recommended to invest in customer services, improve groceries, and let customers shop on their terms.

The customers should be given the first priority at Walmart Company, and it should satisfy their personal needs by implementing new products and services. In addition, it is recommended to open more locations for stores and supermarkets, streamlining, launching new products as the ways for winning of international marketing. According to Raspin (2007), the company should offer a flexible system of discounts as providing cheap prices is the best decision to attract customers. Another strategic option for Walmart Company is being sensitive to competitors’ prices and offering better products.

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It is also recommended to provide needs-based segmentation of customers and implement future development plans. Marketing goals and objectives of Walmart Company refer to the widening of the marketing map that includes Asian and African countries. The marketing strategy of Walmart Company presupposes needs-based segmentation dividing it into demographic (age, gender), sociocultural (ethnic peculiarities), psychographic (quality and price sensitivity) and geographic (orientation on the national peculiarities of the consumers) (Helfat et al. 2007). It is evident that Walmart Company is capable of improving or presenting the new strategy successfully and efficiently. First of all, the company should take into consideration the weaknesses and make them its future priorities due to the influence of the customers and competitors.

It is possible to distinguish the following marketing objectives of Walmart Company for the future:

  1. Becoming more competitive in the Asian and African markets.
  2. Providing available prices.
  3. Implementation of new products and services.
  4. Development of new technologies.
  5. The attraction of more customers via promotion strategy.

Conclusion

In conclusion, it is worth noting that Walmart Company is a successful and profitable organization that applies international strategies. Micro and micro context of the company shows that its rich experience, orientation on the global market, proper pricing strategy make it one of the most successful retailers worldwide. However, Walmart Company has also its weaknesses related to the quality of the products that can provoke lawsuits and customers’ negative feedbacks. Consequently, the corporation should overcome them to remain profitable. Strategic capabilities of Walmart Company are powerful as they are based on pricing, distribution, promotion, and product strategies. However, the corporation should regard them separately to identify the weaknesses. The corporate culture is favourable and well-organized. It means that corporate values benefit organizational reputation and image in the market. The overall cost leadership strategy, the differentiation strategy, and the focus strategy are key business strategies that demand further improvements. International strategy of Walmart Company is related to winning new markets, finding new customers, and adapting to diverse cultures, languages, and mentalities. However, the strategic options show that the corporation should improve its marketing objectives, implement new product, better business strategies, and become more flexible on the intercultural level.