Walmart Inc.
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Walmart Inc.
This is American based multinational retail which operates discount department stores, grocery stores, and chain supermarkets with its headquarters at Bentonville, Arkansas (Collins, 2018). This company was found in 1962 by Sam Walton, and it was incorporated in 1969. It has over 11 000 stores operating in 27 countries under 56 different names. This is the world’s largest revenue company and raises up to US$514.405 billion, which makes the largest private company with over 2.2 million workers.
Walmart value chain Analysis
These are the analytical framework that helps identify business activities that create competitive advantage and value to the business (Ali, 2012). The following are primary activities.
- Inbound logistics has been estimated that more than 0% of the companies produce come from overseas suppliers and 75% of the sales come from non-store inventory. The company uses a minimum amount of links in the supply chain, they use cross-docking as an inventory tactic, and they form strategic partnerships with vendors.
- Operations are run globally in more than 11,000 stores operating in 27 countries and serving about 260 million customers weekly. They operate within warehouse clubs, hypermarkets, supercenters, cash and carry, electronics, restaurants, drug stores and home improvements.
- Outbound logistics is used because of its size and scope as the company runs in complex outbound logistic operations. The e-commerce website has been launched in 11 countries. This will help in load building operations and outbound routing, where it will be operated systematically, which increases efficiency.
- The marketing and sales strategy that Walmart uses tries to associate the brand image with the products they have with convenient access to the stores via various channels together with the competitive price. In 2015, the company’s marketing budget was USD2.4 billion in fiscal 2014 and USD2.3 billion in the fiscal year 2013.
- Service that the company provides was traditionally considered to be poor in terms of customer care service. This is because they were paying low wages to the customer care representatives to maintain their cost leadership. When the new CEO was brought in, Doug McMillion, he announced that he would improve the customer care aspect of the business, and this worked for the company; and the company made an investment of USD 1billion in the year 105 February and they provided higher wages and more training to their workers.
Walmart PESTEL analysis
Walmart’s macro-environment or remote environments contains factors that determine the success of the company. These factors are represented best by the PESTLE analyses (Banerjee, 2015). Walmart has remained a retail industry leader and has withstood all the negative forces that threaten its existence in terms of legal, ecological, political, sociocultural, economic and technological aspects of its business. Therefore, this success needs evaluation of its retail industry environment, and the PESTLE factors are considered to be changing over time, which has caused challenges to the company. This means the company needed to check on the available opportunities and protect the company against any threat. PESTLE analysis helped the company’s managers and leaders determine the factors that are best prioritized in strategy development. The company’s external factors indicated that it needed a strategic focus on ecological concerns, sociocultural, and economic concerns.
- Economic factors
There is significant pressure from economic changes, and this directly makes up the company’s revenue. Using the PESTLE analysis model, it found the following that there was stability in major of the economies, there was ever growth among the developing countries, and there is a decreasing rate in employment in the United States. This means the company should exploit all the available opportunities around the globe and especially in the fastest-growing economies among the developing nations, which got an increased demand for goods from retail firms like Walmart.
- Social factors
Social factors in the business environment of this company will impact consumer preferences and perceptions. The PESTLE analysis model came up with the following observations about Wal-Mart’s macro environment’s external social factors. That the company enjoys a healthy lifestyle trend, there is existing urban migration and cultural diversity trends, which are the opportunities. These are the social factors currently that create opportunities for Walmart. The company can increase its arrays on producing healthful products for the population, and they can increase the variety of products they bring in to the population. This will provide for a quality satisfaction of various cultural preferences. The company can also adjust its strategies to capture the increasing demand for consumer goods in the surrounding areas and in the cities.
- Political factors
There are political factors to consider by the Walmart Company in the retail market, usually government policies. The PESTLE analysis model is interested in the political factors, and the following have been drawn from the external political factors in Walmart’s macro environment. There is political pressure of higher wages, which is a threat; there is high stability in the arena of politics, which is an opportunity and that there is political support for globalization, which is a great opportunity. This means the company must first start by addressing the issue of threat from the higher wages. This has been considered as a threat since it goes against cost minimization, which is important in Wal-Mart’s cost leadership generic strategy.
- Environmental factors
These are the environmental conservation factors which are the popular principle currently. From the PESTEL model, we found out the following that there are friendly environments on the product trend, which is an opportunity, and that there is a business sustainability trend, which is also an opportunity. The company, therefore, must embrace technology innovation to improve business efficiency, improve on policies and standards of their products and attain business sustainability, which will enable them to operate efficiently.
- Legal factors
The company is subjected to requirements of laws and regulations, and according to the PESTLE model analysis, there are external factors that impose lists on the retail firms, and the following are what was found out. There are food safety regulations and employment regulations, which are the opportunities, and also, there is a tax law reform, which is a threat, which means this can lead to a higher tax rate.
Five Forces analysis of Walmart
- Bargaining power of the buyers
The buyers’ bargaining power is not high in Wal-Mart’s case, as the buyers do not make a big purchase. Prices and conveniences are the main factors that reduce customers’ bargaining powers (Greenspan, 2015). There is low-cost switching among the customers irrespective of the fact that they can find cheaper products at lower prices, and that can be more convenient. The pricing strategy helps the company to decrease the buyer’s bargaining power.
- Bargaining power of the suppliers
This is very insubstantial in this company because of the size and the scope of the business. The company is trying to lest prices from the suppliers, sustain the cost leadership and have a competitive advantage. In 2015 they paid $3.5 billion to their suppliers. They have also complied with a broad range of requirements where the employees have insurance, food safety, employee health and other sectors.
- Threats of New Entrants
The threat of new entrants is low in the company since it exerts the medium level of pressure. They are considered as one of the leading retail brands, and they need huge capital for building a brand like that. They have efficient distribution and the biggest distribution networks with the best chain supply, requiring skilled labour, huge investments, and human resources to manage and maintain them.
- Threats from the substitute products
The company is one of the leading retail brands, and they offer a variety of items ranging from hairlines, pharmacy, health, hardware, entertainment, groceries, accessories, stationery and home furnishing stuff, among others. This makes the threats from outside weak since the company offers various things that the retailer sells.
- The rivalry of existing players
This rivalry is now very strong since companies like the Costco Wholesale Corporation, sear holding corporations, and Target Corporation, among others, bring this kind of competition.
Role of leadership in Walmart
The company embraces two types of leadership that are participative leadership, which is democratic in nature and values the input of the team and peers, but they are responsible for making the final decision together with the participative leader (Stankevičiūtė et al., 2012). This increases the employee’s morale since they feel like they are part of the decision-making process, and their suggestions are considered during decision making. This helps the employees accept the proposed changes since they played a role in the process.
Transformative leadership depends more on communication from the management on the achievement of goals. The leaders enhance efficiency and productivity and motivate the employees through communication and high visibility. In achieving these goals, the leadership needs management where the leaders will focus on the organization’s picture.
References
Ali, O. M. S. H. (2012). Improved supply chain performance through RFID technology: comparative case analysis of Metro Group and Wal-Mart.
Banerjee, D. (2015). Walmart Stores Inc.-A Strategic Analysis. International Journal in Management & Social Science, 3(12), 202-225.
Greenspan, R. (2015). Walmart: Five forces analysis (Porter’s model). Paramore Institute.
Stankevičiūtė, E., Grunda, R., & Bartkus, E. V. (2012). Pursuing a cost leadership strategy and business sustainability objectives: Walmart case study. Economics and Management, 17(3), 1200-1206.