Walmart: Navigating a Changing Retail Landscape

Walmart: Navigating a Changing Retail Landscape

Introduction

Walmart which was established in 1969 and is involved in business operations of retailing, wholesaling and other several units distributed all over the globe including the online market. It provides the variety of merchandise products and services at low prices on the daily basis. It majorly functions through three sectors which comprise of Sam’s club. The Walmart United States and Walmart international. The Walmart United states entail company’s significant business with associated brands and online retails. The Walmart International sector involves business activities of the company outside the United States and has several international retail websites. The Sam’s Club sector entails membership clubs associated with warehouses in united states and also related website (Porter, E. & Ramirez-Vallejo, J. 2017). The company is operating roughly 11,600 stores with 59 banners which are distributed in twenty-eight countries. It also has electronic commerce the websites in 11 countries.

The Walmart US sector runs retailing stores which offers customers access to the collection of products and services which are not available in physical stores and associated online services utilizing websites and mobile applications. The digital retailing is linked to stores through services like Online grocery, Walmart pickup and Pickup Today. It also supports digital media content and related services through Vudu and InstaWatch. The Walmart International sector has three categories which include, wholesale, retail and other(Porter, E. & Ramirez-Vallejo, J. 2017). It has various business formats which include digital retails,, supercenters, convenience stores, supermarkets, drug stores, hypermarkets and warehouse clubs. It has physical stores operated in the united kingdom, Argentina, Mexico, Brazil, Japan, Canada, India, Chile, Africa, Central America and China.

Five Porter Forces of Walmart

The Walmart strategic trend relies on the business organization reactions to five forces in its operational environment. It has managed to lead the retail business industry successfully and is considered the biggest retailer worldwide. Even though this level of achievement the external factors impose pressure which needs to be handled by developing strategies which combat the power of bargaining for buyers and suppliers(Porter, E. & Ramirez-Vallejo, J. 2017). These strategies must be sufficient to withhold the vulnerabilities of competitors and new entrants. The company’s five porter analysis projects that it must continuously keep renovating and evolving to make sure its viability is long termed.

In summary context, the firm must concentrate on competitive edge and vulnerabilities imposed by new entrant are considered to be company’s most potent force in business. The Porters five forces entail:

1. Strong competitive edge.
2. Weak power for bargaining of buyers
3. Weak power for negotiation of suppliers
4. Weak substitutes threat
5. The strong vulnerability of new entrants

It is therefore essential for the company to develop new strategies that support the development and sustaining of competitive advantage for an extended period (Porter, E. & Ramirez-Vallejo, J. 2017). This strengths will enable the firm to curb issues on competition and new entrants’ threat.

Competition

The competition in retail business is high, and many companies of different sizes exist in this industry. Below is a list of three external factors necessary for the firm to consider with regards to competition.

1. There is a large number of businesses in the market-strong force
2. There is the presence of wide variety of retail businesses-strong force
3. The existing firms are highly aggressive with regards to business-strong effect.

The business organization counteracts strong force which exists in the three factors listed above about retail setting. Walmart must remain extremely aggressive to beat its competitors; even though it leads presently, it needs to keep the growth positive to retain the position.

Bargain Power of Buyers

The company faces the weak concentration of power of bargaining from buyers existing in the retail market environment. The massive number of buyers makes it hard for imposing pressure on retail companies. It is essential for Walmart to consider addressing the three external factors about customers.

1. The massive number of buyers-strong force
2. High diversion existing amongst buyers-weak force
3. Small size in personal purchases-weak force.

The high number of buyers instills a substantial impact on the business organization and retail market. On the other hand, the weak effect of diversity amongst buyers and uncertain implications of small personal purchases leverage such situation(Porter, E. & Ramirez-Vallejo, J. 2017). To the fact, the power of buyers for bargaining is not reliable in influencing the business organization and other retail companies.

Supplier’s power for bargaining

The supplier’s potential for negotiation has the weak impact on retail companies setting. There is the presence of many suppliers existing in the retail market and big firms such as Walmart can affect available suppliers adversely. According to this aspect, the company and other related businesses should consider addressing the three factors indicated in the list below:

1. The high number of suppliers-strong force
2. Top competition existing amongst suppliers-weak force
3. High accessibility of supply-weak force

The high population of suppliers generates a high potential to create the impact on business firms such as Walmart. Consequently, there is the presence of the high number of suppliers which compete for spaces in the retail stores. The accessibility of supply limits suppliers to influence the retail companies. The point results in Walmart facing the weak impact of bargain power for suppliers.

Threat of Substitution

The risk of substitution imposes weak impact in affecting the retail market setting. Walmart provides a wide variety of products and services that do not have many substitutes. The list below indicates the three external factors relating to threats of replacement.

1. The availability of products and services substitutes is the considerable-moderate force
2. The varieties about substitution are the low-weak force
3. The other available alternatives have higher costs than Walmart.

Some of Walmart substitutes are available readily in the market thus Walmart must consider this fact in their strategic planning activities(Porter, E. & Ramirez-Vallejo, J. 2017). The external factor relating to the existence of low variety in regards to substation makes it hard for customers to drift away from goods and services available in the retail business such as Walmart.

The threat of New entry

The business must address the issue of new business entry into the existing market. Therefore Walmart must tackle the high impact of risks imposed by new entrants. These new entrants’ business organization is easily obtained even in the market dominated by large businesses such as Walmart. Limited retailers can penetrate the market and offer competitive products and services based on their convenience, specialization, location and other related factors. The intensity is divided into the external factors listed below.”

1. Low business operations cost-strong force
2. Moderation in capital costing-strong force
3. Moderate costing of brand creation-moderate force

It is considered too costly to create the new brand entry which has the modest impact on business organizations such as Walmart. The monetary value of starting a new retail business and running cost is low in moderation (Porter, E. & Ramirez-Vallejo, J. 2017). Therefore the new companies can maintain operations and evolve into threats to business organizations such as Walmart

Review of Wal-Mart Financial Data

USD $ in millions

SWOT Analysis for Wal-Mart

The SWOT analysis for Walmart provides insights on external and internal impacts detrimental in the business organizations strategy of development. The growth of Walmart relies on the ability to utilize its strengths effectively against prevailing weaknesses. The forces are used to explore business opportunities and to mitigate challenges and threats.

Strengths

The strengths of the business organization under analysis depend on its size and will enable Walmart to overcome threats even though there is the presence of weaknesses for global growth. The strengths include:

1. Worldwide organizational scale
2. It has worldwide supply chain
3. It has highly effective supply chain

Since Walmart is global, this gives it the capacity of allocating funds for business growth plus expansion. Its global chain of supply support business resilience from risks associated with the specific market. It uses technological innovations to monitor and control the flow of products from suppliers to business warehouses.

Weaknesses

The business organization weaknesses offer challenges on the company’s capability to withstand vulnerabilities in this SWOT analysis and are directly associated with its genetic strategy. The cost leadership general strategy used by the business organization (Walmart) has the following vulnerabilities:

1. Thinner profit margins
2. The business model can be easily cloned

The cost leadership strategy applied by Walmart has slim profit margins as one of the effects. The business firm keeps low selling process, but relatively minimization of profit margins is also mandatory. The business model applied by the firm can be easily cloned or copied due to the cost leadership strategy.

Opportunities

The business firm has opportunities related to expansion and improvement of business activities. The chances are associated with global economic climate. The list below indicates opportunities available as per the SWOT analysis.

1. Expanding business activities in the developing countries
2. Improving practices associated with human resource
3. Enhancing quality standards of its products and services.

The firm has high rate economic growth situation which offers the opportunity for expansion in developing countries. Walmart has the opportunity to improve and modify quality standards to counteract customers concern about their low costing which is associated with low-quality service and products.

Threats

The threat associated with Walmart includes retail market environment and change of customers understanding of the products they purchase. In this context the threats Walmart is facing are:

1. Aggressive business competition
2. The healthy lifestyle which is trending among consumers.
3. Small-scale or personal selling online

The aspect of robust life styling is both a threat and opportunity; it is the threat to Walmart since most of its products are unhealthful and organic. The healthy lifestyle is an opportunity for the business organization to improve its products quality and standards. Some of Walmart competitors can utilize aggressive competition to snatch some of its customers who are a threat. Internet support online selling small-scale retailers can bypass Walmart and use personal websites to sell their products online.

Strategic Recommendations for Wal-Mart

The business firm must consider prioritizing application of its strengths to utilize opportunities available in the worldwide retail market. The Walmart weaknesses and associated threats must be regarded as secondary priorities. Walmart should mainly provide the improvement on its human resource management criteria and quality standards for products to increase performance (Porter, E. & Ramirez-Vallejo, J. 2017). Walmart should continuously and persistently expand the related business process to utilize economic opportunity existing in developing markets. Due to its organizational size, worldwide supply chain and high efficiency which can adequately support aggressive expansion, it should consider venturing more into foreign markets and developing countries.

Conclusion

This paper has analyzed Walmart using Porter Five forces and SWOT analysis providing strategic recommendations for the business firm. It starts by delivering the general overview of the retail firm, then discussing the Five Porter forces about Walmart. The paper also describes the SWOT analysis for the business organization and provides the financial review of the firm. It evaluates and analyses the company according to guidelines indicated in the assignment details. Every section has been completed according to the paper requirements.

Reference

Porter, E. & Ramirez-Vallejo, J. 2017. “Walmart: Navigating a Changing Retail Landscape.” Harvard Business School Case 717-474