Wal-Mart Stores Inc.: The SWOT Analysis
Wal-Mart Stores Inc. is the second largest retail business in the world, “serving over 200 million customers and members/week at more than 8,613 retail units under 55 different banners in 15 countries” (Wal-Mart Stores, Inc. 2010). Walmart has been ranked first among other retailers in “Fortune Magazine’s 2010 Most Admired Companies survey”. For the 2010 fiscal year, WalMart netted revenues of US$405 billion, which is a tremendous rise over net revenues for the similar period last year. The company has achieved this due to its dominance in the retail market attributed to its well recognized brand name and market leadership in terms of sustainability and corporate governance. In evaluating the company’s market position, we will use the SWOT (strengths, weaknesses, opportunities and threats) analysis approach.
Walmart’s success can be greatly attributed to its strengths, which it has in abundance. It is well known for its cost leadership role, and can comfortably beat rivals with its aggressive pricing strategy. In the United States, it is has the largest employee pool. It is the world’s second largest revenue earner, which is attributed to its aggressive growth strategy and now has a commanding share of the U.S. market. It has created a strong brand name and is popular for its value of money, convenience and has a variety of products, it is also has a global presence and especially after it purchased UK’s retailer (ASDA). Walmart has a very efficient IT system that monitors its operations worldwide, and the same case applies to its procurement procedures. Walmart has established a stock ownership program for other people and has a profit sharing scheme for its staff.
Walmart has been faced by a lot of criticism from the public on market domination, quality of its products and employee exploitation. Although, it is a global company its market share on the external market from the U.S. is low. It does not specialize is in any products and therefore it faces competition from other business that have specialized and also it a large retailer hence making it vulnerable because controlling such a big enterprise is complicated.
Since Walmart is the largest retailer in the US, it has a golden opportunity to become the largest retailer in the world. Walmart does not always carry a diverse selection of products, so it can expand stores and merchandise to attract more customers. An area that could especially be increased is their musical products, which it does not stock in large quantity. The chain can merge or create alliances with other retailers internationally particularly the untapped markets like Asia so as to increase its international market share. Wal-Mart could diversify its store types, nevertheless it has successfully implemented Neighborhood Markets and mall stores, but by focusing on a specific target market in a specific area, Wal-Mart could be the number one retailer for everyone. It has resources to try new store types in new regions. It could also consider increasing and expanding its current SuperCenters that are anticipated to drive up revenues (Parnell, 2008). However, consumers are changing shopping habits with the many young consumers preferring doing online shopping, so Walmart should also consider this point. Also many retail companies are closing down business because of the decrease in disposable incomes for the consumers; this can be an opportunity for Walmart to grow its customer base because of the value for money it can offer to its customers.
Although it is a leading retailer, all competition is directed towards it nationally, regionally and locally and as a result substitute goods have increased in the market and many entrants, who are threatening to gain control of the international market. Walmart being a global enterprise implies political and economic issues varying from country to another. The retailer has also received criticisms because it declined to unionize its employees. The retailer’ pharmacies were also recently regulated while the small settlements do not want the retailer’s presence hence establishing malls in such areas is difficult.
Parnell, J. (2008). Strategic Management. Florida: Atomic Dog Publishing.
Wal-Mart Stores, Inc. (2010). About us. Walmart corporate. Web.