THE SWOT ANALYSIS STRENGTHS
Marketing Aspect
Wal-Mart
emphasis is on its brand image that is providing the customers what they want,
when they want it, all at a value and treating each other as they would hope to
be treated. Wal-Mart has roughly 2500 stores in US, and then internationally it
has bought 122 Canadian Woolco stores as at March 1994 which is set to grow
drastically. In UK, it has a new firm base. Wal-Mart has excellent logistic
system. They create the ideal one - stop shopping experience, due to the
acquisition and conglomerate of its wide product range customers can do one
stop shopping products, because in Wal-Mart there is all that the customer
might need.
Management Aspect
Wal-Mart's
policies and practices are designed to ensure an environment that is inclusive
and equitable. They provide training on working with people, equal employment
opportunities, leading skills, diversity and help to achieve career objectives.
Wal-Mart has strong community - based initiatives. Corporate structure of
Wal-Mart is very well rounded and managed with core values like respect for the
individual, striving for excellence and service to their customers. The management
of Wal-Mart is the backbone to the entire firm and these core values have
propelled them to the top of their industry. They have allowed Wal-Mart to be
world's largest company.
Finance and Accounting Aspect
The company
operates stores worldwide, and in the international market whereby in it bought
122 Canadian Woolco stores. The company focuses on offering the lowest prices
across its business segments, which together earned $80 billion in revenue in
1994.
Research and development
Wal-Mart's
innovation keeps it a leading retailer in retail industry as it is regularly
turning out new patents/proprietary technology. Development and innovation are
high at Wal-Mart with regard to their products/services which give ultimate
profit.
Computer Information System
Wal-Mart uses
satellite based communications for connecting the entire network of stores and
to track the company’s delivery trucks so increase efficient. Wal-Mart is
offering safe, secure and informative complete website where consumer can
purchase products easily. Through web-site of Wal-Mart, one can find whatever
information about Wal-Mart.
WEAKNESSES
Marketing Aspect
One of the
biggest marketing weaknesses from Wal-Mart is the resistance to expand into new
market nationally and internationally. There are many areas across the US tried
to block the introduction of Wal-Mart because of the economic impact like local
stores, traffic and environmental problem, for example in 1994 several towns in
Massachusetts forced the company to withdraw its buildings plans. Wal-Mart has
a damaged reputation because when they move into a new location they end up
"forcing" for opening new stores which is unethical.
Finance and Accounting Aspect
Wal-Mart ratios
compared to that of the industry are unfavorable. The sales growth of its
warehouse club lowered far below the industry of 27%, this then shows that the
company is not in a good financial position.
Production and operation Aspect
Wal-Mart sell
products across many sectors, as it follows a low margin and high volume sales
strategy which means it emphasizes on pushing the sales which then compromises
the quality of the products they produce, and
it may not have the flexibility of some of its more focused competitors.
Research and Development Aspect
Wal-Mart is not actively
engaged in any Research and Development. Specifically, they do not do prior
research before opening a new store in any new area.
OPPORTUNITIES
Economic Aspect
Whenever any
country encourages foreign investment with new trade agreements, large businesses
like Wal-Mart have the ability to offer its products and services. This simply
increases the markets available to retailers. Wal-Mart offers all products
under private labels. Expanding brand portfolio, Wal-Mart incurs lower
operational costs, high quality product and gaining higher margin. Wal-Mart has
tremendous opportunities for future business in expanding consumer market, this
is evidenced by its acquisition, merging and entering into a joint venture with
Cifra which is a Mexican retail chain. This then shows that Wal-Mart has the
greatest opportunity to be one of the leading retailers in the world.
Social, cultural, demographic and
environmental Aspect
In order to
fulfill obligation and responsibilities towards social and culture, Wal-Mart
opened an in - store clinic called ‘The Clinic at Wal-Mart' to connect with
local hospitals. The company then could leverage rising health care spending in
the US to boost revenues of its pharmacies and health clinics.
Political, Legal and Government Aspect
Asian market is
virtually untapped by the retail world in many extent. It gives huge
opportunities to expand business with unlimited and unexpected potential growth
and profits. The company then took into account the consideration of expanding
to Brazil, China and Hong Kong in December 1994.
Technological Aspect
In these modern
days, online shopping is growing at a faster pace. To take advantage and
experience of internet shopping, customers can easily purchase products by
receiving friendly site designs, efficient order fulfillment, fast delivery and
response. It can help Wal-Mart to make huge revenue online as most customers
now prefer to shop online.
THREATS
Economic, social, demographic and
environmental Aspect
Wal-Mart is
facing stiff competition from a large number of companies in the retail market
worldwide and local stores. Intense competition could adversely affect the
revenues and profitability of Wal-Mart. They face opposition and resistance
from communities by local and international market like small retailer in US
and opposition of shopkeepers and retailers on introduction of Wal-Mart in
Massachusetts.
Political, Legal and Governmental Aspect
Being a global
retailer, each firm is being threatened by the political aspect, that is in the
countries where they operate in they are governed by the nation's industrial
and general laws, rules and regulations. Like Chinese government does not take
kindly open to their country to foreign establishments.
Technological
As technology
changes and advances, products being sold today are gone tomorrow; this
provides fewer products to sell and continuous change with technology update.
Thus, Wal-Mart has to update technology as per current demand and upgrading
requires high investment.
Apart from the
SWOT analysis, there is the SCOT analysis of which the W is replaced by the C
which stands for the challenges. Wal-Mart was facing the challenges which
included the growing number of less than complimentary newspapers articles
concerning the results of, Wal-Marts entrance into markets. This then led to
the rising of the eyebrows from other stakeholders of the company.
A core
competency is defined as something unique that an organization has, or as
something unique it can do. A company that develops a unique core competency
can create a long lasting competitive advantage.
The
organizations core competency is the culture. The company’s employees are
hardworking, efficient, and process oriented. The founder of the Wal-Mart
called his employees partners as he valued their input and ideas on how to make
the company better. Sam Walton always wanted the best, in that in every branch
the customer goes they received the excellent customer service and always
receive low prices.
More so, the
company core competency is low cost operations. Wal-Mart focused on small towns
and lower overhead. As the economy worsened, people began looking for lower
prices and moving to smaller towns and suburbs. Today Wal-Mart can create big
sales volume which allows the company to gain profits with low profit margin
giving it an advantage over its competitors.
CONCLUSION
Wal-Mart is the
largest retail firm in the world with strong market position in the US. The
company's strong market position in the US provides economies of scale and
enhances the brand image to the company. It derived almost 75% of revenue from
the US market. However, the company faces stiff competition with local players
which can adversely affect the revenue and profitability of Wal-Mart.
In order for
Wal-Mart to stay at the top of their game and follow the company strategy and
achieve their key policy goals, they are going to have deal better with their
stakeholders and make sure they guard their reputation well nevertheless they
are criticized by some community groups, women's rights groups, labor union,
grassroots organizations and resistance to union represent.
Key Strengths
The key
strengths are employees, financial position, customer oriented, one-stop
shopping, satisfaction guaranteed programs, employee stock ownership and
profit-sharing, well-rounded business, ease of website, good reputation, and
favorable access to distribution networks.
Key Weaknesses
The key
weaknesses are some ratios are not sufficient, non-unionization, no formal
mission statement, undifferentiated products and services, site research, and
finally a damaged reputation.
Key Opportunities
The key
opportunities are expansion of business, better segmentation, leverage
technology and financial know-how.
Key Threats
The key threats
are competition, labor unrest, brand loyalty disappearance, supplier backlash
affects performance of company.
1. Explain
in detail, why creativity and innovation are critical traits of a successful
entrepreneur.
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