Walmart Company Swot Analysis
Nyamweya is a Kenyan scholar who has done many years of research on a diversity of topics
A SWOT analysis is a framework used to evaluate the strengths, weaknesses, opportunities, and threats involved in a business venture. Here, we shall carry out the SWOT analysis for the Walmart company (Pratap). We shall identify the external and internal factors that are favorable and unfavorable in achieving the company's objectives. Walmart is a retail corporation, the world's largest, that sells a wide variety of products. It conducts its retail activities through online websites and direct purchases.
Strengths
Global expansion
Brand recognition
Global presence
Global supply chain and logistics plan
“everyday low prices” strategy
Human resource management
Effective resource management
Weaknesses
A large span of control
Thin profit margins
Imitations
Gender discrimination
Poor Employee treatment and working conditions
Opportunities
Strategic alliances
Enhancing human resource practices
Improving quality standards
Expansion to other markets
Threats
A primary competition market
Website technical issues
Political and legal issues
Small-scale e-commerce companies
Strengths are the company's characteristics that give the company an advantage over the other companies of the same specialization.
Walmart’s Strengths
- a. Global Expansion
Walmart is expanding globally in the retail field. It has purchased most of the global retail giants, such as ASDA and Elipkart. It has also joined hands with India's most prominent retail store, Bharti (Pratap). These alliances have made Walmart acquire a large number of customers in areas where the companies operated. Furthermore, Walmart's revenue has increased as a result of these alliances hence success for the company.
- b. Brand Recognition
Walmart is the most recognized retail store in the world. With a variety of goods available for sale both online and at the stores, it makes the company reputable and most recognized brand worldwide.
- c. Global Presence
Walmart is opening many other stores and branches in different countries such as China, Chile, and the UK, making its presence recognizable worldwide. These operations have increased both its sales and global presence. Some of the challenges the international expansion of Walmart is facing include the growth of other online shopping companies such as Amazon Express. The growth of these companies is taking up Walmart's consumers worldwide hence reducing the company's revenue.
- d. Global Supply Chain and Logistics Plan
The Walmart company is well competent in the distribution and logistics system. Walmart uses information technology to monitor every product's performance and in every story in each country where it is found.
- e. “Everyday Low Prices” Strategy
Walmart is the cheapest shopping center in the world. Most of its products have a fixed cost. With this, it is based on an economic plan, thus offering low prices for its products.
- f. Human Resource Management
In every business sector, employees are the core asset, so are they in Walmart. Walmart invests most of its time and money in developing its employees. As per the Business Insider, 1% of America’s population is employed at Walmart. Therefore, it can offer job opportunities to many people in various places where it is located. However, Walmart has been accused of exploiting its workers through low wages and poor working conditions, which comes out as a challenge or threat to the company.
- g. Effective Resource Management
Walmart excellently performs in all sectors of resource management. It appropriately manages information systems, knowledge, skills, and supply chain networks.
- h. Strong Market Power over Suppliers and Competitors
The ability of Walmart to expand worldwide has enabled it to reach out to many suppliers and exercise its market power over competitors and suppliers.
Walmart’s Weaknesses
a. Large Span of Control
Walmart is an extended company. Its expansion could leave loopholes that may render it weak. For instance, in inventory management, system failure may lead to miscalculations and affect the company negatively. Furthermore, the company's online platform may experience technical failures in case of overload from international consumers, leading to poor service delivery, hence losing its reputation.
b. Thin Profit Margins
Walmart's strategy of cost leadership results in thin profit margins. Thin profit margins mean that there are other expected threats, such as poor wages for the workers. It could also be hard for the company to settle debts and other liabilities and end up bankrupt in the long run.
c. Imitation
Walmart does not own any competitive edge against any rival. For instance, the idea of free shipping has been copied by many e-commerce companies that have been copied from Walmart, but Walmart has no legal rights to stand against it. Such companies include target, best buy, and Kroger. This makes it prone to business model copying.
d. Gender Discrimination
According to a lawsuit filed against Walmart in 2007, female employees are discriminated against regarding promotions and pay scale as per the lawsuit.
e. Employee Treatment and Working Conditions
Criticism about how Walmart treats its employees, such as poor working conditions, low wages, and inadequate health-care, turns out to be a weakness.
Walmart’s Opportunities
These count as the external strategic factors and include the following.
a. Strategic Alliances
Walmart partnering with major firms and merging with other retailers will offer a great opportunity to its success. Alliances with ASDA and Elipkart will expand its international boundaries as the companies are well known in the areas they operate hence brand Walmart internationally. Also, acquiring small companies such as Jumia and Jiji will serve as an opportunity for Walmart.
b. Enhancing Human Resource Practices
Since the workforce is Walmart's most crucial asset, improving on it and coming up with innovations will serve a great opportunity in Walmart.
c. Improving Quality Standards
Low prices are connected to low-quality products. Products such as electronics of poor quality, which are cheap, can be replaced with high quality electronics, though expensive but durable.
d. Expansion to Other Markets
Venturing into markets that have not yet been ventured to will ensure that Walmart has expanded its business boundaries. For example, Walmart has not ventured into Africa yet. Africa can offer a large market for Walmart's goods, expanding the company.
Walmart’s Threats
a. Website Technical Issues
With Walmart having included online marketing, customers have raised complaints about technical issues with the website. This can be a threat to the company in the future, therefore, lose its customers.
b. A Primary Competition Target
Competitors are a threat to Walmart as they offer similar products to the same customers. For example, companies such as Amazon and Costco are arising at a high rate taking up the market. This reduces the number of customers getting to Walmart hence a threat.
c. Political and Legal Issues
Political and legal restrictions can hinder the Walmart company from operating in some countries contracting the business. For example, some countries charge a high rate of taxes for foreign companies. When this happens to Walmart, it reduces the profit margins rendering it not advisable to operate in such countries.
d. Small-Scale Online E-commerce Companies
Small companies have entered the online platform too. For example, home depot is in the market competing with Walmart. They offer the same products at the same prices or lower, posing a threat to the Walmart company (WALMART).
STRATEGIC FUTURE OF WALMART
Walmart's idea of forming alliances with other companies is a strategy to acquire a wide market for its goods. In the long-run, Walmart will have acquired a large market internationally. Also, strengthening of the online platform will ensure that they have acquired the international market as most purchases will be made online since the technology is advancing.
Challenges to Overcome
Walmart is facing challenges that should be looked at and solved. These challenges are posing threats to their reputation in the market. Challenges such as technical failure by the website should be solved immediately to ensure proper coordination of the business. Furthermore, employees should be well looked at and be given priority. Walmart should provide good wages to the employees and also improve their working conditions. It is also recommendable to acquire legal agreements to operate in foreign countries.
Long-term Strategic Success for Walmart
Walmart's acquisition of a broad market by liaising with other companies will brand it worldwide. This increases its reputation hence dominating the market. Also, employees will also market the company if they are treated well, making the strategy successful in the long run.
Innovations by Walmart
Firstly, for Walmart to ensure its superiority in the market, it has to offer bonuses on purchases to motivate its customers. Also, promotional points should be given to customers on every purchase done as motivation. Free shipment and delivery of goods to customers should be improved. Lastly, Walmart coming up with an online channel to market its products will be a great step in marketing the company.
Works Cited
Pratap, A. "Walmart SWOT Analysis 2020." Notesmatic, NOTESMATIC, 25 Feb. 2020, notesmatic.com/2020/02/walmart-swot-analysis-2020/. Accessed 16 July 2020.
WALMART. "The SWOT (strengths, Weaknesses, Opportunities, Threats) Of Walmart - BUS100 O19B SPR15NL." Google Sites, WALMART, 2020, sites.google.com/a/email.vccs.edu/bus100-o19b-spr15nl/the-swot-strengths-weaknesses-opportunities-threats-of-walmart. Accessed 16 July 2020.
Comments
Silas Nyamweya (author) from Nairobi, Kenya on March 22, 2021:
If you need such case studies, don't hestate to contact me at silasnyamweya@gmail.com
