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PESTLE Analysis: Management Add in library

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Question:

The company is Wal-Mart. Provide information on the following:

PESTEL analysis, five force analysis, driving forces, and strategic group maps for the industry

- A brief history of the industry (development stages)

- You may use business models, market share, perceived quality and other critical and relevant variables to identify viable strategic groups in the industry

- Competitor analysis -what other companies are currently doing

SWOT, value chains, and benchmarking

Competitive strategies

-Identify and compare key strategies pursued by major players in the industry; you are also expected to discuss which strategy seems to be most successful in the industry, and the rationale for this success

Offensive and defensive strategies, vertical integration and strategic alliances.

 

Answer:

PESTLE Analysis

Different environments will create an impact on the business processes of Walmart and hence, it needs to be considered and planned accordingly. The impact of different environments on the business of Walmart is discussed below.

Impact of political environment on Walmart

  • Walmart always makes sufficient donations to the government and this helps them to maintain good relationship with the government officials.
     
  • Walmart believes in expansion so they try to maintain good relationship with the government as this will help them to expand.

Impact of economic environment on Walmart

  • Walmart is trying its level best to reduce the wages that they are offering to the employees as this will help them to grow in terms of profits and revenue.
     
  • Walmart believes in offering products to the customers at an affordable price and hence, the economy of the nation will not create any big impact on the revenue generation of Walmart. The disposable income will reduce and hence, there are possibilities that people will buy only products that are required necessarily.
 

Impact of Social environment on Walmart

  • In developing economies, pop and mom stores are still into existence. These stores can create an impact on the business of Walmart
     
  • Many people still have to accept the concept of retail stores and this completely depends on social perception of the nation

Impact of technology on Walmart

  • The usage of technology in Walmart is very low as they are more concerned about the cost associated with the implementation of technology.

Impact of legal environment on Walmart

  • The tax rates create an impact on the business of Walmart. Every government changes the tax rate at regular intervals.
  • In India, there is a norm which states that minimum 30%  of their products should be sourced from small retailers (Lake 2010).

 Impact of ecological environment on Walmart

  • The organization should look for ways to reduce their impact on the environment.
  • Many countries limit the supply of electricity and water so it needs to be planned and used accordingly.
 

Porter’s five forces analysis

Porter’s five forces will create an impact on Walmart. The different forces and the impact of different force are discussed below.

The threat of new competitors is very low foe Walmart because the cost of setting up a business like Walmart is expensive it cannot be afforded by all. Walmart has its brand name and at the same time, Walmart is known in the market for the offerings at cheap price. It is merely impossible for an upcoming company to achieve this advantage.

Rivalry from established competitors is very high for Walmart. There are plenty of stores that have established themselves and they are giving tough competition to Walmart. Apart from the mortar and brick stores, there are online stores as well which is targeting the same customers as that of Walmart.

The buyer power is medium for Walmart because there are possibilities that a single buyer may not like Walmart and losing a single customer is not going create an impact on the business of Walmart. The customers can create an impact if they are doing bulk shopping.

The supplier power for Walmart is very low because there are plenty of suppliers who are willing to be associated with Walmart. If few of the buyers are not interested to be associated with Walmart then Walmart may hire new buyers.

The threat of substitutes is also very low for Walmart. There are very less retail outlets which will offer products at such a low price. This is one thing that adds on to the benefit of Walmart.             

SWOT Analysis

There are various strengths and weaknesses of Walmart and at the same time, they have their threats and opportunities as well. It is the responsibility of the management to identify these and plan accordingly.

Strengths of Walmart

  • There are a wide range of products in Walmart and hence, the customers have plenty of options to choose from.
  • Cost leadership is one of the biggest advantages that separates Walmart from other businesses.

Weaknesses of Walmart

  • There are similar other retail outlets and there is hardly any differentiation between them and Walmart.
  • At Walmart, it is seen that at least 80-100 employees leaving the organization everyday and hence, retaining the employees is a challenge (Thayer 2009).

Opportunities for Walmart

 
  • Private labels are increasing so this opportunity can be explored by Walmart.
  • Online shopping is also growing and hence, Walmart can set it up its online store as well.

Threats to Walmart

  • Walmart is continuously under scrutiny by the competitors and government and hence, every small mistake of theirs is blow out of proportion.
  • The prices of commodity are increasing continuously and hence, it will be difficult for Walmart to achieve the lost advantage.

Competitors of Walmart

There are plenty of competitors for Walmart at different location but few of the competitors all over the world are as follows: -

  • Carrefour
  • Tesco
  • Metro

These retailers are growing continuously and hence, they are giving competition to Walmart at all places (Edelson 2012).

 

Value chain of Walmart

The value chain of Walmart starts with the suppliers. They supply products to walmart’s distribution centre. Walmart buys in bulk and hence, they have the potential to bargain with the suppliers and get things at the cheapest possible price.

Walmart distribution center is well equipped to equipments and manpower. All the things are sorted at the distribution center within 48 hours and they are transported to the floor.

Walmart store is located in different corners of the world. The urban population as well as the rural population can shop at Walmart.

Walmart shopper is the last person in the chain and every shopper prefers to buy at Walmart so that they can buy things at a cheaper price as compared to that of other retail stores. 

Offensive and defensive techniques of marketing by Walmart

Offensive and defensive techniques of marketing are used by Walmart so that they can survive in the competitive. Low cost is an offensive technique used by Walmart to survive among the other retailers. Tesco used defensive technique by reducing the cost of products in Walmart retail as they know that low cost advantage offered by Walmart may attract all the customers (Mottner 2009).

 

References

Mottner, S, 2009, Wal-Mart: Supplier performance and market power, Journal of business research, Vol. 62, No. 5, pp. 535-541

Lake, C, 2010, Re-branding Wal-Mart, Social Policy, Vol. 35, No. 1, pp. 9-16

Edelson, S, 2012, Big, Bigger, Wal-Mart, WWD, Vol. 203, no. 64, pp. 1-7

Thayer, W, 2009, Walmart: Our retailer of the year; it’s not just about price. Here’s a look at marketside, partnering practices and the power of retail link, Refrigerated and Frozen foods retailers, Vol. 7, no. 5, pp. 9-17

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