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Wal-Mart SWOT And PESTEL Analysis Add in library

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Question :

Write a report demonstrating how an understanding of external influences could assist your chosen organisation in developing their marketing strategy.
 
 

Answer :

Introduction

Wal-Mart is a well known international brand with a chain of stores in United States. It has a wide collection of generally known products for the consumer. It offers private label retail across different product categories such as apparel, household items, entertainment, and grocery. With presence in worldwide markets, it has established a dominant position. It markets a variety of products to meet the consumer requirements (Mike Pereira 2002).

The company was established in the year 1962 in US. Michael Duke is the present CEO and it has a workforce of 2,200,000. It is well placed to meet the demand out of increased trades Wal-Mart has combined technology and international standards of marketing and retailing to provide consumers with their favorite products. After humble beginnings in the past, it has grown up to be a household name throughout the world. It strives to progress by harnessing the versatility and available opportunities (SFU 2014).

The marketing has usually be targeting the working families to get their choice of products at affordable and reasonable prices. Wal-Mart also has ecommerce online stores which gives a shopping convenience to buyers. The business philosophy of the brand is based on prioritizing the consumer above all. Build on a highly effective mechanism; it is committed to provide simple access to over 1,000,000 products.

Wal-Mart has vowed to improve the nutritional stands if its products in the coming years. It aims to lower the levels of salt and sugar and also eliminate transfat. It also contributes in different charitable causes that reach up to $1 billion per year. The headquarters of the company is located in Bentonville, Arkansas. International operations excluding United States stretch up to 6337 stores across the 26 countries. The company gathers and analyzes a wide scale of data based on shopping habits of consumers. It also employs the highest number of people in the United States (WRLC 2009).      

 

SWOT Analysis

Strength

  1. The international store is also the biggest wholesaler across the globe.
  2. Fortune 500 ranked it as number one in 2011 and among the largest American companies.
  3. The widely spread operations ensure that there is no rival of equal measure.
  4. Wal-Mart has the ability to replicate its flagship products on a regular basis throughout the world on unrivalled scale.
  5. Wal-Mart can benefit from the low income group of consumers by catering to their rising demands for consumable staples to replace discretionary items.
  6. With such flexibility and impact, it has maintained a solid market reputation over the years and continues to do so (Strategy Online n.d.).

Weakness

  1. Wal-Mart, being a large box vendor runs different supercenters throughout US.
  2. In order to store the new stock, they need a big area. It limits the substantial expansion in those urban areas where the provided space is limited.
  3. According to some studies, Wal-Mart has experienced reduced store sales in America for eight consecutive quarters owing to its market place space.
  4. It has become significant for the multinational retail giant to deliver as per its strength.
  5. There is a need to bring a reshuffled set up which is more suitable in the urban spaces.
  6. It has some fierce competitors in form of companies like Tesco and Costco. These brands also aim to go ahead with fresh functional set ups. Provided they are successful, Wal-Mart will be unfortunately in a disadvantageous position.

Opportunities           

  1. In the developing economies such as Brazil, South Africa and Mexico, the company has been successful in growing its existence (Hunts Ville 2007).
  2. In the future years, customers of developing economies will purchase majority of the globe's good apart from manufacturing a handful.
  3. Income growth of Wal-Mart would be impacted by the rising market trends of these fast growing economies (Abahe n.d.).

Threats

There has been a rise in the number of employees in the recent years. It indicates a further possibility of rise in health care costs and labor pays. In the United States, labor expenditure for corporations has increased in line with the rise of wages and health care expenses. As per some business estimation, the health care costs of US workers would go up by 8% in 2012 and more with the passage of time. The increases in medical costs are even outsmarting the inflation and pay rise.

One of the key driving factors behind the rise of medical charges is employee insecurities. They are concerned about losing their jobs and also the health cover. As a result, they are extensively using their health care and even contain it (Sage Pub 2010).

 

PESTEL Analysis

PESTEL analysis is done to mark the actions that are significant and essential for immediate activation. The six different elements which are external to the organization shows the impact they make to the operations of the company and hence the marketing environment. It also defines the healthy and unhealthy outcome of some factors in the business. The environment, technical expertise and competitive forces keep on changing and it has also impacted Wal-Mart. It has to come up with strategic plans for making fast decisions in a long term basis.

Political impact    

On more than one occasion, Wal-Mart has faced political action and law suits for different reasons. Gender discrimination lawsuit was filed against the company in 2007. It alleged that women employees faced discrimination in terms of payments and promotions. These few regulations impact the perception people have towards the brand of being employee friendly and socially conscious company. A negative news can impact the sales of the company adversely (HIS Global Insight 2006).

Economic impact                    

United States has plans for moderating the rise of supercenters in an effort to leverage capital assets. It will be done through a plan which has been designed for increasing returns and sales across US stores. This will have a great impact on Wal-Mart. As per some studies, the smaller towns will lose half their total retail trade by a decade with the arrival of their store.

Another study conducted in 2004 by two university professors said that US counties having Wal-Mart store faced a rise in poverty levels compared to other counties. An article came out in the year 2006 which said that Wal-Mart had a positive influence on small businesses. According to a report that published in a leading daily, the discount on food items of the company raises the welfare levels of US shoppers by up to $50 billion annually (HIS Global Insight 2006).

An American daily also observed Wal-Mart as the remarkable job creator of the galaxy in private sector history. Thus, it cannot be denied that the international brand has been a very strong force for a long time in the retail sector.

 

Social impact    

Wal-Mart has an immense popularity and following in the social circles. Many places throughout the world follow a trend which says that Wal-Mart is the best shopping destination. Consequently, there are many consumers throughout US that go to the stores of the company. They consider it as a one stop service for shopping needs. Thus, it has become their first primary choice owing to the social impact of the brand. The online store of the company has also been a successful and well accepted effort.  It has only increased the number of shoppers and followers (NYU n.d.).  

There are also a certain percentage of Gay, Lesbian, Bisexual and Transgender workers. The company aims to achieve diversity in its employee groups. It had received appreciation for stretching the antidiscrimination policy.

Technological impact  

The basis aspects of marketing follow inputs from modern technology in the world of Wal-Mart retail. Advertisement and sales of the available products are largely based on internet and the new media i.e. social media.

Almost three years back, Wal-Mart had made announcements of working on their home delivery system for customer convenience. Being the biggest retailer of United States, the company collects data on shopping habits of consumers for analysis. It is done to optimize operations though prediction of consumer habits (CIMA 2007).

Environmental impact

Wal-Mart had made announcements of implementing a series of environmental measures for increasing energy efficiency. It has become the largest seller of organic milk and highest purchaser of organic cotton globally. The company has also reduced its packaging and energy expenses.   

 

Legal impact

Wal-Mart was slapped with a fine of more than $80 million for poor management of hazardous wastes.  Hillary Clinton had served as one of the fifteen members in board of director position. It has faced lawsuits for sex discrimination and the legal policies were also rated low by the labor unions.

Conclusion

Wal-Mart has been a widely successful venture which is proved by its growth and impact in the retail world since arrival.  It is able to negotiate for lower prices from vendors. Bu using its bargaining influence, it cuts down the products costs to attract as many customers as possible. The company is constantly involved in revamping its approach and procedures to expand its reach. This international store and its whereabouts were used as subjects of documentary movies, publications, television references, etc. It is always in news for some reasons or the other (SW learning n.d.).

Apart from appreciation and acceptance, Wal-Mart has also faced criticism on certain issues. Be its community groups, labor unions, environmental organizations or their own staff, the company had to go through challenging times. However, it cannot be denied that Wal-Mart has created numerous job and employment opportunities since its inception. It also gives donation on charitable causes which shows a sense of responsibility towards the environment and community as a whole.

Due to the presence of Wal-Mart, many rival companies have improved their productivity standards, quality levels, pricing structure, etc. It has influenced the global community at large and will keep on doing so in future.  

 

References

  1. Mike Pereira 2002, Wal-Mart: Staying on Top of the Fortune 500, retrieved on 15th January 2015 from https://mike-pereira.com/subpage/docs/Wal-Mart-CaseStudy.pdf
  2. SFU 2014, Strategic Analysis of Walmart, retrieved on 15th January 2015 from https://www.sfu.ca/~sheppard/478/syn/1137/G_6_1137.pdf
  3. WRLC 2009, Strategic Analysis of Wal-Mart, retrieved on 15th January 2015 from https://aladinrc.wrlc.org/bitstream/handle/1961/9446/Yang,%20Fan%20%202009S.pdf?sequence=1
  4. Strategy Online, Brand of the Year Walmart 2007, retrieved on 15th January 2015 from https://strategyonline.ca/content/pdf/51104.pdf
  5. Hunts Ville 2007, Wal-Mart Expansion Market Impact Analysis, retrieved on 15th January 2015 from https://www.huntsville.ca/en/townhall/resources/MarketImpactAnalysisHunstvilleWal_MartExpansion.pdf
  6. Abahe, Marketing, Strategy, and competitive analysis, retrieved on 15th January 2015 from https://www.abahe.co.uk/business-administration/Marketing-Strategy-and-Competitive-Analysis.pdf
  7. Sage Pub 2010, The Dynamics of Market Entry and Expansion Strategy in Emerging Markets: The Case of Wal-Mart in Latin America, retrieved on 15th January 2015 from https://www.sagepub.com/ridley/Examples%20of%20literature%20reviews/Dino%20Ovcina%20literature%20review.pdf
  8. HIS Global Insight 2006, The Economic Impact of Wal-Mart, retrieved on 15th January 2015 from https://www.ihsglobalinsight.com/publicDownload/genericContent/11-03-05_walmart.pdf
  9. NYU, Competitor Analysis, retrieved on 15th January 2015 from https://pages.stern.nyu.edu/~jczepiel/Publications/CompetitorAnalysis.pdf
  10. CIMA 2007, Global Strategic Analysis Tools, retrieved on 15th January 2015 from https://www.cimaglobal.com/Documents/ImportedDocuments/cid_tg_strategic_analysis_tools_nov07.pdf.pdf
  11. SW learning, The External Environment, retrieved on 15th January 2015 from https://www.swlearning.com/pdfs/chapter/0324070993_2.PDF
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