Brief 1995, they entered in to Canada and

Brief
History of Organization

On July 2,1962 Wal-Mart was established by
Sam Walton in Rogers, Arkansas with the objective of serving clients with less
cost anyplace and whenever. Before the finish of 1967 Walton family possessed
24 stores crosswise over US and in 1969 authoritatively set apart as Walmart
Stores, Inc. In 1970 Walmart wind up plainly open exchanged organization and
entered in to stock trade in 1972 with offer of $78 million in its 51 stores.
Before 70’s decade’s over it has 276stores of every 11 states. At the point
when Sam’s club opened private company without precedent for 1980s, and the
primary Wal-Mart super focus was opened around the same time. In 1987, utilized
satellite correspondence for their voice, video correspondence. Their business
was fruitful and they remained on top as retailer in the country by 1990. They
celebrated for first $1 billion deals week in 1993 and first $100 billion deals
year in 1997. They expanded their business development by entering in to
various nations. In 1995, they entered in to Canada and in 1996 they entered in
to china and they wind up noticeably effective in every nation they opened the
store. In 1999s, they entered in to Europe by opening 2 stores in United
Kingdom. The method for living is not the same as nation to nation. Dissimilar
to different nations, it was not accomplishment in Germany. Without appropriate
investigations and market techniques they entered in to Germany. Since the way
of life is distinctive to US, Wal-Mart treated and provided US products left
with enormous misfortune. In 2000 Walmart gave adaptability to shop on the web.
In 2005 Wal-Mart endeavored when making a dedication on execute ecological
measures to build vitality effectiveness and reporting objectives to be
provided 100 percent by sustainable power source, make zero waste and to offer
items that manage individuals and the earth.

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External Analysis

Like any other company
Wal-Marts needs to make more profit and expand its business in such a way that
it has competitive advantage, to become better than their competition and be
more profitable by formulating and implementing strategies in its environment,
by analyzing not only opportunities but also threats and competitive forces
which could endanger its integrity and profitability.

Opportunities
            Health
Consciousness: In this fast-paced world where everyone is always scrambling
to get things done, people are becoming more and more health conscious in their
eating habits and trying to improve themselves. This can provide Wal-Mart the
opportunity to supply healthier products for which people are willing to pay
for in any store. “It has been demonstrated the popularity of the own label
products of the firm as their sales grew 40% in the last 10 years. That’s why
Wal-Mart could increase the number of private label products and earn higher
profit margins.” (Laura Barbera Marcilla, (2014). Business analysis for
Wal-Mart, a grocery retail chain, and improvement proposals. P. 50) If
Wal-Mart could do both by combining private labels with healthier options it
would definitely give them an edge over the competition.

Emerging Markets: Businesses
today have great potential of gaining more customers by going global or at
least international. The world had a huge population of over 7.6 billion with
only 4.3% in the United States of America. People all over the globe require
goods and this provides great opportunity. Wal-Mart already has presence in
many countries such as India, with 17.9% and China with 18.5% of the population
and operating outside home market provides valuable experience and knowledge.
It is therefore “A good chance for the firm is to keep on investing on
International operations because they grew at a faster rate than sales in the
home market.” (Laura Barbera Marcilla, (2014). Business analysis for
Wal-Mart, a grocery retail chain, and improvement proposals. P. 50)

Online Market: It is now
common knowledge that online shopping is pretty profitable if done correctly.
Some of the biggest online retailers have shown this like Alibaba in China and
Amazon in USA. The proof is right in front of us as the CEO of Amazon, Jeff
Bezos was announced to be the richest man in the world. In this age of
technology it would be wise for any retailer to have an online presence and
Wal-Mart is big, it save time and money by selling good online directly to the
customer rather than paying for shipping, stocking, storage etc. of good
physically in the stores. “The current trend shows that the online retail
sector grew by 4,7% in the U.S. during the year 2013.” (Laura Barbera Marcilla,
(2014). Business analysis for Wal-Mart, a grocery retail chain, and
improvement proposals. P. 50)

Banking:  Big companies such as Apple, Google and alike
have their own payment systems and don not rely on their party companies such
as PayPal or any other credit/debit or electronic check transfers.  This is a huge saving on fees if there are
many such payments made. I speak from my own experience of work where we
decided to switch to a cheaper payment processing company since it was eating
into the profits. “Every month the retailer receives about $140 million of
payments through debit cards, credit cards and electronic check transfers.”
(Laura Barbera Marcilla, (2014). Business analysis for Wal-Mart, a grocery
retail chain, and improvement proposals. P. 51) This means the company
sheds out a lot of money to third party companies and if they would develop
their own payment system it would not only save them the money there but they
could make money by providing the service as the other companies.

Social Welfare: With
people becoming more health conscious they are also becoming or trying to
become friendlier to the environment. Many scientists believe Global warming is
real and people need to take steps in order to help the environment. We can
already notice electrical cars and power plants coming up in many countries. By
switching to cheaper, more efficient and renewable sources of energies Walmart
could have a good company reputation with the public. “In fact, according to
the EPA, Wal-Mart is the third-largest U.S. corporate consumer of green power,
renewable sources with high environmental benefits. “(Laura Barbera Marcilla,
(2014). Business analysis for Wal-Mart, a grocery retail chain, and
improvement proposals. P. 51)

Threats
            Conflict
of interest: Trying to be energy efficient and going green is easier said
than done especially for large companies like Wal-Mart. This can become a
costly affair and with Wal-Mart needing to maintain low cost of good over its
competition going green could be dangerous but it “is trying to work on this
threat, and is building sustainable facilities. Wal-Mart has raised a goal to design
a store that is 25% to 30% more energy efficient and will produce to 30% less
gas emissions. “(Laura Barbera Marcilla, (2014). Business analysis for
Wal-Mart, a grocery retail chain, and improvement proposals. P. 51)

Competitor’s power: Wal-Mart
has a huge advantage over its competition because of low costs and it will lose
customers if other retailer like Target, Costco, Amazon and Tesco manage to
bring their costs down it will be bad for Wal-Mart. “Wal-Mart will lose clients
and will experience increased competition from them in the future.” (Laura
Barbera Marcilla, (2014). Business analysis for Wal-Mart, a grocery retail
chain, and improvement proposals. P. 51)
Environments. Both local and international market have their own challenges
like understanding the rules and regulations can be a hindrance when entering
international markets and can be a long and difficult process. On the other
side in the local markets big stores cause smaller mom and pop stores to lose
customers and eventually close down because they can not compete with Wal-Mart.
“This affects not only the retailers but their families and the community as a
whole.” (Laura Barbera Marcilla, (2014). Business analysis for Wal-Mart, a
grocery retail chain, and improvement proposals. P. 51) Wal-Mart imports
80% of merchandise, like many other companies as the label “made in China” can
be seen in most stores around the USA, from China and now China is trying to
increase the value of its currency which will cause these retailers to pay more
for the imported goods.

Market Saturation: With many
stores over a limited location it is fair to say that people could prefer to go
to a store which is closer to them than travel a few miles extra. Wal-Mart has
many stores and when it opens a store in a location “20 percent of a new
store’s sales come from existing Wal-Mart stores.” (Laura Barbera Marcilla,
(2014). Business analysis for Wal-Mart, a grocery retail chain, and
improvement proposals. P. 51)

 

Internal Analysis

Strengths

Size: The
huge size of Walmart’s image empowers it to make demands on supplier that in
turn helps it to sell its products on lower prices than its counterparts. When
the company lowers its prices because of its sheer size other competitors are
forced to lower their prices to stay in business, which may not be ideal for
the company, giving Walmart, a huge competitive advantage leading to closing of
local retails stores.

Product Range: The strategy of the company to offer wide range of products from variety
of brands, including its own, complimented by lower prices attracts its
customer to have a single stop shopping experience. In case of product
unavailability in local store, the company’s website also offers free pickup by
shipping it from its warehouse.

Retail Store Formats: The four-retail format Walmart has are Discount Stores,
Supercenters, SmallMarts and Sam’s Club which have proved to be a huge success
to target the customer based on geographic locations.

Location: To
save on operational costs, Walmart stores are located close to highway as well
as close to one another which helps in fast delivery, ample parking for the
customers, easy accessibility and convenience of rearrangement of employees
between the stores.

Pioneer of Information Science in Retail: Walmart was first to implement the barcode. They
extensively adopted Scan & Go systems. It offered web applications to track
inventory and shipping before its competitors. Since Walmart quickly realigned
its business strategies with the new technology for user-friendly experience,
it has given it an upper hand over its counterparts. Understanding the
importance of how did this benefit them, Walmart has now dedicated research and
development centers called ‘walmartLabs’ which hand picks engineers from reputed
universities over the world.

“Save Money, Live Better”:  To its customers
it has been a place to buy inexpensive products in any retail category as such
promoting the company image to be a “money saver”.

Globalization: Walmart is one of the early brands of USA to bring the true sense of
globalization by opening its operations world-wide. Its revenue has jumped 30%
from market outside USA in 2013.

Weakness

Employee Woes: The company has involved in various labor suits from its employees for
poor working conditions, over-time, low wages and sex discrimination in
promotions in 30 of the USA states. The company does not offer health benefits
to employees working less than 30 hours. It recently paid out bonuses when new
tax reforms were declared only to the employees who have been working over 20
years at Walmart. It has high employee turnover in retail stores and
walmartLabs . Ignoring employee feedbacks was one of the reason that led
Walmart to failure in Germany.

Failing to provide Quality Products: The brand currently banks on low cost product strategy
and fails to attract customers who demand high quality products. With rising
cost of operations of products manufactured in China, the profit margin is
steadily declining to offer cheap prices for goods.

Negative Image: The negative publicity by the company employees about
work environment, unfair treatment to suppliers by demanding lower prices so
that Walmart meets its consumer needs and reports of corruption are some of the
issues that are tarnishing Walmart’s image today.

?      
What
recommendations do your group have for Walmart?

(My
recommendations are based on internal analysis of the company) 

Quality Products: Walmart can start a chain of
stores offering higher quality of products as an option to expand its
business plan. This would help build better relations with suppliers who
compromise on quality of provide cheaper goods. This would attract also
consumers from a high-income demographic those who rely on the name of
Walmart and its reputation to province better quality products at cheaper
prices. The existing extensive supply chain network can help reduce the
prices of even costly products that come with great quality promise.
Employee Satisfaction: Recently Walmart updated its
hourly wage from 9$ an hour to 11$. Initiating socialization among the
employees outside of work and community services to boost the employee
morale towards the company. Similarly, investing in improving the work
environment and address the employee concerns diligently. Offer incentives
to employees and promote them to better positions that in turn would
attract better talent to the workforce. 
Each new location of a store should take into consideration local socio-economic
way of life to make best of the strategies to sustain the business at that
location.

Walmart
Strategies

As every company develops its own
strategies in order acquire success and maintain sustainability in the
industry.  Walmart also developed many
strategies to gain the uniqueness and plan to maintain above average returns
throughout its period in the market. A company needs to develop 4P strategies
(product, price, place, promotion). The top-level management is responsible for
developing business strategies for the company’s growth and profits.

Distinctive
Competencies:

            Walmart
uses economics of density, it maintains to have more number of stores within a
limited area, its stores locate close to each other, this strategy by Walmart
helps to save lot of money and time on shipping and it makes easier and quicker
to deliver the products. The strategy to maintain dense stores and stores near
to highways increases to bring the more customers to Walmart as for every
customer Walmart will be the closest one and also easily accessible store.
Walmart has also developed 4 retails formats, Discount stores, Supercenters,
SmallMarts, SAM’s club to target different levels of customers with respective
to their income and lifestyle

Market
Share:

The aim of Walmart is to
provide high quality products with low cost to its customers by maintaining its
profits and high investment returns. Walmart’s strategy of opening a general
distribution center saves delivery prices, avoids storage issues and new store
can be opened for less costs. This helps Walmart to maintain a controlled
supply chain and enjoy high discounts on the bulk buying. Maintaining low cost
strategy bring more suppliers, this way it helps Walmart to gain more market
share than its competitors  and even the
suppliers will have high returns on their investment. Walmart also uses
Electronic Data interchange with its suppliers which helps both Walmart by
cutting down its ordering costs and suppliers to have the knowledge of product
availability level time to time to have their products ready at Walmart all the
time.

Above
Average Returns:

Walmart makes huge
profits by following simplicity in its products. Its main strategy is
supporting high standardization and low customization. This way it limits
modules for a product. It uses high asset turnover strategy, in this approach
the cost is fixed over a large number of units of a product making final unit
price cheaper. This strategy attracts and brings more customers and will
maintain high competitive advantage over its competitors. Another innovative
idea of Walmart is cross-docking inventory system. In this supplier only has to
load the products at Walmart distribution center and Walmart has its own
transportation system to deliver to its stores. This way the storage and
distribution costs decreases, having more profit on the products.

Competitive
Advantage:

Quality of the product and customer
satisfaction makes any company maintain is competitive advantage in the
industry over other companies. In order to maintain the product quality Walmart
has issued a letter to each of its supplier to have the factory certified with
any of the internationally recognized Global Food Safety Initiative standards.
Walmart monitor its goods at all the stores by using SPARK system – Sustainable
Paperless Auditing and Recording Keeping system, which helps the food safety
monitoring all the time. It uses Modular Category Assortment Planning System to
find the purchasing patterns and customer intimacy strategy to target
customers. It also uses pennies strategy – selling good for few lesser pennies.
With its wide variety of products and its low cost Walmart has a huge customer
base. Walmart gains its profits by spending low costs in promotions. Walmart
has its own brands for several products.

Recommendation
Strategy

Price
Strategies

“The average cost of a product that
integrates a shopping basket bought at a WalMart store is $3. The strategy
applied since the very beginning of Wal-Mart was to sell the product at $2.97.
The founder Sam Walton believed that the habits of the consumers will change
when introducing this price strategy, and he was absolutely right.” (Laura
Barbera Marcilla, (2014). Business
analysis for Wal-Mart, a grocery retail chain, and improvement proposals. P. 28).
Yes, “Pennies Strategies” is one of the best price strategies in commerce. And
according to the size of Walmart itself, it can always get lowest cost in
entire industry, hence, it’s “always lowest price” price strategy will be still
work in next couple decades in US. However, because of the impact from Chinese
goods, if in some countries there is no enough protection for local productions
or let’s say some western productions, because their cost difference, for
example, labor, resource, travel…, what’s more, according to different culture,
“Pennies Strategies” maybe not work in some countries, for example, most of
Asian countries, they really don’t like if you change them 1 or 5 cents, this
is time which is so-called “no cash” easy purchase time, everyone is trying
their best to avoid to use cash and make purchase process as easy as possible,
and there are already a lot financial companies focus on this and they even
survive rely on providing easy and safe payment methods such as Alibaba, Paypal,
ApplePay, AndroidPay. Hence, in price strategies, we have some recommendations
as below:

When plan to
open new store in other counties, must find the corporations first, for
example, local resource factories are always cost less than other place,
and because of using local resource factories, most of time, we can as for
some promotion policies from local government, as we know, nothing can be
better if we can get supports from local government.
Start to
organize a new department which responsible for create new payment
software, something like easy-pay, to avoid cash trade, and put original
“Pennies Strategies” into payment software promotion, or we can use a new
credit card policy for temporary, and when first version of payment
software release then we can transfer the credit. And we can have other
wise choice, we can directly to make corporation with financial companies
which already provide this kind to easy payment service which can save a
lot of time and budget.

Promotion
Strategies

            “Promotional
strategies should be designed to suggest, encourage, and facilitate personal
interpretations of the self?relevance and positive consequences of product
use.”. (Timothy R. Graeff, (1995) “Product
comprehension and promotional strategies”, Journal of Consumer Marketing,
Vol. 12).  As we see, they most
common promotion from Walmart is like “was $20.99, now $5.99”, we have to say
it becomes very bad promotion strategies nowadays. The reason is people always
looking for promotion day to purchase production instead of the time they want
it. Hence, as a mega company like Walmart needs to make good balance with
normal day and promotion day, and of course include promotion policies. And our
recommendation for promotion strategies as below:

Increasing
the quality of complimentary or samples, makes people willing pay bill for
this promotion.
Increase
membership permission about promotion, set most of high quality promotion
to membership only, and set annual fee of membership, and return the
membership fee via member cash back in each purchase, then we can bind our
customer no matter new customer or old customer via membership with annual
fee because people always want to get money back. And we can also even set
membership day or membership special area. In a word make membership
benefits very special and also keep other customer who is not membership
can see these benefits.

Distribution
Strategies

Current distribution strategies which
Walmart followed, looks like no issues here, however the main reason Walmart
failure in German is mostly according to this “Distribution Strategies”. Hence
according to this we have recommendation as below:

Because
German is typical Aging country which means labor in German is really high
cost, nevertheless, German has top level technology in the world which
means Walmart can change head to “Automation” which is most popular
keyword in German, a complete unmanned supermarket just like “Amazon Go”.