The Wal-Mart Success Story - Assignment Example

Strategic Planning & Decision Making Wal-Mart SWOT Analysis I. Organization History Wal-Mart was founded in 1962 by Sam Walton, and it became a large discount department store, and chain of warehouse stores. The organization has been focused on formulating a strategy based on offering branded products to their customers at a low price. In fact, Wal-Mart has managed to acquire a market share of more than two million members and customers weekly. II. Organizational Strengths and Weaknesses A. First Organizational Strength The organization has acquired a strong financial position, thereby becoming the world’s largest public corporation, private employer and grocery retailer, in America. Moreover, fifty-one percent of their revenue is generated for the grocery businesses, which are retails in 8500 stores around fifteen countries and fifty states (Wendel, 2012; Walmart, 2012). 1. Reason it is considered strength The strong financial position enables Wal-Mart to operate in countries such as UK, China and some South American countries, where it offers a wide range of services and products, and ensures customers satisfaction. Therefore, this can be considered as the strength of the organization. 2. Explain why this strength is a distinctive competence This is a distinctive competence given that it has enabled Wal-Mart to be the leading retail-variety hoard, which offers a wide range of services and products to their customers at the lower prices than their competitors do. B. Second Organizational Strength The other strength relates to their core competence in the application of information technology in international logistic systems, which improves management of their inventories in different stores to ensure that they are not running out of stock (Berry, 2012). 1. Reason it is considered strength Use of information technology in their international logistic system is a strength that enables managers to evaluate the performance of individual products in the market, in the country or store-by-store (Berry, 2012). In this case, the It has made a significant contribution to their procurement operations, by improving the organizations’ efficiency. 2. Explain why this strength is a distinctive competence Application of information technology in their international logistic system can be considered strength of distinctive competence (Riley, 2012). It enables managers to monitor demand for products in the market and procure the right quantity for their customers, at the right time. Therefore, this gives them a competitive advantage over their competitors who are not able to do the same. C. First Organizational Weakness The first weakness can be attributed to their unsuccessful ventures, which were made in countries like South Korea and Germany. In fact, despite being the world’s largest retailer and their IT advantages, they have become weak in some regions due to their large span of control. Therefore, the company is unable to manage their resources in different areas due to lack of the adequate flexibility in their management (Berry, 2012). 1. Reason it is considered a weakness The company is multinational; their large span of control can be considered a weakness, given that they have only managed to venture in only few countries in the world. Wal-Mart has been established in numerous sectors dealing with products such as clothing, food and stationary (Berry, 2012). However, they have a low level of flexibility compared to their competitors. In this case, the company has not managed to venture in numerous countries in the world. 2. Discuss how the organization can minimize this weakness Nevertheless, this weakness can be minimized through business restructuring, whereby numerous professional managers in different departments of each store can be employed. This is in order to improve their management efficiency to cope with the increased span of control (Chapman, 2007). Moreover, this weakness can be minimized through a focus on recruiting personnel with skills for improving their flexibility in the market; thus, enable them to venture into markets in different countries. D. Second Organizational Weakness Wal-Mart has been criticized for their labor relation issues, whereby they do not have an association with any unions and this leads to a perception of mistreating their employees (Riley, 2012; Greenhouse, 2012). Therefore, the employees in this organization cannot negotiate with management on issues concerning work conditions or salaries (Greenhouse, 2012). 1. Reason it is considered a weakness This can be considered a significant weakness since it is an indication that they are not socially responsible as far as their employees are concerned. Therefore, this creates a poor impression to some customers (Riley, 2012). Moreover, the organization has been accused of keeping part-time employees instead of full-time, thereby leading to a negative effect to their reputation. 2. Discuss how the organization can minimize this weakness This weakness can be reduced by allowing their employees to join the labor unions in order to protect them from mistreatment by Company management (Kneer, 2009). In this case, they can avoid being implicated in problem related to employee mistreatment. On the other hand, the organization can focus on employing more full –time employees in order to eliminate the negative perception created among the members of the society. III. Opportunities / Threats A. First Opportunity Wal-Mart has an opportunity to venture into future businesses through expansion of consumer markets in countries like India and China. It also has an opportunity to improve their perception since the American consumers are motivated by the cost, though this is changing significantly. Therefore, the company can create a perception of establishing and promoting new ideas (Chapman, 2007). 1. Explanation of the Dimension within the General Environment and Force coming from that dimension that is creating the opportunity The industry in which Wal-Mart operates is a free trade zone, where the government is involved in free trade agreements with various nations, thereby resulting to an opportunity of new market (Kneer, 2009). These opportunities are also established by the trade in a small number of countries; thus, creating a vital chance for the business to expand in the future in markets such as China and India. 2. Explanation of why it is an opportunity and how it affects the organization This is an opportunity given that there are numerous regions in the world that Wal-Mart can expand their business, such as Europe and Asia (Kneer, 2009). In fact, this has a positive impact on the business, whereby it will be able to develop larger stores in these markets, and this will result to an increased market share and profitability (Berry, 2012). Therefore, the opportunities in the business environment will facilitate the marketing strategies of the Company. B. Second Opportunity The Company has an opportunity of integrating technology with their sales and marketing activities in order to increase the volume of sales (RAPIDBI, 2007). In this way, their customers are able to purchase products online. This opportunity is also contributed to by the dynamism in technology advancement in the world, which can be attributed to preference for internet shopping by customers. 1. Explanation of the Dimension within the General Environment and Force coming from that dimension that is creating the opportunity Numerous consumers are focusing on saving their time; thus, they are seeking a way of shopping conveniently at one place, thus saving time (Chapman, 2007). Therefore, this has led to increase in the consumer preference for internet shopping, which is facilitated by well-designedwebsites and convenient delivery. 2. Explanation of why it is an opportunity and how it affects the organization This is an opportunity since it contributes significantly to the efforts of marketing (Elite-Edge, 2013). On the other hand, this opportunity will increase the level of sales volume, which will result to high profitability for the company. Moreover, taking the advancement of technology as an opportunity to increase the efficiency of the business operations can create a good perception to the customers leading to loyalty (Chapman, 2007). C. First Threat One of the threats towards Wal-Mart is the criticism for the local communities in the small towns that have numerous stores (Riley, 2012). The critics claims that establishment of the Wal-Mart can lead to the small stores losing their market share due to unfair competition based on pricing. 1. Explanation of the Dimension within the General Environment and Force coming from that dimension that is creating the threat When Wal-Mart decides to venture into a market, initially dominated by small stores, fifty percent of them lose their business due to competition established by the store (Wendel, 2012). Wal-Mart is a large company, which enjoys economies of scale; thus, they can offer products at lower prices than the small businesses, which cause them to lose business. 2. Explanation of why it is a threat and how it affects the organization Therefore, implication of opening a store in some areas can be a threat to the company since it can result to a ruined reputation, which can have adverse effects on the business (Chapman, 2007). In this case, a ruined business reputation decreases a chance for acquiring customer loyalty that is needed for profit sustainability in the business. D. Second Threat The other threat relates to the decrease in consumer purchasing power due to the economic recession faced in some areas, where the Company has ventured (Danca, 1999). The economic recession leads to a decrease in purchasing power of consumers and this can pose a threat to the Company. 1. Explanation of the Dimension within the General Environment and Force coming from that dimension that is creating the threat The volumes of sales attained by Wal-Mart depend on the incomes of the consumer; thus, the economic recession can lead to reduced income for consumers, which will result to low demand for products. Therefore, this can result to a lot of waste to surplus inventories that end up being wasted, when the demand has decreased significantly in various regions. 2. Explanation of why it is a threat and how it affects the organization Decrease in consumer level of income due to the economic recession causes a reduction in the level of demand for products (Hamel, 2013). Therefore, this has a negative impact on the Company since they will not sell the expected unit, thus fail to attain their target profit. In this case, the business may incur losses due to low profit margins, which are expected to cover the operational expenses. IV. Summary Wal-Mart should focus on capitalizing on the opportunities identified in the environment in order to expand their business and increase the level of revenue. On the other hand, there is a need to focus on neutralizing their threats, which can result to failure of the business. For example, by understanding the economic condition, they will be able to apply a pricing strategy that suits the customers’ level of income and this will assist in maintaining the level of sales, and consequently the returns. References Berry, T. (2012). How to Perform SWOT Analysis. Bplans. Retrieved on Jan 22 2012 from Chapman, A. (2007). SWOT analysis. Retrieved on Jan 22 2012 from Danca A. (1999). SWOT Analysis. Retrieved on Jan 20 2012 from European Commission. (2007). SWOT (Strengths Weaknesses Opportunities and Threats) Analysis. For Learn. Retrieved on Jan 20 2012 from   Elite-Edge. (2013). How to conduct a SWOT analysis. Retrieved on Jan 20 2012 from Greenhouse, S. (23 Nov 2012). Wal-Mart Plays Down Labor Protests at Its Stores. The New York Times. Retrieved from http://www.nytimes.com/2012/11/24/business/wal-mart-dismisses-labor-protests-at-its-stores.html Greenhouse S. (Oct 9, 2012). Wal-Mart Labor Protests Grow, Organizers Say. The New York Times. Retrieved from http://www.nytimes.com/2012/10/10/business/organizers-say-wal-mart-labor-protests-spread.html Hamel, G. (2013). 4 Elements of SWOT. Chron. Retrieved on Jan 20 2012 from   Kneer, C. (2009).The Wal-Mart Success Story. Munich: GRIN Verlag     Riley, J. (2012). SWOT Analysis. tutor2u. Retrieved on Jan 22 2012 from RAPIDBI (2007). How to do a swot analysis. Retrieved on Jan 20 2012 from Walmart (Jan 2012). A guide to help suppliers understand the expectations and obligations of Walmarts standards for suppliers. Retrieved on Jan 22, 2013 from http://www.asdasupplier.com/public/uploads/module_files/396/4fc49b8565edaEthical_Sourcing_Supplier_Manual_2012.pdf Wendel C. (2012). The Competitive Analysis of Wal-Mart. eHow. Retrieved on 20 Jan 2012 from http://www.ehow.com/info_7936094_competitive-analysis-walmart.html Read More