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Saturday 25 October 2014
Fish Diseases and Treatment
Saturday 11 October 2014
Internal and External Environment of Wal-Mart
Content
S.N.
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Particular
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Page. No.
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1.
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Acknowledgement
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3
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2.
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Introduction of Wal-Mart
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4
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3.
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Overview of Company
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4-6
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4.
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Nature of Business
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6
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5.
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External Environment
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6-8
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6.
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Influences of Wal-Mart
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8-10
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7.
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Internal Environment
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11-13
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8.
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SWOT Analysis
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14
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9.
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Findings
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15
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10.
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Recommendations
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15-16
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11.
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Conclusions
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16
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12.
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References
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17
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Introduction of Wal-Mart
Wal-Mart
Stores, Inc is an American public corporation that runs a chain of large discount
department stores and a chain of warehouse stores. In 2010 it was the world's largest public corporation by revenue, according to
the Forbes Global 2000 for that year. The company was founded by Sam Walton
in 1962, incorporated on October 31, 1969, and publicly traded on the New York
Stock Exchange in 1972. Wal-Mart, headquartered in Bentonville, Arkansas,
is the
largest majority private employer and
the largest grocery retailer in the United States. In 2009, it generated 51% of its US$258 billion sales in the U.S.
from grocery business. It also owns and operates the Sam's Club retail
warehouses in North America. Wal-Mart has 8500 stores in 15
countries, with 55 different names.
The company operates under its own name in the United States, including the
50states. It also operates under its own name in Puerto Rico. Wal-Mart
operates in Mexico as Walmex, in the United Kingdom as Asda in Japan as Seiyu, and in India as Best Price. It has wholly-owned operations in Argentina, Brazil,
and Canada. Wal-Mart's investments outside North America have had mixed results :its operations in the United Kingdom, South America and China are highly successful, while it was forced to pull out of Germany and South Korea when ventures there were unsuccessful.
Overview of Company
Wal-Mart is well-known American company that operating
retail stores including grocery stores, Discounts warehouse clubs and
combination of general merchandise store. The “Every Day Low Price” strategy makes Wal-Mart
different from its competitors. The company sells electronic items, baby &
kids clothing, video games, toys, fitness and sports instruments, jewellery,
groceries and so many other things. The annual revenue of the Wal -Mart is greater
than the GDP of Switzerland. According to Fortune ranking, the and largest company in the world is Wal-Mart by revenues almost $469.2
billion.
Million of Wal-Mart customers witnessed the big reveal
at grand reopening across the country.
Wal-Mart are getting an extreme makeover, from the
colour, spacing assortment of goods up to changes of merchandise with marks
bigger and bolder sign age.
In 2008, “Project Impact “was launched which aims to
improve the Wal-Mart shopping experience and increase sales. According to
Project roll out schedule 70% of US stores will undergo upgrade by the end 2012
and the remaining renovation will wrap up in to 2014. They launched project
impact during financial crisis in US, they take advantage sag economy, and they
had low prices to get more customers.
Wal-Mart loads up on hot gadgets such as Apple’s
iPhone 4, iPad, 3D TVs in home entertainment to increase stores sales.
Nature of Business
Nature of business refers to the type or
general category of business or commerce you are describing. For example, if
you work at Microsoft, then the nature of your business is software. If you
work at a restaurant, the nature of your business is food services.
In case of Wal-Mart nature of Business is to provide
goods and services to customer. It is deal with wholesaler and retailer customers. Wal-
mart is multidimensional in it nature of business. You can say
customer service or even point out the specific dept. Wal-mart
business module is B2B and B2C. There is casual ambiguity and social complexity
in the firm resources. The customers will purchase them and then bring in money to the
business. It's a commercial enterprise selling retail
goods. It deals with online and offline in its own store. Wal-Mart provides large discount department stores and a chain
of warehouse stores. Wal-Mart is the buying and selling of
products and services by businesses and consumers over the Internet and through
other electronic media. This might include procuring goods and services,
dealing with customers as well as selling products.
External Environment
1.
Political
Wal-Mart made sure that they knew of the
political situation of every country they have operated in and the company has
made sure that it has a good position with regards to political issues.
Wal-Mart is every time ready to face any problems concerning the political
sector. Some times Wal-mart spent money in political issues.
2.
Economic
Wal-Mart is economically stable for the past years. Its
economical environment is doing well so they can try to improve their products
and able to give best to their clients. It is not only the internal economic
situation of the company should be taken in consideration but also consider the
economy of the country, Wal-Mart checks first the economic status of the
country they are operating in before they decide to open the branch in that country. The economic
environment is a major factor in the strategies of discounts retailers. The
United States GDP has been growing steadily since 2009 at 3.5% annually.
3.
Social
Wal-Mart makes sure that the products they offer should
be accepted by the society where they are operating in. Wal-Mart does not
authorize the delivery of some products they know will cause outbursts or
complains from different groups in the society. Wal-Mart is maintaining very
good relationship with different sectors in the society although some sectors
have problems with them. Wal-Mart also participates in social activities that
tend to develop a better relationship between them, the clients and the society
they are operating in.
4.
Technological
Wal-Mart offered new innovations in its technological
aspect and introduced new concepts with regards to its industry. Wal-Mart is
using advanced cash register and better performing slot machines. Wal-Mart is
using better security system. Since technology rapidly changes Wal-Mart keeps
updating to up to date technology and keep an eye on the technology how its
changes. If other companies use new technologies to provide services, Wal-Mart
has a capability to adopt those technologies.
5.
Environmental
Wal-Mart makes sure that the products they sell are
proven to cause very less harm to the environment. Wal-Mart has developed
certain regulations on what type of product they will sell in their store.
Wal-Mart has also introduced better waste management systems that aim to reduce
pollutants and provide a cleaner environment for the future. Wal-Mart makes
sure that its waste system is developed to prevent any mistakes from the
personnel.
6.
Legal
Wal-Mart makes sure that it follows the different laws of
a country where they are doing their transaction. The company doesn’t want to
risk their client’s welfare and company image by breaching local and
international laws Wal-Mart makes sure that the in the country where they are
doing transactions in will have a legal basis and will be sanctioned by local
or international legal organizations.
7.
Market Competition
Wal-Mart
is offering low price, low cost operations as well as their operational
efficiency; Wal-Mart tops the list of retailers worldwide. While some retailers
such as Dollar General offering a low price initiative with comparable low
price offerings as Wal-Mart, Wal-Mart is still the leader in the retail market.
With that said, Wal-Mart’s emerging market is being contested by other major
players such as CarreFour and Metro. Retailers such as CarreFour and Metro
moved into the international marketplace long before Wal-Mart.
8. Bargaining power of Buyers
The bargaining power of buyers highly
influences Wal-Mart. Company is trying its best to keeps its prices low for the
products and services they are providing. When the products are similar then the buyer will compare the price among
suppliers which increases the competition and lead to lower prices and profits.
Wal -Mart offers a wide range of products with the strategy of “Every Day Low Price” that appeal to large audience.
9. Bargaining power of Suppliers
The company makes sure that their suppliers
have high bargaining power through helping them show their importance in the
industry. Wal-Mart makes sure that the price being asked for a material has the
same value as the same materials’ quality and durability. This will ensure that
budgets will not be wasted. Wal-Mart holds a greater
part of market share and suppliers know that, so the power of suppliers is low
in case of Wal-Mart.
Influence of External Environment in Wal-Mart
1. Political
The political factor can negatively affect the Wal-Mart
sales and profits because government can change the
rules and the regulations at anytime which can be influenced Wal-Mart directly.
For example; the sale of Wal-Mart in February, 2013 was lower
than the expected due to delay in income tax refunds. The sale of Wal-Mart globally can be influenced by those issues. Since to
decrease working expenditure and gaining more profit Wal-Mart has operated in different
countries Such as; Germany, Canada, China, Mexico, UK and India. If these
countries face any political instability or any problem, it
can reduce the market share of Wal-Mart.
2. Economic
Raise the price of products and services which
cause to push inflation. This affects the performance of the entire company,
not only on its relationship with the customers, but also affects the overall
system. Purchasing power depends up on the economic condition. The management
of Wal-Mart says that economic factor; both domestically and internationally
might affect Wal-Mart financial performance unfavorable. In U.S and other countries
higher fuel price, energy cost and higher interest rate, inflation, weak housing market, unemployment rate,
higher debt and changes in tax law and overall economic slowdown could affect
consumer demand for the services and products selling through Wal-Mart stores.
Others factors like higher transportation cost, foreign exchange rate
fluctuation, healthcare and insurance, and other economic factors can raise the
cost of general and administrative expenses and harmfully effect the operations
of Wal-Mart.
3. Technological
The Internet and e-commerce greatly influence the
overall performance of Wal-Mart. Thus, it results the company to launch its
online stores which enables the company to be connected with the customers.
Just like the employees, as of now, customers are also changing in demands,
particularly in the ways of buying and availing products and services.
E-commerce or the process of buying and selling goods and services over the
internet had opened a new way of connection between the buyers and the sellers.
4. Substitute product
Customer mainly influenced by low prices. Therefore, if
cost of switching the product is low then threat of substitutes is higher.
Normally, there are three factors that can influence the customer to switch the
product such as; willingness of buyers to switch the product, performance and
price. On the other hand, if the buyers become loyal to the products then
threat of substitute can be decreased. In
Wal-Mart “Every Day Low Price” strategy customers in touch with the company.
5.
Customer
There are two types of customer
in retail. The first is related to the customer’s price sensitivity. If each
brand of a product is similar to all the others, then the buyer will base the
purchase decision mainly on price. This will increase the competitive rivalry,
resulting in lower prices, and lower profitability. The other type of buyer
power relates to negotiating power. Large quantity buyers tend to have more
influence with the firm, and can negotiate lower prices. Some factors affecting buyer power are as
follows,
(a). Size of customer
Larger
quantity buyers will have more power over suppliers in retail industry.
(b). Number of buyers
(b). Number of buyers
When there
are a small number of buyers, they will tend to have more power over suppliers.
The Department of Defense is an example of a single buyer with a lot of power
over suppliers.
(c). Purchase quantity and quality
Consumer can
buy high quantity of product, if there will low price of product, because of
the low price factors consumer will neglect quality factor.
(d). Consumer’s
mentality
Mostly Rural Indian consumers buy products
from local suppliers like, Kirana stores and urban consumers prefer both
sources of supplier.
(e). Discount
factor
It makes the consumer to buy product through
internet from different companies with different types of discount like gift,
cash discount etc.
6.
Supplier
power
The supplier’s power is highly influences
Wal-Mart. When
multiple suppliers are producing a commoditized product in retail industry, the
company will make its purchase decision based mainly on price, which tends to
lower costs. On the other hand, if a single supplier is producing something the
company has to have, the company will have little leverage to negotiate a
better price. The retail company is much larger than its suppliers, and
purchases in large quantities, and then the supplier will have very little
power to negotiate. There are some reasons when suppliers are more
powerful such as;
(a). Supplier
concentration
The fewer
the number of suppliers for a products in retail, the more power they will have
over the retailers. This is a real life situation.
(b). Switching costs
(b). Switching costs
Suppliers of
retail stores become more powerful as the cost to change to another supplier
increases.
(c). Uniqueness of product
(c). Uniqueness of product
Suppliers
that produce products specifically for a retailers and retailers will have more
power than product suppliers.
7. Competitor
Costco and Target is the competitor of
Wal-Mart in local market and they are the more significant threat to the market
share of the Wal-Mart. Costco is the largest discount wholesaler which can
compete with the Sam’s Club of Wal-Mart. Target can be the biggest threat in terms
of competing with Wal-Mart in all levels. The low price strategy followed by
the Target is the same strategy which is Wal-Mart using. Target is gaining
recently more market share by adding more grocery options in stores and
expended its stores internationally. Tesco is a British retailing company that
is known to have gained large international and domestic market share. Tesco is
the third largest retailing firm behind Wal-Mart and Carre-Four. Like other
retail companies, Tesco wants to have clients that will patronize their
product. The company uses a loyalty program to gain the loyalty of its clients.
Compared to Wal-Mart, Tesco has started to concentrate on the housing market
but it has not been that successful as of late.
Internal Environment
Wal-Mart
is the largest non-government employer and corporation in the world, Wal-Mart
is bound to have an interesting internal structure put in place. The main Wal-Mart's
Internal Environment is as given below,
1. Corporate
Structure
Corporate structure was structured into
three business units, Wal-Mart Stores USA, Sam’s Club, and Wal-Mart
International. Wal-Mart is a
public corporation, however the majority of the stock is still held by Walton
family members. Therefore, there is lots of family involvement at the top
level. The headquarters are in Bentonville, Arkansas, along with the control
and decision making ability of the organization. There is a very hierarchical
structure in place which only fuels the "good 'ol boys club" for top
management. The other unique element in Wal-Mart's corporate structure is a
strong culture that is fuelled by the Wal-Mart way of doing things, which as
far as they are concerned is the only way.
2. Management
The top management and most support functions are centralized at
the headquarters in Arkansas. Most of the top management started by working
their way up for a store manager and making a name for themselves. It is
assumed that in order to be an effective executive the individual needs to have
the experience from the store in order to know what they are talking about. The
control also lies in Bentonville, each day the store managers in each and every
store must submit reports and update the inventory, where the results are sent
to headquarters and reviewed.
3. Corporate Culture
Down to earth and committed to
being the very best there is from top to bottom. Culture comes from the Sam
Walton spirit, or known as the philosophy that people are the way to success
from top to bottom. Buying out companies overseas seems to be a way into
international markets for Wal-Mart. Sam Walton believed that a strong culture would help them to
be a retail giant. He was once quoted as saying: "The reason for our
success is our people and the way that they are treated and the way they feel
about their company." Wal-Mart has worked to keep a small-town feel
for its stores while becoming a retail powerhouse. Wal-Mart's primary concerns
are low cost, low cost, and low cost. Wal-Mart really sells itself as being a
great place to work, that its employees have a lot of fun at work, and are
ready to help its customers out.
4.
Research and Development
Wal-Mart is facing
the challenge of continuing to grow when margins are continuously shrinking. In
order to help their bottom line, Wal-Mart needs to introduce more products on
its private label brand, where the margins are higher. In addition to the private
label, apparel and house wares are an area with high margins that Wal-Mart will
focus on increasing sales. Wal-Mart
pays close attention to societal trends and supply chain technology. Tremendous research of competitors and their
strategies in order to learn from their mistakes. Management monitors
demographics & preferences of consumers.
5. Operations
Wal-Mart is connects
each store with headquarters and over 2,000 suppliers so that they will never
run out of or have too much inventory. Wal-Mart turns over their inventory more
than any other retail store. Strength and weakness of operation of Wal-mart are
as follows,
Strengths
Ø Maintains excellent service with
discount prices.
Ø Excellent up-to-date computerized
inventory system.
Ø Strategically located
distribution centres are a distinctive competency.
Ø Large number & size of U.S.
stores achieves economies of scale necessary for low cost competitive
advantage.
Weaknesses
Ø Slowing of comparative store
sales growth indicates stores may need upgrading or are being located too close
to each other.
Ø Customer ratings of staff
friendliness & courtesy dropped 20% since 1999 – now below industry
average.
Ø Lack of economies of scale in
many international locations due to low market share.
Ø Acquired foreign stores tend to
be too small with limited parking.
6.
Human Resources
Wal-Mart is the
largest non-government employer in the world. They realize that turnover is
high in retail, but that their associates are one of their most important
assets. Their written policy regarding associates is as follows: "They
are encouraged to maintain the highest standards of honesty, morality, and business
ethics". In order to become a Wal-Mart associate, candidates must take
a multiple-choice test and select what are considered the appropriate
"Wal-Mart" responses in order to be hired. There are and have been several cases
regarding discrimination on the basis of gender (female) that females are often
not hired or promoted to be managers. Some of the strength and weakness of
Wal-mart are as follows,
Strengths
Ø Wall-Mart jobs highly desired,
e.g., new Chicago store.
Ø Corporate policy dedicated to
improve employee involvement and expertise through seminars & training.
Ø Not unionized. Loyal employees.
Ø Special awards for employee
performance.
Ø Employees encouraged asking
questions and offering suggestions.
Weaknesses
Ø Drop in customer rating of staff
is a red flag for potential people problems.
Ø Poor history of integrating staff
of acquired foreign store chains into Wal-Mart.
Ø Poor history of promoting women
& minorities into management led to law suits.
Ø Poor employee benefit package
creates resentment.
Ø Anti-union stance may antagonize
employees & customers – especially in other countries.
7. Finance
Finance is the back bone of any
organization. It is most important to manage in good manner to the
organization. Wal-Mart internal financial strength and weakness are given
below,
Strengths
Ø Increasing sales easily supports
debt.
Ø Over 40 years of record sales and
profits.
Ø Earnings per share at record high
levels.
Ø Return on equity above 20% since
2002.
Weaknesses
Ø Comparative store sales growth
falling since 1999.
Ø Asset turnover (sales/total
assets) in continuous decline since 2001.
Ø Long-term obligations for leases
are high ($3.7 billion in 2006 from $2.0 billion in 1996).
Ø Return on assets declining.
Ø Stock price falling.
Ø Long term debt increasing to
finance acquisitions.
8.
Stakeholders
According
to walmartstores.com, Wal-Mart is committed to engaging all of their
shareholders, both internally and externally, to become the most sustainable,
responsible company they can. Wal-Mart believes that by listening to, and
partnering with their stakeholders, they are truly saving their customers money
so they can live better. Wal-Mart’s stakeholder group differs, in an effort to
adapt to the changing needs, and issues that continue to evolve in the
marketplace. As Wal-Mart pursues their corporate goals, they further strengthen
relationships with shareholders in order to be transparent and enhance their
relevancy with the customers and communities they serve.
9.
Information Services
Wal-Marts
inventory system, Retail Link, is a web-based technology that ties ALL Wal-Mart
stores to thousands of suppliers to allow for suppliers to be aware of what is
needed by stores. Wal-Mart was the first chain to have computers in all of its
stores and to have them connected to each other. This system connects to
headquarters, which sends reports on what the store is selling, what's just
sitting on the shelves, and what stores are selling the most items.
SWOT Analysis of Wal-Mart
Internal Strengths
·
Strong brand name
·
Strong bargaining power over suppliers
·
good supply chain management
·
Strong culture
·
Capable associates
·
Strong presence in Canada and Latin America
·
Low Price and Customer oriented
·
Expansion Strategy
·
Strong financial and IT resources.
·
Good customer service and pleasant shopping experience with free
parking.
|
Internal Weaknesses
·
Only attract price sensitive shoppers
·
May lose control and lack of coherent strategy due to huge
expansion plan nationally and internationally
·
The company is global but has presence in
relatively few countries worldwide
·
Wal-Mart sell products across many sectors
it may not have the flexibility of some of its more focused competitors
·
Huge financial resources commitment in expansion
·
High turnover rate of inventory
|
External Opportunities
·
Big potential market in Europe and Asia
·
Global Expansion
·
Increasing online sales.
·
Strategic alliances acquiring rival firm.
·
Improve the feature of their website.
·
To take over or joint venture to enter in
global market
·
Strong power over suppliers due to large volume of purchases.
·
Everyday low price.
·
Growing international sales resulting from new market
opportunities that exist in foreign markets including Canada, Mexico, Japan,
UK, Taiwan, Korea and Porto Rico.
|
External Threats
·
Sustain market leader position
·
Competitors like, Tesco & Carrer-Four
·
Tariffs and taxes that the company
has in different countries, each countries has its own rate of taxes and
tariff that creates additional expenses for the company.
·
Exposed to competitions from various fronts
·
Face potential political problems, cultural and practice
differences
·
Intense price competition
·
Large foreign competitors entering U.S. and international
markets where Wal-Mart is present
|
Findings
Ø Wal-mart being multidimensional in its nature
of business.
Ø Their key relationship with the
suppliers/vendors through application of technological initiatives and their
bargaining power as buyers has brought them enormous amount of reputation.
Ø The Organizational and the Management style
at Wal-mart are unique with the decentralization of authority and obsessions
with cutting costs have proved to be very successful and consistent with their
corporate strategy.
Ø There are more opportunities that exist for
Wal-mart based on their current position in the retail industry and their
current strategy.
Ø Effective utilization of key value chain
activities that is consistent with the company strategy that provides
competitive advantage.
Recommendations
Ø Focus on absorbing international markets like
India: Rather than competing with the retail giants like Carrefour and
Lianhua/Huilan from China, Wal-mart should tap the opportunities in places like
India, and developing countries that provides great potential for growth and
increase sales in the retail industry.
Ø Wal-Mart’s global expansion strategy of
organic growth rather than acquisition would be a progress as long as Wal-mart
evaluates its growth strategy based on the local industry conditions and revise
its strategies based on the local competition.
Ø Store lay outs can be improved with better
ambience (brighter lighting like target) and highlight the sale items (both
in-store and internet) to attract different types of customers.
Ø Wal-mart should take better measures to build
a good relationship with its employees/associates by providing better
wages/benefits. Not only does this build a positive image but also retain its
employees.
Ø The system should be protected from hackers
that want to destroy records of supplies.
Ø Focus more attention on marketing efforts
such as promotions and circulars in local journals for more visibility rather
than just relying on word of mouth advertising.
Conclusion
It can be conclude
that Wal-Mart has developed a great workplace environment which full of
competition, self improvement and respects that differentiate the company from
its competitor. Wal-Mart is the number one retailer in the United States and is
at the top of the Fortune 500 listing.
Wal-Mart operates in many countries world-wide and is moving into new
countries every year. Wal-Mart is also
expanding as a retailer. They have
expanded into many other sectors of the marketplace, including groceries, gas
stations, electronics, and auto maintenance.
Each year, Wal-Mart finds new ways to grow and offer more services to
their customers.
The low cost strategy of the company
attracts more customers towards the Wal –Mart which increases the profit
margin. In addition, the company has satisfied its customers need through
offering a wide range of products which reduces the risk of customer turnover.
The Company is well placed and it has the ability to control the major part of
market share. It has expanded many stores worldwide and still planning to open
more stores. Every year the company finds more ways to satisfy their customer
need.
As a result
of Wal-Mart is ever growing size and variety of services they offer, their
public affairs department is going to become more and more important. Wal-Mart
is going to be made more regulation against them and their public affairs
department is going to have to work harder to make it possible for Wal-Mart to
continue to grow. Wal-Mart is going to have to work harder to maintain their
good reputation.
References
More information about Wal-mart can be found by visiting www.walmartstores.com and on Twitter at http://Twitter.com/walmart. Online merchandise sales are available
at www.walmart.com and www.samsclub.com.
Environment of Wal-Mart http://www.ukessays.com/essays/marketing/technological-innovation-impact-of-online-shopping-on-walmart-marketing-essay.php#ixzz3Fdp29lAM
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