Bus499 – WalMart External and Internal Environments

Choose the two (2) segments of the general environment that would rank highest in their influence on the corporation you chose. Assess how these segments affect the corporation you chose and the industry in which it operates.

The economic and political segments rank highest in Wal-Mart. The economic factor ranks highest since Wal-Mart operates in different countries. Therefore, the economic condition of the host country would greatly impact the company. High inflation rates and currency devaluations are some of the major economic factors that have affected the company in the recent past. High interest rate, high energy costs, inflation, high unemployment, and high debt level are some of the major factors that affect Wal-Mart’s operations in the U.S. Slowdown of the U.S. economy and lack of consumer credit are some of the major factors that affect the company’s American operations. This is due to the fact that the above factors have a significant impact on consumer demand (Morrison, 2011).

Wal-Mart operates in more than 25 countries across the globe. Therefore, it is vital for the company to ensure that it adheres to the rules and regulations of the host countries. In 2010, Wal-Mart’s Chinese operations were faced with several challenges. These challenges ultimately forced the company to acquire a local company to continue having smooth operations in the country. Political factors that may affect Wal-Mart’s operations in China include political instability, legal and regulation constraints, and the tax system. Political factors may force the company to alter its operations to conform to the existing conditions (Morrison, 2011).

Considering the five (5) forces of competition, choose the two (2) that you estimate are the most significant for the corporation you chose. Evaluate how well the company has addressed these two (2) forces in the recent past.

Intensity of rivalry among competitors and threat of new entrants are the most significant forces for Wal-Mart. There is stiff competition in the retail industry. The industry has many firms with different sizes that compete for the available customers using different strategies. The large number and variety of firms in the industry and the aggressiveness of the firms poses a significant threat to competition. The company has addressed these risks by ensuring that it remains aggressive. Despite the fact that Wal-Mart is the industry leader, it has strived to acquire a larger market share in various market segments. The company engages in extensive advertising campaigns that strive to improve its market share. In addition, Wal-Mart opens new stores in new locations occasionally. This enables the company to acquire new untapped markets or snatch the customers of the competitors who would shift to Wal-Mart upon its entry into the market due to the company’s strong brand name (Keillor, 2011).

Wal-Mart also operates in an industry where there is a high threat of new entrants. This is due to the fact that new small retailers may enter the market despite the fact that it may be population by large retailers such as Wal-Mart and Target. The small retailers compete with Wal-Mart basis on convenience, specialty or any other factors. The low cost of doing business is one of the major factors that makes is easy for small retailers to venture into the market. In addition, venturing into the retail market requires moderate amount of capital. However, it is difficult for the new entrants to develop their brands. Wal-Mart has countered the threat of new entrants by increasing the number of stores particularly in the American market, which accounts for the largest proportion of it revenues. Millions of Americans live within 5 miles of a Wal-Mart store. This has made it difficult for the new entrants to compete with Wal-Mart based on convenience and location. Extensive advertising campaigns have also helped in improving the company’s competitiveness. This has enabled the company gain a competitive edge over other companies in the industry.

With the same two (2) forces in mind, predict what the company might do to improve its ability to address these forces in the near future.

Wal-Mart should strive to differentiate its services from those of its competitors. For example the company may create stores that enable customers to have an enjoyable shopping experience. This would help in attracting customers to its stores. The company may also target new markets. Wal-Mart does not have a huge presence in emerging markets. Venturing into emerging markets would guarantee the future growth and profitability since emerging markets are growing at high rate. This would enable the company to stop over-relying on the American market, which is saturated.

Assess the external threats affecting this corporation and the opportunities available to the corporation. Give your opinions on how the corporation should deal with the most serious threat and the greatest opportunity. Justify your answer.

Wal-Mart faces stiff competition in local and international markets since it is the market leader. The company may counter this competition by engaging in extensive advertising campaigns. The company has enough funds to counter the competition. The company may also create initiatives that strive to improve the company’s brand name. These include implementing various corporate social responsibility initiatives and sponsoring various events that are popular in communities that surround its stores. This would show that the company is responsive to the needs of the community. Venturing into emerging markets would also help enable the company maintain its sales revenue in the face of declining sales in developed markets, which are characterized by stiff competition. Wal-Mart also faces stiff competition from companies that use e-commerce to sell their products. Companies that use e-commerce pose a significant threat to brick-and-mortar stores since they have low operational costs. Wal-Mart may counter competition from e-commerce companies by establishing its own e-commerce platform and engage in extensive promotional campaigns to increase its popularity among its customers (Hill & Jones, 2012).

Wal-Mart currently competes with specialty stores. Use of different strategies for different markets such as the creation of normal stores and neighborhood markets provides Wal-Mart with the greatest opportunity for expansion. The company may create specialty stores that target different market segments. Wal-Mart’s strong brand name would enable it attract a significant number of customers. This would fuel the growth and profitability of the company (Hill & Jones, 2012).

Give your opinion on the corporation’s greatest strengths and most significant weaknesses.  Choose the strategy or tactic the corporation should select to take maximum advantage of its strengths, and the strategy or tactic the corporation should select to fix its most significant weakness. Justify your choices.

Wal-Mart’s strong brand name is one of the major strengths of the company. Delivering personalized experiences to its customers is one of the major strategies that Wal-Mart may use to take maximum advantage of its strong brand name. The company should use digital marketing to connect with is customers using various means. Wal-Mart should implement a strategy that ensures there are conversations with its customers across different channels. It should profile its customers based on buying patterns to create personalized means of communicating with them in two-way interactions. This would necessitate Wal-Mart to ensure that it does not simply classify its customers. It should strive to improve its relationships with them.

Despite the fact that Wal-Mart is the largest retailer in the world, it only operates in a few countries outside the U.S. This is one of the greatest weaknesses of the company. Therefore, it is vital for the company to ensure that it increases its operations in foreign locations. The American market is saturated. Focus on the market would stunt the growth of the company. Wal-Mart should ensure that it focuses emerging markets, which have huge growth potential. This strategy would enable the company stop relying on the American market. Emerging markets promise to account for a significant proportion of the company’s sales revenues in the future (Boone & Kurtz, 2015).

Determine the company’s resources, capabilities, and core competencies.

Wal-Mart’s resources include brand loyalty and low cost position. The company has a strong brand name, which increases loyalty among its customers. Wal-Mart is also synonymous with low-priced products. This helps in improving the popularity of the company among its customers.

Wal-Mart capabilities include having a superior logistics system. The company has stores in different countries. The stores are connected by a state of the art supply chain that ensures seamless movement of products in the supply chain. Wal-Mart also has more than 4,000 tracks that help in the transportation of its products.

On the other hand, the core competency of the company is being the market leader, which has enabled the company to develop a competitive advantage for itself. Wal-Mart engages in tough negotiations based on price with its suppliers and ensures that the final price is the minimum possible. This enables the company to offer the lowest possible prices to its customers. Low cost operations is also a core competency of the company. Wal-Mart strives to reduce its operational costs. Its products have low profit margin. However, large sales volumes enable the company to gain profits (Boone & Kurtz, 2015).

Analyze the company’s value chain to determine where they can create value using the resources, capabilities, and core competencies discussed above.

Primary activities and support activities are the major components of Wal-Mart’s value chain. Below is the company’s value chain analysis.

Support activities

Human Resource Management

Wal-Mart is one of the best companies to work for in America. It provides its customers with competitive wages and various benefits. This helps in improving the motivation of the employees. Highly motivated employees meet the needs of the customers of the company more efficiently.

Technology

Wal-Mart uses technology in the sale of its products. Swiping the bar code of the products that the customers have purchased sends information to the company’s data warehouse. The company may use the information to personalize interaction with customers. This would help in improving its competitiveness.

Firm Infrastructure

Wal-Mart has more than 11,000 stores located in different parts of the globe. The large number of stores helps in improving the number of customers that the customers serve. Wal-Mart ensures that the local stores satisfy the needs of its customers. The company also ensures that the local stores implement initiatives that help in reducing the overall operational costs of the company.

Primary Activities

Inbound Logistics and Outbound Logistics

Wal-Mart has a state of the art logistics system. The company has distribution centers, which have a ‘hub and spoke’ arrangement. This enables the company to maintain a low level of inventory in its stores, which simultaneously reducing transportation costs. Wal-Mart does not use third party logistics like other companies in the industry. It controls its own inventory. This reduces its operational costs.

Operations

The major aim of Wal-Mart is to provide a wide variety of products at a low price in a location that improves the shopping experience of its customers. The company also has its own branded products. Continuous expansion of its products enables Wal-Mart to meet the needs of its customers.

Marketing and Sales

Wal-Mart sells low-priced products. The company does not invest heavily in advertisement. In relies on word-of-mouth advertising among its customers. This strategy is in line with the company’s strategy to reduce its operational costs.

Service

Wal-Mart strives to improve its customers’ shopping experience. It ensures that its employees are friendly to the customers. This helps in improving customer satisfaction. Wal-Mart also accepts returned goods without questioning the customers the reasons for the returns.

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