Walmart
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Synopsis
Wal-Mart Stores, Inc., an American publicly traded corporation that is currently the largest company based on revenue according to the 2007 Fortune 500. The company was initially founded by Sam Walton in 1962. Today, Wal-Mart is the largest private employer in the world and also the worlds fourth largest utility or commercial employer, in the United States, “Wal-Mart is the largest grocery retailerwith an estimated 20% of the retail grocery and consumables business, and the largest toy seller in the U.S., with an estimated 45% of the retail toy business, having surpassed Toys “R” Us in the late 1990s.” However, considering the companys substantial success, Wal-Mart has been the target of harsh criticism from such community groups as womens rights groups due to allegations of sexism targeted towards its female staff, human rights advocates condemning the corporations poor working conditions of foreign factories producing goods for Wal-Mart, and labor unions protesting the low rates of employee health insurance as well as its resistance to union representation, and the companys extensive foreign product sourcing. Yet, despite these hurdles, Wal-Mart continues to be a profitable corporate behemoth by persuading its suppliers to establish their lowest total cost. Wal-Mart has mastered how to harness the power of consumer marketing as well as adhering to the order of business marketing (
Marketing Strategy
Wal-mart convinces its suppliers to sell to them at the lowest wholesale rates
The company slogan “everyday low prices” offers the customers immense savings and saved the company on merchandising and advertising costs
Wal-mart has three value disciplines:
1. Customer Intimacy: persistent focus on satisfying the needs of the customer by providing customers access to quality goods, to make these goods available when and where customers want them, to develop a cost structure that enables competitive pricing, and to build and maintain a reputation for absolute trustworthiness. (Jain 307).
2. Product Leadership: The Company continues to replenish its inventory as the centerpiece of its competitive strategy. (Jain 307)
3. Operational Excellence: Wal-mart achieves incredible cost saving through the logistical efficiency of its electronic point of sale based ordering system. As each product goes through the checkout scanner, it is reordered to be back on the shelf within 48 hours (Cheverton 119).
SWOT Analysis
Strengths
Wal-mart is the largest employer in 21 states, with the second largest net sales in the world.
Wal-mart is a dominant retail brand with a name for recognizing the value of money, convenience, and offering a variety of products all in one store.
Wal-mart has a conducts a detailed internal logistics system which helps them to see how individual products are performing nationwide, store-by-store at a glance.
The companys logistic system allows them to ship merchandise from any of their distribution centers in order to provide the cheapest and most efficient route.
Wal-mart shares their sales data with their suppliers through computer programs which allows Wal-mart to maintain consistent stocked shelves
The company continues to invest time and money in the on-going training of its employees in order to retain and develop them.
Weaknesses
Wal-marts dominance in the retail industry has stirred the ire of small retailers who find it difficult to survive
Environmentalists are concerned that Wal-marts big box stores are not sensitive to the environment. These buildings cause traffic pollution and congestion which can damage small communities.
Wal-mart employees earn poverty-level wages and are not provided with adequate health care benefits. Employees are then led to apply for public aid, which means that taxpayers are the ones paying for Wal-mart employees healthcare costs.
Wal-mart has also been accused of discriminating against female employees and violating child labor laws.
Wal-mart has grown and expanded into the international markets, but they still do not have a large part of the European market. They are present in the U.K, but their competitors are gaining in the other surrounding countries.
Wal-mart lacks flexibility, since the company runs the gamut on the product sectors it sells like clothing, food, stationary, and electronics, it may not have the flexibility like of its competitors, who can make changes and improve on certain product lines when the needs of the customer changes. Also, the colossal amount of merchandise Wal-mart carries might prevent the company to focus in on sectors that need improvement.
Opportunities
Since Wal-mart is the largest retailer in the United States, it could position itself to expand its brand worldwide by forming strategic alliances with other global retailers, focusing on specific markets such as Europe or the Greater China Region. *They have since opened numerous stores in China and have gained significant market share.
New locations and store types offer Wal-mart opportunities to exploit market development. They can diversify large super centers, to more local and mall-based sites.
Threats
Wal-marts leader of the pack status means that they are the target of competition, locally, and globally.
As a corporate behemoth retailer means that the company will be exposed to political problems in the countries that it conducts its business
The cost of producing many consumer products tends to have fallen because of lower manufacturing costs. Manufacturing cost has fallen due to outsourcing to low-cost regions of the World. This has lead to price competition, resulting in price deflation in some ranges. Intense price competition is a threat (
Industry Evaluation
Potential Competitors
Grocers could potentially enter into the retail side.
Entry barriers are relatively high, as Wal-Mart