Walmart Business Analysis

Walmart Business psychoanalysisContents (Jump to)Walmarts Current Strategy organizational structure, culture, and fit systemsSWOT Analysis for Walmart ushers Five Analysis of WalmartKey Strategic Issues at Walmart in-person SWOT AnalysisFinancial Analysis of WalmartRecommendationsWalmart memory board Inc. is non whole the shift giant, hardly dealwise is the medium- life-sizest grocery strand in the sphere. Walmart broth Inc. was founded in 1962. Samuel Walton and his brother J.L. Walton open their first Walmart Discount City in Rogers, Arkansas (Walmart muniment, 2010). For Walmart hive away Inc., their common mission is Save people coin so they laughingstock live best(p) (Walmart corporate, 2010). Comp atomic number 18d with their of import competitors some(prenominal)(prenominal) as tooshie and K mart, Walmarts 2009 gross revenue were al roughly 50% more. Because of its giant size of it and buying power, Walmart outhouse buy its products at real econ omic crisisly hurts, exchanging higher(prenominal)(prenominal)(prenominal) obtain strengths for hapless cost then passing the savings onto its customers (Wikinvest Walmart, 2010).Walmart has 8,900 stores roughly the world in three contrastive stemma segments of sell stores that including Walmart stores, Sams beau monde and Walmart global. All of them produce variant kinds of sells including electronic appliances, groceries, furniture, apparel and health debaucher stuffs etc. For their trading segment, they turn reveal e realwhere 54% of the societys stores are placed in the United States, and the others world(prenominal) stores are primary(prenominal)ly located in central and south America and china. The company mainly centralisees on pass the first base-tonedest impairments to attract its consumers. Walmart tot exclusivelyy earned $408 cardinal thousand thousand r yetue in 2010, increase 1% shadowervass to 2009 (Wikinvest Walmart, 2010).In 2009, W almart earned $255.7 million in the domestic segment of the companys revenue. For Walmart stores segment are further categories into three divergent formats including Supercenters, Discount stores and Neighborhood Stores. For the Sams club, it is the second largest membership- plainly seller club ( Costco is the first largest membership- al wholeness retailer) in United States belong to Walmart Inc., their main customers almostly are offices, convenience stores, motels, restaurants and schools etc. (Wikinvest Walmart, 2010).For at present, Walmart has total 3,121 international stores whole over the world including in Mexico, Japan, Canada, China and countries in central and South America. However, recently Walmart begins to s paltry down their fruit rate in the United State and turn their main focus onto its international stores to develop growth. For international stores locations altogether earned total $98.6 gazillion revenue in 2009, matchd to the cut-rate sales of 20 08, is increased 9.1% (Wikinvest Walmart, 2010).Strategic History of the industryThe whole retail industry in the United States has over $4 trillion annual revenue. The main retail companies are including Walmart, Home Depot, Kroger, Costco, and Target. a couple of(prenominal) of the large companies dominate some retail welkins such as stack merchandisers and grocery stores, other sectors like auto dealers and convenience stores are fragmented. However, retail industry still has many small and specialty retailers are single-store trading operations (Hoover, 2011).The economy deeply implys the retail contend. In other words, retail demand depends on the economy. Many antithetic kinds of economic factors such as handicraft growth, recession, personal income, consumer confidence and interest grade can strongly affect consumer spending behavior. When during recessionary periods, the bad economy can affect the retail sales growth rate slow drastically or even sales revenue de cline. While the retail spending grows rapidly when in the period of strong economy growth, for example consumers leave spend more on grocery when they take h grey-haired more income. However, the rising interest rates give affect consumer purchase behavior and consumer ability to finance large amount of purchase such as buy cars (Hoover, 2011).Strategic History of Walmart Store Inc.In the early stage of strategic history for Walmart, they eer unchanged their vision al ways low terms for their customers. Until 1990s, Walmart announced that they aforethought(ip) to go global. They wanted to look for international foodstuffplaces for the reasons as following set-back of all, Walmart has lining very strong contestation in United States such as Target and K mart. These two incorruptibles had aggressive thundering their business and had started communion Walmarts market share. Secondly, the market in the United States is already saturated it was meet difficult for the co mpany to enshroud its growth rate. Thirdly, the US population is accounted for however 4% of the worlds population and if they want to embroider their global market, China had the authorisation massive growth due to their huge population of over 1.3 billion people. The last reason is, globalization opened up defect-new markets in China and created opportunities for bank discount stores such as Walmart (Walmarts Cost Leadership Strategy, 2004).On the other hand, Walmart is victimisation the schema that cooperates with local anesthetic suppliers to purchase their products, even though the organizational culture is precedentized with the home country. This system is not only use to the products purchasing, but also adapted to the local cultures and stores decoration and knowing are also changed to meet local taste all round the world (Walmarts Cost Leadership Strategy, 2004).Organizational mission statementAs we know, the mission statement for Walmart is any day low pric e. In gild to insist their mission, Walmart implemented three approaches in the market. First, it increased the local purchasing in army to reduce the purchasing be and also sheath consumers needs in dissimilar places. Secondly, it maintained a good family with their suppliers, conform to them by paying at bottom 3-7 days during its initial years. Thirdly, it launch dispersion centers (DC) and computerized its care system to improve efficiency and reduce be (ICFAI, 2005).Business Level StrategyFor these several years, Walmart has been trying hard on dilate its stores outside the United States. It through two different to enlarge their international business market new store construction and acquisition. learnedness strategy of supermarket chains had been a part of Walmarts entry andstore blowup strategy in Canada, Mexico, Brazil, Japan, China and Great Britain (The Walmart Puzzle, 2008).Over all, the Walmart strategies were including fivefold store segments, overth row daily prices, lots of name-brand merchandise, reduce operating costs, emphasized customers snug service, wide selection products, disciplined expansion into new geographic markets, and using acquisition to enter foreign market (Walmart Store Inc., 2010). However, no event Walmart are in which foreign country, their company vision always low prices is never changed.The companys low distribution costs and cost- effective supply chain management are the big reasons why Walmart is so success and at the same season reduce the products prices. Walmart has get into distribution efficiency compare with their competitors because of its rural store locations.Current strategy for the major operations/functions of the companyCurrent strategies for Walmart are including low costs, high volume, increase customer mirth and expansion strategy. Walmart creates name recognition and customer satisfaction, and combined the retailer with the study of offering the best prices. They also expand their new business segments to different sectors such as pharmacies, automotive repair, and grocery sales to increase their sales revenue.Expansion strategyThe company realized that building a new store will allow for increase market share value. afterward their success in the rural areas, Walmart go to urban areas and then moved to surrounding areas. The expansion strategy made Walmart the hail one retail store in the United States. As Walmart continue its expansion domestically, the sure decided to go international. Furthermore, Walmart realized that acquiring an existing retail business firm is necessary for expand domestic and international markets. Therefore, Walmart by acquire retail store which enable to expand locally and internationally.Always low prices thrust customers live develop strategy is believed the strongest strategy used by Walmart. The firm genuine the idea of dealing right off with the manufacturer and with the power control by Walmart will enable it to get the best deal from the manufacturers and suppliers.Organizational structure, culture, and control systemsSaving people money to help them live better was the mission for Walmart. Hence, Walmart negotiates different suppliers and visualizeing their cost structure in post to reduce the price. Walmart has to be certain that the manufacturers were doing their best to cut down costs. Also, Walmart believed in consecrateing a long-term descent with their suppliers.Walmart had 129 distribution centers located at different locations all over the US. Over 80,000 items were stocked in these centers. Walmarts own warehouses direct supplied 85 percent of the inventory, as compared to 50-65 % for competitors. Shipping costs for Walmart is rough 3 % which is lower than its competitors, 5%. The distribution centers ensured a steady and consistent spring of products to support the supply function (Walmarts Cost Leadership Strategy, 2004).Walmarts logistics infrastructure was its ext ravagant and successful transportation system. The distribution centers were serviced by more than 3,500 company owned trucks. To make its distribution process more in effect(p), Walmart also uses a logistics technique called cross-docking. In this system, the finished goods were directly picked up from the manufacturing plant from suppliers, and then directly supplied to the customers. The system reduced the handling and storage of finished goods, eliminating the role of the distribution centers and stores (Walmarts Cost Leadership Strategy, 2004).SWOT Analysis for Walmart Store Inc.(S)trengthsReputation soil Name Walmart is a powerful brand and pioneer in the retail industry with the wide spread network of stores. It has a reputation for low price, convenience and a wide range of products all in one store for customers. Walmart has captured round 10% of the retail market in the U.S. and continues to expand. Walmart stores continue to open all over the country making Walmart a mob name. Walmart has also been widely acknowledged for its social responsibility actions. The company has donated to a variety of charitable organizations and has been accredited for bringing jobs and wealth to less developed communities. volunteer Low Prices Walmart uses its enormous size and buying power to shove its suppliers into extremely low prices, offering arrangements of high volumes of merchandise in give-and-take for low prices. The good thing somewhat Walmart is that its shifts the low cost prefer to customers and available the products at lower prices. It has loyal customer base because it meets the foretaste of customer by always delivering the goods at lower prices at compare to its competitors.Expand Global Market Walmart has precipitously expands its international market over the past few years and has comed global expansion. For example its purchase of the United Kingdom based retailer ASDA.Technology Technology is ability to Walmart with its inventory control system that was recognized as the most civilise in retailing. The technology linked all the stores to the headquarters and the companys distribution centers. It also enables the warehouse of which the goods are sayed, and direct the flow of goods to the store and proper shelves. give chain and logistics management Supply chain and logistics management are one of the strengths of Walmart. This allows Walmart to utilize the Just- in- epoch inventory concept and suspend the pilling up inventory to pitch the extra cost for maintaining inventories in the warehouses. merciful Resource Walmart always deplore to provide training to their employees to improve the customer service level. The firm acquire locally, provides training programs for its employees. Walmart also gets its employees involve and encourage them to make use of words like we, us, and ours. It also provides stock ownership and wage sharing with enormous contribution from the H. R of the firm. Walmart was nam ed one of the best 100 firms to work for.Cross-docking inventory system Using the cross-dock technique, Walmart was able to effectively leverage their logistical volume into a core strategic competency. Walmart operates an extensive satellite network of distribution centers serviced by company owned trucks. Its satellite network sends point of sale (POS) data directly to 4,000 vendors. Each register is directly connected to a satellite system sending sales information to Walmarts headquarters and distribution centers.(W)eaknessesEmployee turnover Walmart has high employee turnover which costs more money and time for company to train the new employee.Bad publicity Walmart is currently facing a gender discrimination lawsuit. Their feminine employees accuses that they were discriminated against in matters regarding pay and promotions. And also, Their female managers were accounted for the minority group in the company.Lock of flexibility Walmart sell very wide range kinds of products for example like clothes, food, pharmacy or stationary which overlook of flexibility compare with other more focused competitors. different competitors may let the ability to make changes and improve on a certain product lines when the needs of their customers change. Walmart, however, may defy too overmuch merchandise and not be able to focus in on sectors that need to be improved. rough products have poor superior Although Walmart provides low price of products, however, customers sometimes complain about the poor spirit of few products.Facing difficulty in International market It is hard for Walmart to expand their business out of US to totally different countries all nigh the world. Moreover, Walmart has to facing different culture and customer behavior in different countries, for example Walmart facing difficulty to expand the market in China.(O)pportunitiesCustomers Because Walmart provides low price to their customers, so they are able to attract more customers. Furt hermore, customers essentially are able to purchasing everything in one store that satisfied their needs. Walmart 24 hours stores also satisfied their customers.Diversified store types Walmarts different store types and new locations provide more opportunities to exploit new market. Stores diversified from local, small-based sites to large super centers.International Expansion No doubt that continued expand the international market is a huge hazard for Walmart. Walmarts oversea stores have experienced significant growth. There are actually tremendous opportunities for in store(predicate) growth in developing countries and Asian markets than in the United States such as China and India. Creating strategic alliances and licensing agreements with other global retailers are ways to move into different countries.(T)hreatsCompetition Walmart faces different strong competitions locally and internationally. Walmart main competitors are including Kmart, Target, crossway and Costco wholes ale. In 2010, the Net Profit Margin for Walmart is 3.59%, Target 4.22%, Costco wholesale 1.69%, Carrefour 0.38%, respectively (Hoovers, 2010). Target is Walmarts direct competitor in the US, offering a range of general merchandise in a similar store format (Wikinvest, 2010).Economy niche The revenue for Walmart is unnatural by economy recession. Good economy is an opportunity for great business, because customers will have more money to spend. If the economy is great, there will be more jobs and people will shop more. However, if the economy is bad, there will be fewer jobs and people will shop less. Also, with the high price of gasoline and its effect on the economy, Walmart will certainly be abnormal the most.Strategy fictive Walmart strengthens its competitive advantage on low-cost products. opposite competitors may imitate their low-cost strategy to take over their market shares.Low Brand Loyalty In the retail industry, customers would like to rent the product with the lowe st price. In other words, customers do not alimentationing about the brand or which retail stores, if Costco has the exactly same chips that sell cheaper than in the Walmart, then customers will choose to buy the chips in the Costco not Walmart.TOWS MATRIXSTRENGTHSWEAKNESSESReputation Brand NameBad publicityOffer Low PricesLock of flexibilityExpand Global MarketSome products have poor qualityTechnologyFacing difficulty in International marketSupply chain and logistics managementEmployee turnoverHuman ResourceCross-docking inventory systemOPPORTUNITIESOPPORTUNITIES-STRENGTHSOPPORTUNITIES-WEAKNESSESCustomersBuild on its already efficient distribution system to further expand in the U.S and globally.Walmart should be awareness and strict to control of the quality of the product in separate to keep their customers basis.Diversified Store TypesExpand diversified store types to International market in order to increase profit in International market. flock higher employment standards through enhanced training to keep their employees have best performance.International ExpansionDuplicated the successful delivery logistic management and the distribution centers into International market.Continue to build on cost efficient pricing and production due to expansion.Go into new markets and buy out their local retailers to gain market share.THREATSTHREATS-STRENGTHSTHREATS-WEAKNESSESCompetitionBuy raw materials or products from local suppliers to hold a better political status within the local community further to compete with their competitors.Human resource incision should set a benefits long-term promotion program or standard and training program for their employees in order to decrease the employee turnover.Economy RecessionCreate their own brand of products and increase the quality of products in order to establish customers loyalty.Establish joint judge partnerships or long-term relationship with local retail companies to get the advantages in the International s egment.Strategy imitationDevelop strong RD and technology to enhance the competitive advantage and avoid imitation from other competitors.Low Brand LoyaltyFive Forces Analysis for Walmart Store Inc.Threat of entrances LowThe threat of new entrance in the grocery and discount retailer industry is very low. New entrants have to face with the strong low-price competition among exist giant retail companies like Walmart, Costco and Target. New entrants need to invest large amount of capitals to establish their brand recognition, service, and variety of product offerings that Walmart, Target, and others competitors continue to improve on each day. In addition, existing companies can drop prices lower in order to rage a new competitor out of the market. Therefore, the threat of entrances is low.Power of buyer-HighCustomers have many choosing opportunities and consider about products very details. They want the product now and they want it with the best service, best quality and reasonabl e price. Customers also relish increasing choice of products and choose one product that has the best quality and better price. For example, if customers find out Target sells an exactly product that has better quality and price than Walmart, and then they will choose to buy it in Target instead of Walmart.Power of Suppliers LowThe bargaining power of suppliers is very low. Walmart is very famous on giving pressure to their suppliers to cut their price lower and lower in order to offer the lowest price to their customers. On the other hand, become the supplier of Walmart is a very boisterous competition. In 2004, about 10,000 new suppliers applied to become Walmart vendors. However, only about 200, or 2%, were ultimately accepted by Walmart (Gwendolyn Bounds, The Wall path Journal). Therefore, the bargaining power of suppliers is low.Rivalry HighThe competition in the US grocery and discount retailer industry is very high. The main competitors for Walmart in the local market are Kmart and Target. These companies also have to face competition from wholesalers such as BJs, Costco and even the international market such as Carrefour. Walmart has adopted a cost functionership generic strategy. In the past, most companies have not been able to match Walmarts strategy everyday low prices. However, Walmarts barrier to entry (economies of scale) and strength (supply-chain management) can be easily imitated with ample resources. Therefore, retailers are in a fierce competition that see who can offer their customers the lowest price.Threat of substitute LowThe threat of substitutes in this industry is low because only few companies have ability to offer such a variety of products available instantly and also low prices. One possible substitute is online obtain however, customers usually do the online shopping for clothes or other stuffs but not for food or grocery shopping. Therefore, the threat of substitute is low.Key Strategic IssuesIssue 1 Open too many new s tores close to existing stores lead to new stores taking over the market shares from existing stores.Status QuoWal- grocery store depends on opens many new stores and expands into new market to increase the long-term sales and income growth. However, because of Walmarts large size of expansion, new stores are effects the sales on existing stores. For example, Walmart builds a store relatively close to an already existing store, the new store might take away customers from the old store thus decrease the sales in existing stores (Walmart, 2010).evolutionary commute (Incremental Improvement)In order to solve this problem, Walmart expands their business segment into international market instead of domestic market. For example, Walmart opened 5 times number of stores in the international market in 2010 compared to domestic stores most of stores are in Mexico, China, and Central America (Walmart, 2010).Revolutionary Change (Huge/Drastic Change)Walmart is also aggressively to open busin ess segments in India if the country opens up the sector to foreign direct investment. India has retail market more than 1 billion no doubt India is a huge opportunity for Walmart. However, retailers that carry multiple brands (like Walmart) are restricted to wholesale outlets in India. After Indias policy change, Walmart is allowed to expand superstores and generate revenue in India (Walmart, 2010).Specific tactics to implement the strategyWalmart needs to establish long-term relationship or joint venture with local retail company to get into the market in India. Although in 2006, Walmart announced that it had tied up with Bharti Enterprises Ltd. (Bharti) to get into the Indian retail sector. Bharti was a diversified company, and one of the biggest mobile telephone service providers in India (Walmart and the Indian Retail Sector, 2007). However, because of the government policy, the small retailers groups and the Left parties against allowing the company into India are all the barr iers that Walmart has to face it.Issue 2 International competitorsStatus QuoIn order to expand and improve the sales revenue for the economy recession particularly in the domestic market, Walmart has been aggressively expand its business segment into international market. However, the local big retailers or small retailers groups are against Walmart to get into their market to take over the market shares because of its low price strategy (Walmart, 2010).evolutionary Change (Incremental Improvement)Improve its supply chain, logistic and technology segment to lower its delivery and operation costs in order to compete with local big retailers such as Britains Tesco, Frances Carrefour, and Germanys Metro (Walmart, 2010). On the other hand, retail business segment is hard to create products differentiation, because commodity products are all the same for customers. The only way that gains the market shares for retail stores is not only low price but also quality of products. Therefore, Walmart should awareness of its quality of products to attract more customers even in the international market.Revolutionary Change (Huge/Drastic Change)Walmart should acquire and purchase the local retail companies in order to get into the international market. On the other hand, establish long-term relationship with local suppliers to have the win-win situation for their cooperation.Specific tactics to implement the strategyIn the beginning of year 1, 2 and 3, Walmart should first focus on improving its supply chain, logistic and technology improvement in order to compete with local big retailers on its lower operation, delivery costs and high quality of products. For the long-term tactics, Walmart should deeply penetrate into the local market, understand different cultures and customers behaviors and then cooperate with local suppliers to establish long-term partnership. face-to-face assessmentSWOT Analysis of myself in relation to the organization (What can I offer to the organi zation?).(S)trengthsInternational expansion (China) Walmart is extremely aggressively penetrated into the market in China. Also, no doubt that China has 1.3 billion populations which accounted for the most majority population in the world, creates a huge business opportunity for Walmart. Therefore, Walmart needs a manager who can speak fluently mandarin orange and English, and really understand about Chinese culture and Chinese customers behavior. Hence, I can offer Walmart my knowledge to develop more opportunity in Chinas market in order to maximize the profits.(W)eaknessesLack of working experience Even though I can speak fluently mandarin orange tree and understand the Chinese culture and customers behavior however, I still lack of working experiences. I do have some part time working experience such as working in starbucks, but do not have full time working experiences.(O)pportunitiesBecause of my paid knowledge (bachelor and master degree are both business management) are ex pertise on this line which can offer Walmart a captain employees or manager. Moreover, my family also has business in China, Hangchow, which makes me has understanding and interested about China. I can provide Walmart establish partnership with local suppliers and establish long-term relationship with them to compete with local retails competitors.(T)hreatsMany applicants near the world There is still having many talented applicants around the world prevail to get into this company. Some of the applicants have high education degree and business knowledge and also have ability to speak many different kinds of languages. Therefore, I am in extremely fierce competition.Not every business segment in Walmart is my expertise I have diminished and lower advantages compared to local American because of the speaking and cultural differences. Furthermore, the company does business in many different retail formats, including supercenters, food and drugs, general merchandise stores, cash a nd carry stores, membership warehouse clubs, apparel stores, soft discount stores and restaurants. However, not every business segment in Walmart is in my field of expertise.Financial Analysis2010 Annual Sales ( frame2-1)(Source Hoovers, 2011, http//0subscriber.hoovers.com.leopac.ulv.edu/H/company360/competitiveLandscape.html?companyId=11600000000000)As you can see in underframe 2-1, this is 2010 annual sales for 4 main retail stores in the United States. They are including Walmart, Target, Costco Wholesale and Carrefour. Walmart has almost $ cd billion sales in 2010. Compared to other competitors, annual sales for Walmart was much higher than other companies. Carrefour annual sale in 2010 was around $100 billion. Annual sales for Target and Costco were just around $50 billion in 2010.2010 Net Profit Margin (Figure2-2)(Source Hoovers, 2011, http//0subscriber.hoovers.com.leopac.ulv.edu/H/company360/competitiveLandscape.html?companyId=11600000000000)In Figure 2-2, net profit margin i n 2010 for Walmart was 2.98%. Target was higher than Walmart which had 3.69% net profit margin in 2010. Other two competitors, Costco and Carrefour were both under 1.84% in net profit margin in 2010.Figure 2-3(Source Hoovers, 2011, http//0subscriber.hoovers.com.leopac.ulv.edu/H/company360/competitiveLandscape.html?companyId=11600000000000)The Return on Asset ratio is usable in measuring how efficiently a company uses its assets to generate profit. By definition, ROA is calculated by dividing the Net Income by the total asset of a company. Refer to Figure 2-3, ROA for Walmart from 2006 to 2010 are much higher than its competitors. Walmarts ROA were around 9% to 10% each year, compared to its competitors which were all much lower than Walmart. This basically bureau that Walmart utilizes its assets well enough to generate profit in comparison with their competitors. However, ROA in 2007 for Target is higher than Walmart, Target 9.29%, Walmart 9.05%. Targets major competitive advantag e over Walmart lies in its customer base the average household income for Target customers is about $50,000 a year, whereas the average yearly income for a Walmart customer is only $35,000Figure 2-4(Source Hoovers, 2011, http//0subscriber.hoovers.com.leopac.ulv.edu/H/company360/competitiveLandscape.html?companyId=11600000000000)The picture on Stockholders Equity (ROE) ratio measures the percentage of profit earned on stockholders investment in the company. In other words, return on equitymeasures a corporations profitabilityby revealing how muchprofit a company generateswith the money shareholders have invested. In Figure 2-4, ROE for Walmart were around 20% from year 2006 to 2010, compared to other competitors which are higher than others.Figure 2-5(Source Hoovers, 2011, http//0subscriber.hoovers.com.leopac.ulv.edu/H/company360/competitiveLandscape.html?companyId=11600000000000)Net profit Margin is an indication of how effective a company at cost control