Evaluate Walmart’s internal and external environment and competitive position. #3 Compare and contrast
competitive strategies. #4 Evaluate global strategies and strategies for diversified companies.
Assignment Purpose: Learn how to conduct an external and internal company analyze.
Conduct an external analysis of Walmart. Use all of the tools necessary to conduct a thorough evaluation
of the external environment in which your firm operates.
Evaluate Walmart’s internal and external environment and competitive position.
Internal Environment
Strengths
Wal-Mart is the largest retail store globally with unsurpassed levels of operations over its
rivals and suppliers. As the biggest retail store across the world, it means that;
The firm can share its fixed costs over different brands making it the a\most affordable
place to buy groceries
Efficient utilization of resources. The firm can use its resources- distribution channels,
information structures, skills and other capabilities effectively in various locations to cut
down operations costs.
Strong market over its rivals and suppliers. Because of Wal-Mart’s size, it uses its market
influence over suppliers to get supplies at lower costs. Wal-Mart can also affect
competition by offering certain products at loss, thus get of competition form the sector
(Ghazzawi, Palladini & Martinelli-Lee, 2014).
Weaknesses
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The company’s weaknesses prevent it from withstanding challenges. A number of Wal-
Mart outlets are directly associated with its cost leadership generic strategy that contribute to low
profit margins and an easy to imitate business model. Low profits are attributed to the generic
strategy since it reduces costs of products, the firm must decrease profit margin and focus on
increasing volume of sales.
Opportunities
Walmart’s opportunities include expansion in developing nations, which is due to good
economic conditions. Moreover, the firm has improved human resources practices that are
associated with criticisms regarding its labor practices. Again, there are improved quality
practices, which mainly address concern demands about health impacts due to not only
affordable costs but also low quality goods (Ghazzawi, Palladini & Martinelli-Lee, 2014).
Threats
Wal-Mart’s threats are connected to retail market conditions and changes in consumer
behaviors. Its main threats include health lifestyle patterns that affect the firm’s operations since
majority of its products are not natural or healthy. Another threat is intense competition since it
retails can effective marketing techniques to attract the company’s client.
Competitive Position
Walmart’s five force analysis can help in evaluating its competitive position.
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Customers bargaining power
The company experiences low pressure from its clients. Nonetheless, clients’ movement
groups have criticized Walmart’s pricing strategy, though this is negligible. Much as clients can
buy goods from its rivals at comparable rates, expediency offered by the company is a distinct
selling proposition.
Threat of New Entrants
The company experience moderate to low pressure from new entrants. This is because it
has been operating for man ears and realized huge economies of scale. Furthermore, Wal-Mart’s
brand is recognized globally with a considerable brand portfolio under one roof. This is an
essential differentiation aspect from new entrants. Nevertheless, new entrants can reduce cost for
a given time frame however; in the long run it can be challenging to outdo Wal-Mart in the
grocery sector.
Threat of Substitute Products
While there are similar products that Wal-Mart offers, its low cost strategy and
convenience are rare to be copied by its rivals. Moreover, much as clients can shift to other
specialty shops, Wal-Mart sells all sorts of products under one roof and the price is low in
comparison to these shops. Additionally, online shopping presents other benefits for the
company since modern buyers prefer to shop in homes regardless of time or place and get
products at their doorsteps (Shin & Tucci, 2015).
Bargaining Power of Suppliers
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Suppliers bargaining power is extremely slight. However, the firm put pressure on its
suppliers to reduce margins while providing quality goods. Although, suppliers criticized this
move, they have no choice but deliver because Wal-Mart is a huge buyer with supplies
accounting for 40 to 50 %. Therefore, Wal-Mart has considerable power and bargaining power of
suppliers is essentially nil (Seenivasan & Talukdar, 2016).
Rivalry
Retail industry largely involves big and different grocery stores. Wal-Mart faces intense
competition from Target, K-Mart and so forth. As such, the company should retain cost
leadership strategy.
Compare and Contrast Wal-Mart Competitive Strategies
Unlike its rivals, the company use cost leadership strategy, which is integrated with a
variety products, accessibility and enjoyable shopping experience. In addition, the company
concentrates on customer service; improved products following buyers changing lifestyles; and
increased buying experience. The company has incorporated its physical stores with online
business. Such changes enable clients to collect online orders and even reminded through text
messages.
Evaluate Global Strategies and Strategies for Diversified Companies.
Wal-Mart uses various global strategies, for instance, in the US, the company leverages
with multinational companies (MNC) while in Mexico it used formed a joint venture with Cifra
to launch Wal-Mart de Mexico. In addition, in Canadian market, the firm purchased roughly 122
Woolco stores, in UK it acquired ASDA and in Japan it acquired about 6.1% Seiyu stake. In
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Chile, Wal-Mart Distribución y Servicio D&S S.A. and runs 329 retails within Chile. Wal-Mart
also uses agreement with enterprises to expand in the global market; like in India it formed an
agreement with Bhart forming Bhart Wal-Mart (Shin & Tucci, 2015).
With respect to diversification, Wal-Mart is among diversified firms internationally.
Therefore, the company uses a number of different strategies to diversify. It has different outlets
under the Wal-Mart banner that specialize in different products such as; Neighborhood Wal-Mart
that specializes in groceries; the electronic commerce platform known as walmart.com, Wal-
Mart supercenters for general merchandize and Sam’s club the leader in wholesale.
Consequently, the company offers various services in diverse regions (Ghazzawi, Palladini &
Martinelli-Lee, 2014). Some of these services include pharmacy, jewelry, furniture, optical and
lube services. As a result of diversification, Wal-Mart has always on the fortune 500 list.
Diversification make the company a one-stop store where buyers can get all their needs and
affordable rates for man, shopping at the firm’s stores is extremely convenient.
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References
Ghazzawi, I. A., Palladini, M., & Martinelli-Lee, T. (2014). The Wal-Mart Stores, Inc.: An
American Dream That Touched The World. Journal of the International Academy for Case
Studies, 20(1), 9-32.
Seenivasan, S., & Talukdar, D. (2016). Competitive effects of Wal-Mart supercenter entry:
Moderating roles of category and brand characteristics. Journal of Retailing, 92(2), 218-225.
Shin, S., & Tucci, J. E. (2015). Wal-mart’s dilemma in the 21st century: Sales growth vs.
inventory growth. Journal of Applied Business Research, 31(1), 37-n/a.
