BriefHistory of OrganizationOn July 2,1962 Wal-Mart was established bySam Walton in Rogers, Arkansas with the objective of serving clients with lesscost anyplace and whenever. Before the finish of 1967 Walton family possessed24 stores crosswise over US and in 1969 authoritatively set apart as WalmartStores, Inc. In 1970 Walmart wind up plainly open exchanged organization andentered in to stock trade in 1972 with offer of $78 million in its 51 stores.
Before 70’s decade’s over it has 276stores of every 11 states. At the pointwhen Sam’s club opened private company without precedent for 1980s, and theprimary Wal-Mart super focus was opened around the same time. In 1987, utilizedsatellite correspondence for their voice, video correspondence. Their businesswas fruitful and they remained on top as retailer in the country by 1990. Theycelebrated for first $1 billion deals week in 1993 and first $100 billion dealsyear in 1997.
They expanded their business development by entering in tovarious nations. In 1995, they entered in to Canada and in 1996 they entered into china and they wind up noticeably effective in every nation they opened thestore. In 1999s, they entered in to Europe by opening 2 stores in UnitedKingdom. The method for living is not the same as nation to nation. Dissimilarto different nations, it was not accomplishment in Germany. Without appropriateinvestigations and market techniques they entered in to Germany.
Since the wayof life is distinctive to US, Wal-Mart treated and provided US products leftwith enormous misfortune. In 2000 Walmart gave adaptability to shop on the web.In 2005 Wal-Mart endeavored when making a dedication on execute ecologicalmeasures to build vitality effectiveness and reporting objectives to beprovided 100 percent by sustainable power source, make zero waste and to offeritems that manage individuals and the earth. External AnalysisLike any other companyWal-Marts needs to make more profit and expand its business in such a way thatit has competitive advantage, to become better than their competition and bemore profitable by formulating and implementing strategies in its environment,by analyzing not only opportunities but also threats and competitive forceswhich could endanger its integrity and profitability. Opportunities HealthConsciousness: In this fast-paced world where everyone is always scramblingto get things done, people are becoming more and more health conscious in theireating habits and trying to improve themselves. This can provide Wal-Mart theopportunity to supply healthier products for which people are willing to payfor in any store. “It has been demonstrated the popularity of the own labelproducts of the firm as their sales grew 40% in the last 10 years.
That’s whyWal-Mart could increase the number of private label products and earn higherprofit margins.” (Laura Barbera Marcilla, (2014). Business analysis forWal-Mart, a grocery retail chain, and improvement proposals. P. 50) IfWal-Mart could do both by combining private labels with healthier options itwould definitely give them an edge over the competition.Emerging Markets: Businessestoday have great potential of gaining more customers by going global or atleast international. The world had a huge population of over 7.
6 billion withonly 4.3% in the United States of America. People all over the globe requiregoods and this provides great opportunity. Wal-Mart already has presence inmany countries such as India, with 17.9% and China with 18.5% of the populationand operating outside home market provides valuable experience and knowledge.It is therefore “A good chance for the firm is to keep on investing onInternational operations because they grew at a faster rate than sales in thehome market.
” (Laura Barbera Marcilla, (2014). Business analysis forWal-Mart, a grocery retail chain, and improvement proposals. P. 50)Online Market: It is nowcommon knowledge that online shopping is pretty profitable if done correctly.Some of the biggest online retailers have shown this like Alibaba in China andAmazon in USA. The proof is right in front of us as the CEO of Amazon, JeffBezos was announced to be the richest man in the world.
In this age oftechnology it would be wise for any retailer to have an online presence andWal-Mart is big, it save time and money by selling good online directly to thecustomer rather than paying for shipping, stocking, storage etc. of goodphysically in the stores. “The current trend shows that the online retailsector grew by 4,7% in the U.S. during the year 2013.” (Laura Barbera Marcilla,(2014).
Business analysis for Wal-Mart, a grocery retail chain, andimprovement proposals. P. 50)Banking: Big companies such as Apple, Google and alikehave their own payment systems and don not rely on their party companies suchas PayPal or any other credit/debit or electronic check transfers. This is a huge saving on fees if there aremany such payments made. I speak from my own experience of work where wedecided to switch to a cheaper payment processing company since it was eatinginto the profits.
“Every month the retailer receives about $140 million ofpayments through debit cards, credit cards and electronic check transfers.”(Laura Barbera Marcilla, (2014). Business analysis for Wal-Mart, a groceryretail chain, and improvement proposals. P. 51) This means the companysheds out a lot of money to third party companies and if they would developtheir own payment system it would not only save them the money there but theycould make money by providing the service as the other companies.
Social Welfare: Withpeople becoming more health conscious they are also becoming or trying tobecome friendlier to the environment. Many scientists believe Global warming isreal and people need to take steps in order to help the environment. We canalready notice electrical cars and power plants coming up in many countries. Byswitching to cheaper, more efficient and renewable sources of energies Walmartcould have a good company reputation with the public. “In fact, according tothe EPA, Wal-Mart is the third-largest U.
S. corporate consumer of green power,renewable sources with high environmental benefits. “(Laura Barbera Marcilla,(2014). Business analysis for Wal-Mart, a grocery retail chain, andimprovement proposals. P. 51)Threats Conflictof interest: Trying to be energy efficient and going green is easier saidthan done especially for large companies like Wal-Mart.
This can become acostly affair and with Wal-Mart needing to maintain low cost of good over itscompetition going green could be dangerous but it “is trying to work on thisthreat, and is building sustainable facilities. Wal-Mart has raised a goal to designa store that is 25% to 30% more energy efficient and will produce to 30% lessgas emissions. “(Laura Barbera Marcilla, (2014). Business analysis forWal-Mart, a grocery retail chain, and improvement proposals. P. 51)Competitor’s power: Wal-Marthas a huge advantage over its competition because of low costs and it will losecustomers if other retailer like Target, Costco, Amazon and Tesco manage tobring their costs down it will be bad for Wal-Mart. “Wal-Mart will lose clientsand will experience increased competition from them in the future.” (LauraBarbera Marcilla, (2014).
Business analysis for Wal-Mart, a grocery retailchain, and improvement proposals. P. 51)Environments. Both local and international market have their own challengeslike understanding the rules and regulations can be a hindrance when enteringinternational markets and can be a long and difficult process. On the otherside in the local markets big stores cause smaller mom and pop stores to losecustomers and eventually close down because they can not compete with Wal-Mart.”This affects not only the retailers but their families and the community as awhole.” (Laura Barbera Marcilla, (2014).
Business analysis for Wal-Mart, agrocery retail chain, and improvement proposals. P. 51) Wal-Mart imports80% of merchandise, like many other companies as the label “made in China” canbe seen in most stores around the USA, from China and now China is trying toincrease the value of its currency which will cause these retailers to pay morefor the imported goods. Market Saturation: With manystores over a limited location it is fair to say that people could prefer to goto a store which is closer to them than travel a few miles extra. Wal-Mart hasmany stores and when it opens a store in a location “20 percent of a newstore’s sales come from existing Wal-Mart stores.” (Laura Barbera Marcilla,(2014).
Business analysis for Wal-Mart, a grocery retail chain, andimprovement proposals. P. 51) Internal AnalysisStrengths Size: Thehuge size of Walmart’s image empowers it to make demands on supplier that inturn helps it to sell its products on lower prices than its counterparts. Whenthe company lowers its prices because of its sheer size other competitors areforced to lower their prices to stay in business, which may not be ideal forthe company, giving Walmart, a huge competitive advantage leading to closing oflocal retails stores.Product Range: The strategy of the company to offer wide range of products from varietyof brands, including its own, complimented by lower prices attracts itscustomer to have a single stop shopping experience. In case of productunavailability in local store, the company’s website also offers free pickup byshipping it from its warehouse.
Retail Store Formats: The four-retail format Walmart has are Discount Stores,Supercenters, SmallMarts and Sam’s Club which have proved to be a huge successto target the customer based on geographic locations.Location: Tosave on operational costs, Walmart stores are located close to highway as wellas close to one another which helps in fast delivery, ample parking for thecustomers, easy accessibility and convenience of rearrangement of employeesbetween the stores.Pioneer of Information Science in Retail: Walmart was first to implement the barcode.
Theyextensively adopted Scan & Go systems. It offered web applications to trackinventory and shipping before its competitors. Since Walmart quickly realignedits business strategies with the new technology for user-friendly experience,it has given it an upper hand over its counterparts. Understanding theimportance of how did this benefit them, Walmart has now dedicated research anddevelopment centers called ‘walmartLabs’ which hand picks engineers from reputeduniversities over the world.”Save Money, Live Better”: To its customersit has been a place to buy inexpensive products in any retail category as suchpromoting the company image to be a “money saver”.Globalization: Walmart is one of the early brands of USA to bring the true sense ofglobalization by opening its operations world-wide. Its revenue has jumped 30%from market outside USA in 2013.Weakness Employee Woes: The company has involved in various labor suits from its employees forpoor working conditions, over-time, low wages and sex discrimination inpromotions in 30 of the USA states.
The company does not offer health benefitsto employees working less than 30 hours. It recently paid out bonuses when newtax reforms were declared only to the employees who have been working over 20years at Walmart. It has high employee turnover in retail stores andwalmartLabs . Ignoring employee feedbacks was one of the reason that ledWalmart to failure in Germany.Failing to provide Quality Products: The brand currently banks on low cost product strategyand fails to attract customers who demand high quality products. With risingcost of operations of products manufactured in China, the profit margin issteadily declining to offer cheap prices for goods. Negative Image: The negative publicity by the company employees aboutwork environment, unfair treatment to suppliers by demanding lower prices sothat Walmart meets its consumer needs and reports of corruption are some of theissues that are tarnishing Walmart’s image today. ? Whatrecommendations do your group have for Walmart? (Myrecommendations are based on internal analysis of the company) Quality Products: Walmart can start a chain of stores offering higher quality of products as an option to expand its business plan.
This would help build better relations with suppliers who compromise on quality of provide cheaper goods. This would attract also consumers from a high-income demographic those who rely on the name of Walmart and its reputation to province better quality products at cheaper prices. The existing extensive supply chain network can help reduce the prices of even costly products that come with great quality promise. Employee Satisfaction: Recently Walmart updated its hourly wage from 9$ an hour to 11$. Initiating socialization among the employees outside of work and community services to boost the employee morale towards the company.
Similarly, investing in improving the work environment and address the employee concerns diligently. Offer incentives to employees and promote them to better positions that in turn would attract better talent to the workforce. Each new location of a store should take into consideration local socio-economic way of life to make best of the strategies to sustain the business at that location.WalmartStrategiesAs every company develops its ownstrategies in order acquire success and maintain sustainability in theindustry. Walmart also developed manystrategies to gain the uniqueness and plan to maintain above average returnsthroughout its period in the market. A company needs to develop 4P strategies(product, price, place, promotion). The top-level management is responsible fordeveloping business strategies for the company’s growth and profits. DistinctiveCompetencies: Walmartuses economics of density, it maintains to have more number of stores within alimited area, its stores locate close to each other, this strategy by Walmarthelps to save lot of money and time on shipping and it makes easier and quickerto deliver the products.
The strategy to maintain dense stores and stores nearto highways increases to bring the more customers to Walmart as for everycustomer Walmart will be the closest one and also easily accessible store.Walmart has also developed 4 retails formats, Discount stores, Supercenters,SmallMarts, SAM’s club to target different levels of customers with respectiveto their income and lifestyleMarketShare:The aim of Walmart is toprovide high quality products with low cost to its customers by maintaining itsprofits and high investment returns. Walmart’s strategy of opening a generaldistribution center saves delivery prices, avoids storage issues and new storecan be opened for less costs. This helps Walmart to maintain a controlledsupply chain and enjoy high discounts on the bulk buying. Maintaining low coststrategy bring more suppliers, this way it helps Walmart to gain more marketshare than its competitors and even thesuppliers will have high returns on their investment.
Walmart also usesElectronic Data interchange with its suppliers which helps both Walmart bycutting down its ordering costs and suppliers to have the knowledge of productavailability level time to time to have their products ready at Walmart all thetime. AboveAverage Returns:Walmart makes hugeprofits by following simplicity in its products. Its main strategy issupporting high standardization and low customization. This way it limitsmodules for a product. It uses high asset turnover strategy, in this approachthe cost is fixed over a large number of units of a product making final unitprice cheaper. This strategy attracts and brings more customers and willmaintain high competitive advantage over its competitors. Another innovativeidea of Walmart is cross-docking inventory system. In this supplier only has toload the products at Walmart distribution center and Walmart has its owntransportation system to deliver to its stores.
This way the storage anddistribution costs decreases, having more profit on the products. CompetitiveAdvantage:Quality of the product and customersatisfaction makes any company maintain is competitive advantage in theindustry over other companies. In order to maintain the product quality Walmarthas issued a letter to each of its supplier to have the factory certified withany of the internationally recognized Global Food Safety Initiative standards.Walmart monitor its goods at all the stores by using SPARK system – SustainablePaperless Auditing and Recording Keeping system, which helps the food safetymonitoring all the time. It uses Modular Category Assortment Planning System tofind the purchasing patterns and customer intimacy strategy to targetcustomers. It also uses pennies strategy – selling good for few lesser pennies.With its wide variety of products and its low cost Walmart has a huge customerbase. Walmart gains its profits by spending low costs in promotions.
Walmarthas its own brands for several products. RecommendationStrategyPriceStrategies”The average cost of a product thatintegrates a shopping basket bought at a WalMart store is $3. The strategyapplied since the very beginning of Wal-Mart was to sell the product at $2.97.The founder Sam Walton believed that the habits of the consumers will changewhen introducing this price strategy, and he was absolutely right.” (LauraBarbera Marcilla, (2014). Businessanalysis for Wal-Mart, a grocery retail chain, and improvement proposals.
P. 28).Yes, “Pennies Strategies” is one of the best price strategies in commerce. Andaccording to the size of Walmart itself, it can always get lowest cost inentire industry, hence, it’s “always lowest price” price strategy will be stillwork in next couple decades in US.
However, because of the impact from Chinesegoods, if in some countries there is no enough protection for local productionsor let’s say some western productions, because their cost difference, forexample, labor, resource, travel…, what’s more, according to different culture,”Pennies Strategies” maybe not work in some countries, for example, most ofAsian countries, they really don’t like if you change them 1 or 5 cents, thisis time which is so-called “no cash” easy purchase time, everyone is tryingtheir best to avoid to use cash and make purchase process as easy as possible,and there are already a lot financial companies focus on this and they evensurvive rely on providing easy and safe payment methods such as Alibaba, Paypal,ApplePay, AndroidPay. Hence, in price strategies, we have some recommendationsas below: When plan to open new store in other counties, must find the corporations first, for example, local resource factories are always cost less than other place, and because of using local resource factories, most of time, we can as for some promotion policies from local government, as we know, nothing can be better if we can get supports from local government. Start to organize a new department which responsible for create new payment software, something like easy-pay, to avoid cash trade, and put original “Pennies Strategies” into payment software promotion, or we can use a new credit card policy for temporary, and when first version of payment software release then we can transfer the credit. And we can have other wise choice, we can directly to make corporation with financial companies which already provide this kind to easy payment service which can save a lot of time and budget.PromotionStrategies “Promotionalstrategies should be designed to suggest, encourage, and facilitate personalinterpretations of the self?relevance and positive consequences of productuse.”. (Timothy R.
Graeff, (1995) “Productcomprehension and promotional strategies”, Journal of Consumer Marketing,Vol. 12). As we see, they mostcommon promotion from Walmart is like “was $20.99, now $5.99”, we have to sayit becomes very bad promotion strategies nowadays. The reason is people alwayslooking for promotion day to purchase production instead of the time they wantit. Hence, as a mega company like Walmart needs to make good balance withnormal day and promotion day, and of course include promotion policies.
And ourrecommendation for promotion strategies as below: Increasing the quality of complimentary or samples, makes people willing pay bill for this promotion. Increase membership permission about promotion, set most of high quality promotion to membership only, and set annual fee of membership, and return the membership fee via member cash back in each purchase, then we can bind our customer no matter new customer or old customer via membership with annual fee because people always want to get money back. And we can also even set membership day or membership special area. In a word make membership benefits very special and also keep other customer who is not membership can see these benefits.DistributionStrategiesCurrent distribution strategies whichWalmart followed, looks like no issues here, however the main reason Walmartfailure in German is mostly according to this “Distribution Strategies”.
Henceaccording to this we have recommendation as below: Because German is typical Aging country which means labor in German is really high cost, nevertheless, German has top level technology in the world which means Walmart can change head to “Automation” which is most popular keyword in German, a complete unmanned supermarket just like “Amazon Go”.