WalMart Company Analysis Assignment Help
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Wal-Mart is the leading retailer in the world with its cost leadership strategy. It has its operation in more than 27 countries under 69 different banners with 2.2 million associates worldwide (Walmart Corporate, 2012). This paper will analyze macro and micro conditions of Wal-Mart with SWOT and porter five force model and will suggest the opportunities to increase competitiveness and profitability. This Company analysis case study assignment help paper will also include a communication plan along with the corporate governance mechanism and its effectiveness in the operations of Wal-Mart.
Impact of Mission, Vision and Primary Stakeholders
The mission statement of Wal-Mart is, “we save money of people, so they can live better.” This mission statement reflects the focus of Wal-Mart towards reducing the cost of its products and services continuously and to achieve the leading position in the retail industry (Walmart Corporate, 2012. The vision of the organization is also to increase the living standard of people by providing them quality products at lower cost, which increased its customer base and facilitated it as the market leader in retail industry. The mission helps the employees to work together and consequently keeping the cost lower for people, which increased the preference of Wal-Mart’s products and services among customers.
The management of the organization also includes the flexible and supportive polities, which encourages the employees to provide their best efforts, which also helped the organization to achieve the success. At the same time, management of Wal-Mart is also focused on lowering of its cost on continuous basis, so that it could obtain a large customer base, which facilitates success for the firm (Walmart Corporate, 2012. The employees and management both pursue for the decline in cost of living of people by adopting new and advanced tactics and strategies to reduce the cost of its products and services. It has also made the long-term contracts with suppliers, which has reduced its overall cost and has facilitated a significant contribution in the success of the firm by increasing customer satisfaction through providing them quality products at demand (Kneer, 2009).
Porter’s Five Force Analysis
Porter’s five force analysis shows the potential success and industry attractiveness for an organization. It is quite effective to analyze the opportunities and threats in the industry, which may influence the operations of firm (Hill & Jones, 2009). Following is the analysis of 5 forces of competition:
Competitive Rivalry within Industry: The retail industry is quite competitive as there are several payers in the industry, which are competing Wal-Mart on the basis of cost leadership. Carrefour, Metro AG, Target, and Tesco are some of the competitors, which may affect the position of Wal-Mart in the industry due to increase in their position in the industry by their business expansion and increase in customer base. The increasing competition within the industry is affecting the operations and reducing its revenues, which may affect the strategic direction of firm (Ahlstrom & Bruton, 2009).
Threats of new entrants: Threats of new entrants are low in retail industry of US due to dominant position of few retailers in the basis of quality, price and product range. The outstanding distribution channel, brad name, requirements of huge finance also creates entry barriers (Hill & Jones, 2009). As per assignment experts It is significant for Wal-Mart to maximize its revenues by attracting more customers through its strategies and to maintain a competitive position.
Bargaining power of suppliers: The bargaining power of suppliers is moderate as same large suppliers such as P&G, Coca-Cola has higher bargaining power in the comparison of small suppliers. The large market share of Wal-Mart also offers business to the manufacturers and wholesalers, which increase the power of Wal-Mart over suppliers and provides it a competitive position. It also has a vertical integration with suppliers, which reduces their bargaining power and increases the efficiency of firm to deliver the required products to customers in time (Monczka, Handfield, & Giunipero, 2008).
Bargaining power of buyers: The bargaining power of individual customers is quite low, but due to increasing competition it is increasing as it is forcing the Wal-Mart to keep its prices low at all times. At the same time, switching cost for customers is also low as they can switch easily to other firms, which are providing comparable products at lower prices. It may affect the market position of Wal-Mart, so it should be more focused over customer satisfaction (Kneer, 2009).
Threats of substitutes: The threats of substitutes are quite less for Wal-Mart due to lack of retail stores, which provides the convenience and low prices to the customers. It also includes wide range of products, which also reduces the threats of substitutes (Monczka, Handfield, & Giunipero, 2008). So, Wal-Mart has advantage to be more competitive due to its quality and pricing aspect among customers.
Thus our assignment help experts says that, the retail industry is quite attractive for Wal-Mart and there are several chances for potential success of it in the industry by capitalizing its competitiveness.
SWOT analysis of Wal-Mart
Following table includes the SWOT analysis of Wal-Mart:
(Source: Antoni, 2007; Kneer, 2009; Walmart Corporate, 2012)
From the table, it could be determined that Wal-Mart has the leading position in retail industry, but still its presence in the international market is not well due to several political and economical implications. It has opportunity to diversify its market in other countries, but the intense price competition and regulatory requirements could affect its position. To reduce its weakness related to presence in international market to achieve the opportunity in the several European and Asian regions by eliminating the political and economical barriers, the firm should use its brand image and distribution channel efficiency to enter in new market (Ferrell & Hartline, 2010). The brand image, cost leadership, employees’ efforts and wide channel would be effective to make the strategic alliance or merger with the local large retailers in other regions and to enter in the country more effectively. It would be effective to reduce competition and to increase the market share of firm. It should also make its presence through e-commerce in the countries, in which it does not have a strategic partner.
Strategies to Increase Competitiveness and Profitability
There are three levels of strategies available that may be used by Wal-Mart to increase its competitiveness and profitability. The business level strategy would be more profitable for Wal-Mart as this level of strategy will help to create competitive position in the industry by distinguishing the operational activities of Wal-Mart from its competitors (Harrison & John, 2009). The current cost leadership strategy could be used for the product and market development of the firm into new and existing regions as it will be effective to attract the customers and retain them for long-time (Hill & Jones, 2012).
It will increase market share into particular segments by targeting narrow segments that may increase overall performance and sales positively. Under this strategy, integrated actions can be designed by the management to attract the customers and create a distinctive image of the firm among customers and competitors (Hitt, Ireland & Hoskisson, 2010). Similarly, at corporate level, it could use the merger and acquisition strategy to enter in new markets with the help of its large financial sources, which would be effective to reduce the entry barriers and to increase the market share along with competitiveness due to its international expansion. To develop core competency, this level of strategy works positively (Harrison & John, 2009). Under functional level strategy, the firm can identify market niches that may generate higher profits for the firm by increasing sales of it. Overall, use of focus cost leadership strategy may increase the market share of the firm in the broad as well as narrow target customers (Hill & Jones, 2012). To make this strategy successful, Wal-Mart is required to focus more on quality.
This strategic level would be effective to enhance the overall significance of the firm in the international market and to produce positive results for the firm in terms of market share and competitiveness.
Proper communication in an organization helps to communicate all the required information to stakeholders, which is significant to increase the organizational effectiveness. To make the strategies make above known to all stakeholders, Wal-Mart is also required to have an effective communication plan, so that possible conflicts of interest could be eliminated. To increase awareness about the strategies at different levels, the firm should first encourage a discussion with key stakeholders such as management, board of directors, and key employees, which would be effective to know all the conflicts and to sort out with the proper consideration of them in the strategic initiatives (Bellandi, 2012). The roles and responsibilities of individuals should be defined clearly, so that the strategic objectives could be achieved in an effective manner. The communication plan would be implemented by top management regarding the needs of the strategic initiatives and benefits to all stakeholders along with organization.
It will be effective to increase their efforts and reduce their conflicts associated with the new strategies made by the organization. The mails and memorandums could be used by the firm to increase the awareness of the employees in the organization about the strategies taken by the firm at different levels. This mean of communication should also include the roles and responsibilities of the employees, which are being expected by them to achieve the objectives of organizational strategies. There should be a continuous communication between all stakeholders, so that any required change in the strategy could be implemented timely (Stahl & Mendenhall, 2005). This communication plan would be effective for Wal-Mart to communicate with all its stakeholders, which would improve its effectiveness in the strategic implementation.
Corporate Governance Mechanism
Wal-Mart also includes the different governance mechanism to control the managerial actions and to increase the organizational significance. Wal-Mart includes the different governance documents, which include the different rules and regulations for employees to perform their roles and responsibilities in ethical manner (Walmart Corporate, 2012). These governance documents include the qualification and roles for board of directors and also there compensation conditions, which prevent the fraudulent activities in the business. These corporate governance documents also describe the processes through which the business operations of Wal-Mart are conducted along with the role of Wal-Mart’s board committees. This is effective to determine a way through which all the actions should be taken by management. Any action by management beyond these limits would not create a responsibility over the organization, which controls the managerial actions at a great extent (Walmart Corporate, 2012).
Another control mechanism used in Wal-Mart is audit committee, which is responsible to assist the board in monitoring the integrity the financial reporting processes, performance of the firm, compliance of organizational acts with the applicable legal and regulatory requirements (Walmart Corporate, 2012). It helps to create an environment of fairness, which restrict the management to take any action, which is not in favor of its stakeholders or unethical (Bergdahl, 2008). It also facilitates transparency in the organization’s financial activities, which is beneficial to control the managerial actions at a great extent and to facilitate the organizational effectiveness.
Effectiveness of Leadership
The leadership in Wal-Mart is quite effective to motivate the employees to perform better. It is because the leadership The leaders believes that they are servant and for this they listen to their partners, associates and colleagues patiently, which create a environment accomplishing overall goals by the integrated efforts of team (Walmart Corporate, 2012). The leadership in Wal-Mart is beneficial to motivate the employees by developing a sense of responsibility among them. The inclusion of them in the decision making is also effective to increase their morale and efforts for the organizational development (Lussier & Achua, 2009). The leaders in Wal-Mart are expected to be with their associates, which make the leadership quite effective for the growth of Wal-Mart by involving the employees in decision making.
The leadership facilitates teamwork within the organization, which is a major reason for the success of Wal-Mart in the retail industry (Bradt, 2012). The leaders are also in touch with the political, social, and economical changes around the world, which also enhances the effectiveness in decision making by leaders. But still there is a need of more flexibility in the decision making approach by leaders (Lussier & Achua, 2009). The increasing price competition is affecting the position of Wal-Mart in industry, which needs to be considered by its leaders by changing its cost leadership strategy. The leaders in Wal-Mart are quite rigid with their low pricing strategy, which is not successful in all the regions around the world (Ferrell & Fraedrich, 2012). So, leaders are needed to bring flexibility in their decision making to remain its competitive position.
For being a responsible corporate citizen, Wal-Mart follows the philosophy of operating globally and giving back to society. It provides financial and volunteer support to thousands of community focused and charitable organizations. It operates it business in ethical manner and mainly focuses to improve the life of people in society by reducing their cost of living. It is also engaged in the foundation of Hunger relief and military support in US through its foundation, which also facilitate it as the responsible ethical corporate citizen (Walmart Corporate, 2012). These efforts of Wal-Mart have facilitated it as a leading company industry and have increased the morale of people in the company. The people at bottom line are now more concerned towards the activities that are beneficial for the organization and also make them more loyal with the organization (Economist Intelligence Unit, 2008). For example, the employees at Wal-Mart are more focused over the activities, which reduce the cost of organizational operations, which is their contribution towards the sustainability of organizational low cost leadership.
From the above discussion, it can be concluded that Wal-Mart is the industry leader, but still the increasing competition may affect its competitive position in the industry and can reduce the market position. So, it should use the appropriate strategies to maintain its competitiveness in the industry.
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Walmart Corporate. (2012). Retrieved from: http://www.walmartstores.com/AboutUs/
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