Wal-Mart Strategic Planning
Category : External Analysis Examples, Wal-Mart Case Studies
While at the augmented his income by selling newspapers and organizing others to do so for him; he held down other part-time jobs as well. It is perhaps not surprising; therefore, that Walton took a job in retail with after his graduation in 1940. Although he did not stay in the job long, his experience with had a big impact on . He learned to refer to his colleagues in the business as associates (2000). He learned the importance of keeping a finger on the pulse of retail trade by visiting one's own and competitive stores. He learned about giving local store managers a small stake in the profits from their stores as a way of having them buy into ownership in the stores' success. A few years after, the idea of the discount store was beginning to take hold. Indeed, most of the retail revolutions that had occurred up to this point had in one way or another found some way to achieve a cost advantage and pass this advantage on to consumers in the form of lower prices (2000). On July 2, 1962, opened his first discount store, which he called Wal-Mart. In its first year in business, the store had a high turnover almost double the average of Walton's other stores ( 2000). Wal-Mart is one of the popular retail stores not only in the US but in various parts of the world. Wal-Mart is the largest public corporation in terms of revenue It makes use of strategies to dominate the retail industry. This paper will conduct a strategic review of the company. It will include a strategic analysis of the company’s external and internal environment. The paper will also conduct a SWOT analysis of the company.
II. Strategic Analysis
II. A. Company Mission
Wal-Mart’s mission is to help people save their money for them to live better. The company does this by making sure that they have cutting edge researches about technologies that will help them continue their reputation as an innovative leader in the retail industry. The researches focus on determining newer means to serve the clients. The company researches for technologies and techniques that will help them make sure that they always place the needs, safety and well-being of the consumers above all else. The technologies need to give the clients an easier transaction. Moreover the company makes sure that it makes researches on needs of their different target markets and different demographic markets. Lastly the company makes sure that for their pricing is well researched and analyzed.
II.B. Main customer markets
The market of Wal-Mart is different individuals who need a discount store that will provide them the products they need. This market is the one that needs an alternative shopping experience. This market wants a store where every product they need is available and sold at lower prices. The market segment of the company is divided into clients who have brand loyalty and price sensitivity. There are specific products for those clients that are price sensitive and want low priced products. There are also products that direct its attention clients who are brand conscious. The company makes sure that they cover all the segments in the society they are operating in. The company has specialized prices for the different market segment, this will ensure that the clients will have lesser doubts about taking a look at the company’s product and the products that they can afford. The target market of the company involves almost all sectors of the society. They want to provide products to all ages and all gender. The company as much as possible aims to reach all walks of life. This target market is a larger source of income. The company has different marketing strategies that can cater to the taste and appeal of such markets. The company makes sure that its stores and branches are located in the most profitable places where clients can easily see the store and they can be encouraged to visit the store and buy products. The company also makes sure that competition in the location they want to put up the branch will not be too heavy.
Tesco is one of several European retailers whose entry into Central Europe has changed the local retailing structure. It grew first through acquisition of local chains and of chains of Western retailers, and then through Greenfield investment in new hypermarkets. Government regulations did not present major problems to its expansion (2004). ). Tesco is a British retailing company that is known to have gained large international and domestic market share. Tesco is the third largest retailing firm behind Wal-Mart and Carre-Four. Like other retail companies, Tesco wants to have clients that will patronize their product. The company uses a loyalty program to gain the loyalty of its clients. Compared to Wal-Mart, Tesco has started to concentrate on the housing market but it has not been that successful as of late.
II.D. PESTLE analysis
Wal-Mart made sure that they were aware of the political situation of every country they have operated in and the company has made sure that it has a reasonable position with regards to political issues. Wal-Mart is continuously prepared for any problems concerning the political sector.
Wal-Mart can be said to be economically stable for the past years. Its economic stature is doing well that’s why they try to improve their products to give the best to their clients. It is not only the internal economic situation of the company should be taken note of but also the economy of the country, Wal-Mart checks first the economic status of the country they are operating in before making decisions if they will have a branch in that area.
Wal-Mart makes sure that the products they offer will be accepted by the public. Wal-Mart does not authorize the delivery of some products they know will cause outbursts or complains from different groups in the society. Wal-Mart makes sure that they have a very good relationship with different sector in the society although some sectors hold a grudge towards them. Wal-Mart also engages in social activities that tend to develop a better relationship between them, the clients and the society they are operating in.
Wal-Mart offered new innovations in its technological aspect and introduced new concepts with regards to its industry. Wal-Mart makes use of highly advanced cash register or better performing slot machines. It also makes use of better security systems. Since technology rapidly changes Wal-Mart makes sure they are updated to what is happening and they can adjust to these changes. If other companies use new technologies to provide services, Wal-Mart has the technology capable of competing with such technologies.
Wal-Mart makes sure that it follows the different laws of a country they engage transaction in. The company doesn’t want to risk their client’s welfare and company image by breaking local and international laws Wal-Mart makes sure that the transactions they engage in will have a legal basis and will be sanctioned by local or international legal organizations.
Wal-Mart makes sure that the products they sell are proven to cause minimal problems to the environment. Wal-Mart puts up certain regulations on what type of product they will sell in their store. Wal-Mart has also introduced better waste management strategies that aim to reduce pollutants and create a cleaner environment for the future. Wal-Mart makes sure that its waste system is organized to prevent any mistakes from the personnel.
II.E. Porter’s five forces
Wal-Mart has been around for a quite some time and the company is not greatly affected by the new entrants. The influence of potential entrants to the company is weak. Any new entrant will have difficulty in gaining clients not unless they can provide innovative strategies that can thwart Wal-Mart from its position and get Wal-Mart’s clients.
Competitive rivalry has a low influence on Wal-Mart. The company has lower concerns on its competitors since there are limited competitors in their industry. The competitors cannot give much problem to the company since it already acquired a good percentage of the buying public.
Substitutes give high influence to Wal-Mart and its different branches since substitutes can make a company lose the clients it has. The substitutes can be in the form of online or actual stores. This kind of business is continuously growing and continuously changing strategies. The company and its different branches in different locations make sure that the substitutes won’t give them much problem. They do this by proving that the service they offer and the technologies they use to provide the service are the best quality and are better than substitutes or any other company.
Bargaining power of buyers and sellers
The bargaining power of buyers highly influences Wal-Mart. As much as possible the company maintains reasonable prices for their products and service to satisfy the buyers. When the clients try to dictate lower prices the company tries to know whether it is reasonable and if isn’t it has no choice but let the client go. The bargaining power of sellers highly influences Wal-Mart. The company makes sure that their suppliers have high bargaining power through helping them show their importance in the industry. Wal-Mart makes sure that the price being asked for a material has the same value as the same materials’ quality and durability. This will ensure that budgets will not be wasted.
III. SWOT analysis
Wal-Mart’s strength is the popularity it has. The company is known throughout the world. Strength of the company is the strong brand name they have. The strong brand name is what makes the company, its products and services popular. Furthermore a strength of the company is its ability to make strategic adjustments whenever there is a need for it. The company makes sure that whenever changes in the industry happen they have alternative plans towards it. Another strength of the company is the supply chain system wherein the company keeps the products in a secure place until it is needed in a certain branch. Lastly a strength Wal-Mart’s is its website that is easy to use, attractive, and informative. Such website encourages the clients to visit the store and avail the company’s products.
The main weakness of Wal-Mart is the criticism towards the company. The criticism affects not only the image of the company but its standing in the supply chain. Such criticism affects the relations between the suppliers and the company thus causing issues in the company’s supply chain. Another weakness of Wal-Mart is the notion that the company is losing its charm. This means that the company in some way is having problems in their relationships with clients. Lastly a weakness of Wal-Mart is poor sales in clothing merchandise. The company does not do well in this kind of product due to the company not being known as a reseller of such product.
An opportunity for the company is to find out more ways to give a distinctive look and features to their stores and branches. By doing this the company will have competitive advantage over other firms. It will attract clients who have various tastes. An opportunity for the company is to improve the features of their website. By doing this it can attract more markets. The company should also continue to improve its supply chain so that different issues and problems can be resolved ahead of time. It should device faster means to deliver supplies to prevent shortages of products in their branches. Lastly an opportunity for the company is to continue to reach newer territories where it can offer its products and services. This newer territories may be in a country that has recently just improved its economy.
The main threat to the Wal-Mart is the competitors. The competitors like Tesco and Carre-Four try various tactics to overcome the standing of the company in their industry. The competitors may device a way to overcome the company and have a better standing in the supply chain. The threat to the company includes the laws in the country they are operating in. Another threat to the company is the tariffs and taxes that the company has in different countries, each countries has its own rate of taxes and tariff that creates additional expenses for the company. Lastly a threat to the company is the culture of some clients in other countries they operate in. Some people may not like the new culture that is brought by Wal-Mart and its expansion into newer markets.
IV. Strategic Issues
External analysis pinpoints major opportunities and threats posed by the environment. It analyzes those external factors the community or public sector jurisdiction cannot control but which nevertheless affect its ability to achieve strategic objectives ( 1993). Internal analysis provides an objective understanding of the controllable factors in the public sector jurisdiction's internal environment, identifying those with the greatest long-term impact on a community's or organization's position ( 1991). The objective of this analysis is to identify the organizations or community's major strengths and weaknesses with respect to its overall mission or relative to each of the strategic issues it faces. The usefulness of the internal analysis depends on objectivity and completeness and identifies strengths and weaknesses of the organization as it attempts to implement strategic plans, goals and objectives, and its overall mission. Organizations need to be aware of what is happening in their environment that might affect them. In other words, they should continually survey and monitor the outside as well as the inside of the organization. This is especially true during the strategic planning process ( 1991). The main strategic issue the company faces is the relationship of the company with the external environment. The clients and critics are part of Wal-Mart’s external environment. The criticism and low sales of products shows that the company is not relating well with its external environment.
V. Strategic options
V.A. Resource led
The most effective business strategy in a period of economic concentration is to focus on the company's core competency. The core competency may not be the product line that is creating the most revenue right now and it may not be the highest ticket item. The core competency is what helps the company do better than everyone else. It helps them to be better than their current or potential competitors. Companies that are successful in times of concentration are those who strive to provide added value to their customers through increased focus on what they do best which is their core competency and do that by taking as much wasteful effort out of their internal system as possible ( 2002). Resource led strategic development/option focuses on changing the direction of the company and taking a look at the company’s core competency. In this option the company’s choice of succeeding action will be based on what the environment needs, what the environment offers and what the company can afford. In this option the company will determine the criticisms and determine what can be done towards it. The company will point out each criticism. Determine the cause of the criticisms and know what actions can be done to remove the criticism. Since there are low sales on the clothing merchandise, this option will determine means to focus on other products and reduce the order for the clothing. In this option the company will focus on the products that have higher sales. The company will then reduce its order of supplies for the clothing merchandise and increase the order for the product that is doing better.
V.B. Market led
In marketing practice, the ability to use as much detailed consumer input as possible as an aid in the strategic process is considered crucial, and thus drives significant marketing research programs. A problem arises when the knowledge base gained from consumer research is to be translated for application to strategic planning and decision making ( 2001). Traditional marketing research does not have a framework by which the understanding gained can be either directly assessed for the development of strategic options or can be specified in a consumer-based strategy format. The result of not having such a consumer-based strategy framework is undue subjectivity in the translation process of research findings underlying the development of advertising strategy ( 2001). An aspect in analysis is to consider the determinants of strategic options. A business needs to consider its characteristics that make some of its options infeasible without making major organizational changes ( 2000). The market led strategic option focuses on what is needed by the market and what will create innovations in the market. In this strategic option the focus is on the company’s creativity, desire to reach the objective oriented and need to follow the theory. The market led strategic option for the firm is to sell newer products not available in the market. These products can help the company remove the negative notions about it. The sale of new products can be used to counter the low sales of the clothing merchandise.
V.C. Benefits/limitations of the options to the organization
Wal-mart’s option of concentrating more on better performing products can help the organization to reach more markets and answer to varying needs of clients. This option can open opportunities for the company in venturing to other related fields in other markets. The resource led option helps the organization to access how the delivery of products can be further improved to meet the requirements of correlation with the newer establishments created by the company. Wal-mart’s market led strategic option to increase its product line will help in attracting clients who are not clients of retail stores. This option will help the company to reconstruct its image in the industry. This option will give the company additional income. The limitation on the resource led strategic option will be more on how the clients will respond to the reduction of clothing products. The clients who buy clothing merchandise may be disappointed if they discover that there is a reduction on the supply of such products. A limitation on the market led option is the clients feeling alienated due to the addition of new product lines.
VI. Implementation/Change Factors
VI.A. Strategic implementation
The resource led strategic option is the one that will be used to solve the problem. The resource led option can help the company determine what will be the problems that will be encountered as the option is implemented. The resource led strategic option is feasible and the company has enough finances to do such option. The resource led strategic option strategic option is acceptable to both the society and members of the organization. It will not be the cause of internal or external conflicts. The resource led strategic option’s main problem at implementation will be how long each resource will be acquired. Not all the resources can be acquired by the company in one day; it will take some time and thus the other aspects of implementation will be delayed. The critical success factors for the implementation of the option include the finances and the quality of the system. These two factors are important for the implementation of the option to be a success. The performance indicator for the implementation of the option includes the time frame of implementing the option. The length of time taken in implementing the option will serve as an indicator of how successful the selected resource led strategic option is.
VI.B. Courses of action
To implement the strategic option there are different courses of action that needs to be taken
- Gather the resources that will be used to implement the strategic option
- Gradually use the resources to start the implementation of the option
- Minimize errors so that the implementation would not take more time than expected.
- Have alternative courses of action to make sure that problems will not hamper the progress of the implementation of the option.
- Make sure that the option would be finished at the approximate time.
VI.C. Management of change
Managing change is important. Without competent management, the transformation process can be out of control. But for most organizations, the much bigger challenge is leading change. Only true leadership can counter the many sources of corporate resistance. To manage change leaders need to have an established direction. In the case of Wal-Mart, the focus of the management should be on making sure that criticisms against the company would be reduced. The management should also focus on analyzing which products are selling well. By focusing on such issues the managers would be guided on how to go along with the change process. To manage change leaders need to align the people. The employees need to be informed of the changes; they can be informed through bulletin board postings on what changes the company needs to have. The manager should give additional information on why the change is necessary for the company’s survival.