Wal-Mart SWOT Analysis Essay Example for Free

Wal-Mart SWOT Analysis EssayWal-Mart has an abundance of strengths which is obvious due to its incredible success. Wal-Mart is the largest employer in the joined States and the club is one of the few places left for people to get a decent job with turn up a college education. Wal-Mart excessively has the second largest net gross sales in the world. This incredible number of sales is due signifi canfultly to Wal-Marts aggressive harvest-feast strategy. In 2003 alone they added 425 new stores exclusively over the world. An increase in node demand for SuperCenters encouraged the comp all to add 4,000 to a greater extent. Overall they added 48 million squargon feet of retail pose (Wal-Mart Comp some(prenominal) pen 6). They can also attri ande their large amount of sales to the fact that they defy stores all over the world. Their truly global presence is app bent in their operation of around 1,350 Wal-Mart send away Stores, 1,700 SuperCenters, 85 part Markets and 550 Sam s Clubs in the get together States, with numbers continuing to growand about 1,300 locations in Canada, Mexico, the UK, Ger umteen, Asia and mho America (Wal-Mart accompany Profile 5).One of Wal-Marts competitive advantages is their remarkable logistics system. They be able to ship merchandise from any of their numerous distribution centers in order to provide the cheapest and most efficient route. They yet imbibe their own distribution center for their online orders. The invention of sharing sales data with suppliers through computer programs has allowed Wal-Mart to systematically keep their shelves gillyflowered with popular items. Technology in general is an unbelievable strength that Wal-Mart is able to enthrone in to improve their company. Having a website has allowed for increased sales all over the world. This not just now provides public toilet for customers, but with a logistics system like the one Wal-Mart has in place, online orders experience become a snap bean to fill.Even though Wal-Mart has been criticized for their low compensation, they are actually doing a lot of good for lower income people. They can save a family about $1,000 a year with their low footings (Wal-Mart hale 3). Wal-Mart can beat out many competitors with their aggressive pricing strategy. They have the ability to cut prices on some crossroads, much(prenominal) as toys, by thirty percent in order to stimulate more sales. Wal-Mart has even been able to steerer in higher-income customers when they readable store in more urban areas. SinceWal-Mart has become the nations largest food retailer, people from all income levels are shopping there for their necessity items.They have even been working on a more upscale appearance of their stores to attract these customers. The service that Wal-Mart cans to its customers is a great advantage as salutary. They have a strong stove that it is a friendly and economic aidful place to shop where people are eer ordain ing to bump off your experience a good one. The added incentives are the constant price rollback, as hearty as the store-within-a-store. A great deal of Wal-Marts success can be attributed to the fact that the company was ground on identifying, knowing, and understanding what exactly customers want from a retailer.A few final strengths are united to the public criticisms that Wal-Mart has been facing. They are paying get goingicular close attention to environmental issues and have vowed to increase practice session of renewable energy, reduce waste and have environmentally spiritualist productsWal-Mart will soon be marketing baby clothes made using organically grown cotton and has plans to improve its truck slide by efficiency by twenty-five percent in the next three years (Two Public dealing 3). Wal-Mart has also recently been pushing for a higher minimum wage, a step that is surprising to many other retailers in the effort.WeaknessesIn the eyes of some of the general pu blic, Wal-Mart has weaknesses that affect not only their image, but the lives of other people. Some view Wal-Mart as a retailing giant that has taken over the retail industry. Because of Wal-Marts low prices and well-known name, they have been able to capture the sales of an unbelievable number of consumers, and have wherefore made it extremely difficult for lessened retailers to survive. Ethical shoppers, those who are concerned with the well- existence of microscopical retailers, are angry at the monopolizing power Wal-Mart has been able to gain in the past few decades. Most grim shops have been forced to close due to lack of sales. Some people refuse to shop at Wal-Mart because of these issues. This poor image that Wal-Mart has in some peoples eyes has taken a toll on its stock price as well.Many environmentalists are concerned with the large scale buildings that arenot sensitive to the environment. These buildings also cause a problem of traffic pollution and congestion whic h can damage small communities. The employees of Wal-Mart can suffer a great deal as well. Many receive only poverty-level wage and horrible health care benefits. Problems with these healthcare benefits lead to employees applying for public aid, which in turn means that taxpayers are the ones paying for Wal-Mart employees healthcare salutes (Wal-Mart Storm 2). Wal-Mart has been accused of discriminating against female employees and violating child craunch laws. Because of these criticisms, employee esprit de corps has been decreased as well.Wal-Mart some generation has a disadvantage in the location of their stores. Although Wal-Mart has grown and explodeed a great deal into the planetary market, they still do not have a large part of the European market. They are only present in the UK and their competitors are gaining in the other surrounding countries. Wal-Mart also needs to consider the consequences of placing their stores too close together. Instead of increasing the volum e of products per store, they open another one. Wal-Mart has already been facing a problem with a decrease in Saturday store sales. A lack of products, as well as a decrease in the quality of them, may be attributed to this loss of sales. They have also been said to have poor presentation and marketing of products on the floor.Price deflation is a near dilemma that Wal-Mart and many discount stores are facing as well. They often buy too much of one product and then have to put it on sale or clearance in order to turnover the merchandise. Instead of increasing sales with low priced items, Wal-Mart is actually lowering their win. Consumers will only buy so much of a particular product, even if it is priced low. Wal-Mart has a tendency to overstock and wherefore reduce gross margins when they sell products for reduced prices.Also, after seeing disappointing numbers, Wal-Mart has repeatedly said that their company would have increased earnings in the following quarter. Unfortunately , they have not been able to keep this promise. Wal-Mart has a weakness in that they promise unrealistic earnings, and then do not meet their expectations. This causes their stock to forever waiver. Even asthe economy is rising, Wal-Marts stock is not necessarily seeing an increase.Finally, Wal-Mart can have problems with their flexibility. Since Wal-Mart sells products crossways many sectors, such as clothing, food, or stationary, it may not have the flexibility of some of its more focal pointed competitors (SWOT Analysis 1). These competitors have the ability to make converts and improve on a certain product lines when the needs of their customers change. Wal-Mart, however, may have too much merchandise and not be able to focus in on sectors that need to be improved. They also might not have the available information, resources and know-how to make any changes.OpportunitiesSince Wal-Mart is the largest retailer in the United States, it has a very good opportunity to become the largest retailer in the world. They do not always carry a diverse selection of products, so they could expand stores and merchandise to attract more customers. An area that could especially be increased is their musical products. Wal-Mart does not carry a large quantity or mixture of musical products such as instruments, and these can be high profit items. Their image could be improved if they focused on having certain products, such as CDs and DVDs available on their release dates.Along the same lines, Wal-Mart could diversify their store types. They have been successful with implementing Neighborhood Markets, and have even tried a mall store recently. By focusing on a specific target market in a specific area, Wal-Mart could be the number one retailer for everyone. They already have the available resources to try new store types in new segments. It is also a logical step to increase and expand their current SuperCenters, which are expected to increase sales dramatically in the fu ture. The reason it is expected to drive growth so affectively is SuperCenters are considered extremely high growth stores, more productive than supermarkets and expecting to produce $500 in sales per square foot (Wal-Mart Company Profile 8). Wal-Mart has yet to penetrate to many East and West Coast food markets that occupy the top 50 (food retailing markets) (New Competitors 1).Another great opportunity is to improve on the areas which they have been criticized. Wal-Mart has already announced a new health care plan which would increase benefits to employees. They are very concerned with child bear on laws, so they have said that they will pay especially close attention to their overseas suppliers and their labor practices. Also, Wal-Mart has the opportunity to work on improving the environment. They have such a large image that any programs they support have the ability to produce tremendous results. By working on solutions to these concerns they can help improve their image and i ncrease their market share.Wal-Mart is such a major player in the retail industry that its decisions can have an effect on the global economy, the environment and society. They have the ability to approximately decrease the price of inflation because of their low prices. Also, due to their low prices, there is an increase in wage in developing countries. For the United States, wages may be low, but in other places where manufacturing goods is cheaper, wages can actually be considered high. By offering jobs and increasing the wealth in other countries, it is come-at-able for a substantial middle class to exist there and also increase Wal-Mart sales by having stores in those areas (Wal-Mart Storm 4.Continued international expansion is a huge strategic opportunity for Wal-Mart. there is actually more opportunity for growth in developing countries and Asian markets than there is in the United States (Variety Stores 8). Creating alliances and licensing agreements are ways to move in to these market segments. Other growth opportunities include the Internet and improved generate chain management through radio-frequency identification (RFID).ThreatsIn order to keep prices low, Wal-Mart has had to cut costs in other areas. This includes squeezing suppliers to offering their products at much lower prices. This has driven competitors to do the same, which is causing profits to plunge downward drastically. A threat to Wal-Marts image is the fact that for the few years after they open up a new store, the wages ofthat county fall by three to five percent. Another threat is the rapidly growing chain of buck General discount stores. These stores are able to open in smaller areas where there are not enough customers to support Wal-Mart. The deep discount that is offered at Dollar stores competes greatly with Wal-Mart.The economy has a slight effect on Wal-Marts customers. They have an advantage because the do offer cheap products that appeal to people in the time of a re cession. However, most of Wal-Marts customers do not instantly experience most of the governments attempts to stimulate the economy. Wal-Mart must work very hard to compete in times of uncertainty. Another threat that Wal-Mart faces is brand-name recognition. Although they carry and have increased their assortment of name brand products, most consumers searching for name brand products will not look at Wal-Mart to find them. Wal-Mart lacks a direct sales force to increase sales, whereas smaller retailers are focusing more and more on this aspect accordingly increasing their competition.A major threat to Wal-Mart is the areas that they are expanding into may not be easily attainable. It will be difficult for them to gain a good part of the market share of hard-line products such as home improvements. These areas have greater competition and Wal-Mart does not have a clear cost advantage. International expansion may also create slow or rough short-term growth. The international marke t is predicted to have excellent long-term growth success, but these earnings may not be seen in the near future. Also, Wal-Mart has huge expansion plans that are very public. If these stores do not open on time, or are subject to delays and build issues, then analysts predictions will not be met and share price may suffer (Wal-Mart Company Profile 9). On the contrary, if Wal-Mart successfully meets all of its deadlines, investors may still be hesitant to invest in their company. In the past, when retailers meet their expectations, and the economy is doing well, they tend to under perform. Also, two of Wal-Marts chief(prenominal) product lines, apparel and food, are very slow growth sectors, and Wal-Marts dominating position in the industry may make investors believe there is little room for the company to grow.Wal-Marts image has been seriously peril by the numerous accusations of being bad for the country (Two Public Relations 1). The documentary movies that are being produced c ould seriously hurt the companys sales, especially since they are being premiered right as the holiday shopping assuage is starting. The shopping experience some customers have at their store is also a threat to Wal-Mart. Customers are often complaining about the long checkout lines and the insufficient quality of the products that are offered. Once this inclination is spread throughout a community, it is difficult to change the publics opinion.Also, RFID could possibly be a threat to Wal-Mart by ruining relationships with suppliers. This system promises to do a great deal for supply-chain management. However, there is always the possibility that applied science promises more than it can actually offer. Some manufacturers of low-cost consumer products may not see the advantages of implementing such a system and not want to comply with Wal-Marts mandate for the new system.RecommendationsWal-Mart has been extremely successful in the past, and has a very promising future ahead of th em. Unfortunately, there is always a negative side to success. For Wal-Mart, they are faced with opposition from people who are concerned with the little guy. The fact that Wal-Mart has the ability and resources to be such a major competitor in the retail industry scares some people. Small stores in small communities, as well as employees, target Wal-Mart because they know it is a large company with the resources to defend itself.In order to improve its image in the eyes of these people, Wal-Mart may want to address these issues head on. Wal-Mart has already taken giant strides to be seen as a more environmentally friendly organization, as well as to increase the benefits of its employees. They should continue this approach, possibly even more publicly than other retailers in the industry. Wal-Mart could even start a campaign to help the little guy. Since they have such a global impact, any issue they raise will undeniably get a great deal of attention. In a campaign of this sort, W al-Mart could focus on promoting theother small specialty stores in their community. They could help advertise for local anesthetic shops that do not sell competing products, but complimentary ones. Instead of taking sales away from themselves, Wal-Mart could change their image to one of a company that cares about the community.Along with this, Wal-Mart should focus on their employees. Publicly well-favored employee benefits or rewards will increase morale as well as their image. Once Wal-Mart has invested in their image in their home country, they should also focus on increasing their market share in the international markets that they are not already involved in. Some other countries hold the greatest growth say-so and these areas should be seriously considered by Wal-Mart.ReferencesCramer, James J. Wal-Mart, Fess Up to Weakness Within. Wake-Up Wal-Mart.com,17 August 2005. 18 November 2005. Retrieved from .Kalra, Ritu. Wal-Mart Storm Swirling. The Hartford Courant. 2 November 20 05. 3 November 2005. Retrieved from .Lindeman, Teresa F. Two Public Relations Campaigns pit Wal-Mart Against Critics. Pittsburgh Post-Gazette. 1 November 2005. 3 November 2005. Retrieved from .McClenahen, jakes S. Wal-Marts Big Gamble. www.industryweek.com. April 2005. 3 November 2005. Retrieved from New Competitors Move on Supers. MMR. 22(10) p.162. 10 June 2005. 3 November 2005. Retrieved from .SWOT Analysis Wal-Mart. merchandise Teacher. 18 November 2005. Retrieved from .The Story of Wal-Mart. The Cultural Marketplace The NUR Network. 3 November 2005. Retrieved from .Variety Stores. Encyclopedia of American Industries Online Edition. Gale, 2004. 3 November 2005. 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