Insigne, Harold D.

STEM 1201

WALMART
Starting as a modest discount retailer in Rogers, Arkansas, Walmart has grown to establish numerous
stores across the United States and venture into international markets. By prioritizing innovation, we're
crafting a cohesive shopping experience that empowers customers to browse both online and in-store at
their convenience. Our aim is to generate opportunities and deliver value not only to customers but also to
communities worldwide.
Walmart Supercenters provide a comprehensive shopping experience by merging a grocery section
featuring fresh produce, bakery goods, deli items, and dairy products with a wide range of offerings
including electronics, apparel, toys, and home furnishings.

SWOT (Strengths, Weaknesses, Opportunities, Threats)

STRENGTH
Strong Brand Recognition
- Walmart's brand recognition is a key asset, solidifying its position as one of the world's largest retailers.
Through persistent marketing efforts, it has become a household name, synonymous with affordability
and convenience globally. Recognizable by its logo, slogan, and brand symbols, Walmart has successfully
established itself as a market leader. Alongside its reputation for low prices, Walmart boasts a diverse
product range spanning electronics, apparel, groceries, and more.
Efficient Supply Chain Management
- Walmart owes a significant portion of its success to its adept supply chain management. This involves
orchestrating and overseeing all processes from raw material procurement to product delivery. Efficient
supply chain management is pivotal for Walmart as it guarantees the provision of top-notch products to
customers at competitive prices.
Diverse Revenue Streams
- Operating as a hypermarket, Walmart benefits from a multitude of revenue streams, affording the
company resilience and adaptability in dynamic market conditions. With its extensive array of offerings
spanning groceries, clothing, electronics, home goods, and more, Walmart caters to a diverse customer
demographic. This product diversity safeguards the stability and predictability of the company's revenue
streams.
Economies of Scale
- Economies of scale denote the cost benefits attained by a company through expanding its production or
operations. Walmart, being one of the globe's largest retailers, capitalizes substantially on economies of
scale. This enables the company to provide products at more competitive prices compared to rivals, all
while sustaining profitability.
Strong Customer Base
- As a multinational retail powerhouse with a presence in numerous countries, Walmart boasts a robust
customer base comprising millions worldwide. Predominantly, Walmart's strongest customer base resides
in North America. Notably, in 2016, approximately 95% of American consumers frequented Walmart's
website or one of its many stores across the United States. Noteworthy statistics from Zippia indicate that
a single Walmart supercenter in the USA serves an average of 10,000 customers daily. This formidable
customer base stands as a cornerstone of Walmart's competitive edge and plays a pivotal role in the
company's sustained success.

WEAKNESSES
Overdependence on the U.S. Market
- Despite its expansive global footprint, a considerable portion of Walmart's revenue originates from its
U.S. operations. Out of approximately 10,500 Walmart stores worldwide, around 4,648 are situated
within the United States. This heavy reliance on the U.S. market exposes Walmart to economic
fluctuations and changes in the U.S. economy. Given that the U.S. market constitutes a substantial
majority of Walmart's revenue, any downturn or recession in the U.S. can significantly impact the
company's financial performance. The 2008 global financial crisis serves as a poignant example, as
Walmart's sales and revenue were notably affected by the economic downturn in the United States.

Labor Practices
-Despite holding the title of the world's largest private employer, with a workforce exceeding 2.2 million
individuals, Walmart's labor practices have long been a focal point of criticism and controversy.
Accusations of mistreatment of employees and raised safety concerns have plagued the company, leading
to negative publicity.

Limited E-commerce Presence

-Walmart maintains an extensive network of physical stores worldwide and has made substantial
investments in e-commerce in recent years. However, the growth of its e-commerce segment remains
constrained, trailing behind competitors in this arena. Rivals like Amazon and Alibaba have developed
robust e-commerce platforms offering diverse products and services, enabling convenient shopping
anytime and anywhere. This discrepancy places Walmart at a disadvantage in the market, as its e-
commerce platform still lags behind those of competitors.

Inconsistent Customer Service

-Walmart's operation of hypermarkets has attracted criticism due to inconsistent customer service,
including long wait times, disorganized stores, and challenges locating products. Such issues are often
attributed to factors like inadequate training and low wages among employees. Insufficient training and
support may hinder employees' ability to deliver consistent and satisfactory customer service, resulting in
frustration and dissatisfaction among both employees and customers. Ultimately, this can adversely affect
job performance, morale, and the overall experience for both employees and customers, thereby
negatively impacting the company.

Thin Profit Margins

-Walmart's reputation for offering low-priced goods is a significant strength, attracting and retaining
customers. However, it also presents a weakness for the company. Its cost leadership strategy may result
in thin profit margins, as it aims to keep prices as low as possible. This strategy necessitates selling a
large volume of goods to generate profit, putting pressure on profitability. Moreover, the reliance on low
prices makes Walmart vulnerable to fluctuations in the global economy. Increases in the cost of raw
materials or labor can negatively impact profit margins, highlighting a vulnerability in Walmart's business
model.

OPPORTUNITIES

Global Expansion

With a staggering presence of over 11,000 stores across approximately 27 countries, Walmart stands as
the largest retailer globally. Despite this vast reach, the company possesses considerable potential for
further expansion into new markets. Global expansion offers Walmart a significant opportunity to
penetrate fresh markets, diversify revenue streams, and broaden its customer base. Such expansion into
foreign markets holds the promise of numerous benefits for Walmart.
E-commerce Growth
According to Statista, global retail e-commerce sales are projected to reach a staggering US$ 6.9 trillion,
indicating rapid growth within the industry. Various factors, notably the COVID-19 pandemic, have
expedited the transition to online shopping, creating ample opportunities for companies in the e-
commerce sector. Walmart stands poised to seize a substantial portion of this burgeoning market by
capitalizing on its existing strengths and bolstering its e-commerce capabilities through strategic
investments.
Demand for Environmentally Friendly Products
With the growing consumer emphasis on environmental consciousness, there's a rising demand for
sustainable and eco-friendly products. Walmart stands to capitalize on this trend by expanding its
offerings of sustainable goods and highlighting its environmentally friendly practices. The company has
already made notable strides in sustainability, setting ambitious targets to reduce greenhouse gas
emissions and enhance renewable energy utilization. However, as a prominent retailer, Walmart can
further elevate its commitment to sustainability to bolster its brand image and resonate with a broader
consumer base.
Diversification
As the retail landscape undergoes continual transformation, Walmart stands to benefit from
diversification into related sectors like healthcare and financial services, presenting a substantial
opportunity for business expansion. While Walmart already operates in some of these arenas, further
expanding its product offerings within these new markets could be advantageous.
Technological Advancements
Technological advancement forms a cornerstone of Walmart's growth strategy. The company has already
committed substantial investments in cutting-edge technologies such as machine learning, artificial
intelligence, and data analytics to optimize operations and elevate customer experience. Nonetheless,
Walmart remains poised to leverage further technological advancements to refine its operations, enrich
customer experience, and fortify its online presence.
THREAT
Intense Competition
The retail landscape is fiercely competitive, with numerous large and small players competing for market
dominance. Walmart contends with formidable rivals such as Amazon, Target, and Costco, all of which
boast substantial resources and formidable online presences. This intense competition poses a threat to
Walmart's profitability, as it provides customers with a multitude of options.
Economic Downturns
Economic downturns and shifts in consumer spending patterns represent notable threats to Walmart's
business. During such downturns, consumer spending typically declines, and shoppers become more
price-conscious. Consequently, Walmart may experience reduced sales and lower revenue. Moreover,
heightened price sensitivity may lead consumers to opt for lower-priced products or turn to discount
retailers, intensifying competition for Walmart.
Changing Consumer Preferences
Indeed, the dynamic nature of consumer preferences and shopping habits poses a significant threat to the
Walmart business model. Changes in consumer preferences driven by factors like economic fluctuations,
technological advancements, and evolving societal values can impact shopping behaviors. For instance,
the rising awareness of environmental sustainability and ethical business practices has influenced
consumer choices, leading them to prioritize stores that align with these values, even if it entails paying a
premium. Failure to adapt to these shifting preferences could result in Walmart losing customers to
competitors who better meet their evolving expectations.
Increasing regulatory scrutiny
Walmart faces a significant challenge in navigating increasing regulatory scrutiny imposed by various
governments across the globe. Governments are growing increasingly wary of the influence wielded by
large corporations like Walmart and are implementing regulations aimed at safeguarding consumers and
fostering fair competition. These regulations may encompass taxes, tariffs, and other measures that can
impede Walmart's operations in certain regions. Thus, compliance with diverse regulatory frameworks
poses a formidable challenge for Walmart as it operates across different jurisdictions.
Litigation
Litigation involves initiating legal action against an individual or organization. Walmart faces an average
of about 20 lawsuits daily and can accumulate up to 5,000 lawsuits annually. These legal challenges are
instigated by consumers, government entities, and even Walmart employees. As a prominent
multinational corporation, Walmart is accustomed to navigating a diverse array of legal risks stemming
from sources such as employment disputes, product liability claims, and intellectual property disputes.
However, these lawsuits can impact Walmart in several ways.

WALMART PESTEL (POLITICAL, ECONOMICAL, SOCIOLOGICAL, TECHNOLOGICAL,

ECOLOGICAL, LEGAL) ANALYSIS
Political Factors:
The political factors are the rules, policies, and regulations that the marketing country and its government
follow. There are many points that need to be looked after when it comes to political factors, like fiscal
policies, foreign trade policies, tax rules, and more. There might be some other points that can externally
affect the company. Thus, the political factors influencing Walmart are as follows:

 Politics is highly stable: Since the level of political stability is high, the respect shown towards
the political rules is also high. Thus, organizations such as Walmart do not face any issues.
 Political support is necessary for globalization: Your business can never stand on its own if you
go against the politics of the market. Thus, Walmart has to bear the lobbying expenses to expand
its businesses in various markets. For example, the firm spent a lobbying expense of $25 million
to expand its organization in the Indian market.
 Being Influential in State Politics: Walmart, through its functioning, has become influential in
state politics. For instance, they increased the legal age for Gay Rights and Gun licenses to
impress their customer and potential customers in 2018. Moreover, they asked their workers to
contribute to the “Republicans.”
Economic Factors:
When it comes to the economy, a company needs to put in more effort to maintain its supply-demand
ratio. A business cannot run well if either is out of balance. Other factors influencing financial conditions
are inflation, interest and exchange rates, and economic growth. For instance, a consumer might change
their demand for a particular object based on varied factors. It will lead to the manufacturing company of
the said product having some loss. Hence, the economic factors that are directly affecting Walmart are as
follows:

 Major economies are stable: Establishing a successful business in such markets gets smoother
when the economy is well-off. Walmart primarily operates in the United States with a stable
economic structure.
 Developing countries are growing: Developing countries like India are growing economically, so
starting a profitable market there will be smoother.
 The United States is facing a decrease in unemployment: A decrease in unemployment ensures
economic stability, which is always ideal for a business.
Social Factors:
When it comes to a business, consumers play the most significant role. They typically control the demand
and supply chain, and a minute shift in their demand might cause a massive revenue change for the
specific company. A consumer's demand might change based on certain key factors, like the change in
trends or some, approaching social events, and sometimes even different cultural engagements. By taking
note of the social factors, the companies do nothing but keep in mind the social-cultural background of
the said market so that they can have the opportunity to do appropriate business. Therefore, the social
factors under the influence of which Walmart works are as follows:

 Trend of having a healthy lifestyle: Social media trends are a crucial deal now, so having a
healthy lifestyle by eating healthy, exercising, and more is the trend. So, Walmart should have
more options for health-friendly products in their stores.
  The trend to show cultural diversity: Showing respect and enjoying the diverse cultural spectrum
is trendy. The factor here heavily influences the market and is a crucial external factor that
Walmart should consider.
 Lots of migration from rural to urban areas: Shift in living style is the reason behind the shift in
demand for certain goods. Thus, the company needs to determine that and do business
accordingly.
Technological factors:
Recently, technology has gone through several changes. Some of these changes were for the betterment,
but some failed to do much in the market. Companies from different industries use specific advanced
technologies to make their business flourish more than expected. To have a successful business, a
company must be aware of the latest technologies available in the market, which can directly help them
succeed. Sometimes a company's brand value and popularity highly depend on the technology type they
use. Thus, the technological factors responsible for the changes in Walmart are as follows:

 Usage of technology for business automation: Business automation means doing repetitive work
automatically through technologies, which saves time and resources a lot. Walmart can employ
such things to gain sustainability in the market.
 Increase in the number of smartphone users: Increased smartphone users have led to a tech-
friendly consumer circle, so to get more customers, the company needs to be tech-friendly too.
Today, Walmart has improved its mobile application system. Today its customers can have a
smoother shopping experience. For example, Walmart has eliminated the burden of carrying a
physical list because now consumers can mark those items they require to purchase from the store
with this application.
 Usage of technology to work through big data: Multinationals like Walmart need to take care of
their massive data. Hence, using advanced technology is the best option here. Today, Walmart
uses fifty robots to track the stocks, prices, and other varied functions.
Environmental factors:
The environment has been getting the brunt of our success and ambition for a long time. But nowadays,
companies are trying to become eco-friendly to provide their future generations with a sustainable world.
A company must have reusable products to reduce the amount of waste and pollution they produce. The
companies should maintain the carbon emission rate, and their main focus should always be
sustainability. Mentioned below are the environmental factors that influence Walmart:

 Trends supporting eco-friendly products: Environment-friendly products are the trend now. Thus,
impacting millions to keep the environment safe. Walmart should also incorporate such products
to increase its business.
 Trends to improve business sustainability: Businesses going green is not a trick anymore. But it is
done by the majority to have a beautiful planet to live on and do business on, and this initiative
Walmart should also adopt.
Legal factors:
No company would want to do something illegal because that might cost them their whole business as
their brand value, reputation, and popularity will face massive repercussions because of their actions. So,
every company tries to uphold the legal boundaries of the market they are focused on and functioning.
Legal factors are mainly the laws and regulations that every country has. Legal laws like the
discrimination law, labor law, safety law, and especially the consumer law should be taken care of at any
cost by the company to have a peacefully running successful business. Therefore, you can say the below-
mentioned legal factors influence Walmart's operations:

Regulations looking after the safety of food: There needs to be laws and regulations that ensure that
the food provided by Walmart is healthy and safe to consume.
Regulations taking care of the employees: Employees need laws concerning the work environment,
minimum wage, job assurance, and more.
Changing the tax management ways: It is necessary to make the company system more accountable
and simpler. Thus, improvement in tax management ways is advisable.