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Wal Mart - advantage of opportunities in the environment

How can Wal-Mart use its strengths in order to take advantage of opportunities in the environment? How can it strengthen weaknesses and avoid threats in the environment? Can it continue to grow?

Case Instructions:

Perform an Internal Analysis at Wal-Mart, identifying its Weaknesses and Strengths.

Then Identify Opportunities and Threats in the External Environment.

Perform a SWOT analysis at Wal-Mart!

Helpful Hints!

First, read the Background Materials and assimilate the main concepts of internal analysis and some of the frameworks

Second, assimilate the SWOT framework

Third, read the assigned articles as well as conduct additional research

Fourth, apply concepts to facts about Wal-Mart and use strategy concepts to perform the internal and SWOT analyses

Fifth, make a decision (either yes or no) and then defend it by developing arguments. There is no wrong answer as long as it is strongly well defended

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Solution Preview

Founded in 1962 by Sam Walton, Wal-Mart followed an amazing pattern of success and growth, eclipsing all other U.S. department store retailers by the early 1990's. It employs over 1 million people in the United States at 3,400 stores and 1.4 million people worldwide at 4,500 retail units in 10 countries: the United States, Mexico, Puerto Rico, Canada, Argentina, Brazil, China, Korea, Germany, and the United Kingdom (where it owns the ASDA chain of supermarkets).
Sam Walton, the founder of Wal-Mart, opened the first Wal-Mart store in Rogers, Arkansas in 1962. The company is publicly traded at the New York Stock Exchange under the symbol WMT and has its headquarters in Bentonville, Arkansas.

Wal-Mart operates large discount retail stores selling a broad range of products such as clothing, consumer electronics, drugs, outdoor equipment, guns, toys, hardware, CDs and books. Its typical products are basic, mass-market equipment, rather than premium products stocked at specialist stores. Wal-Mart also operates "Supercenters" which include grocery supermarkets. SAM'S CLUB stores are also owned by Wal-Mart; these are "warehouse clubs," which require a paid membership to access. (Compare Costco)

Wal-Mart's chief competitors as discount retailers include the Kmart Corporation and the Target Corporation.
With respect to traditional operations, Wal-Mart continues to enjoy success. Despite the emergence of other bricks-and-mortar competitors such as Target, Wal-Mart's cost position and relationships with suppliers still differentiate it from the competition. Its value proposition continues to be successful, and it remains a darling of Wall Street analysts. Finally, as the fervor over business-destroying dot-com ventures wanes, Wal-Mart continues to show a high level of durability potential in its traditional operations.
Perhaps the transition difficulty in the early years rested in the area of Wal-Mart's technical prowess. One of Wal-Mart's core competencies is its operational ability to streamline the supply chain through cross-docking inventory systems and efficient means of communication through technology.

Wal-Mart operates as an aggregator, distributor, and retailer of consumer goods. Due in part to its size, to the connectivity involved in its operations, and to the zest with which it has traditionally negotiated supplier contracts, Wal-Mart has established itself in a key position in the value chain of its suppliers. It is consumer goods giant Procter & Gamble's largest customer, and holds a significant power position relative to other smaller suppliers. This position has enabled Wal-Mart to obtain superior price breaks relative to the competition on the products it carries. Its size has obviated the need for separate distributors or wholesalers in the value chain. Coupled with the efficiency of its distribution network and store model, Wal-Mart has achieved a well-entrenched position in the value chain of its customers as well - that of the lowest cost consumer goods retailer. Hence, the value that Wal-Mart provides is two-fold. First, it provides value to its suppliers by operating as a large, relatively stable, nearly omnipresent channel for sales of goods, which provides rapid feedback on unit sales and localized demand. Secondly, and arguably more importantly, Wal-Mart provides value to customers by offering aggregation of a wide variety of consumer goods in a single location, and selling those goods at the lowest prices.

Wal-Mart Stores, Inc. (Wal-Mart) operates retail stores in various formats worldwide. The Company organizes its business into three principal segments: Wal-Mart Stores, SAM'S CLUB and International. The Wal-Mart Stores segment is the largest segment of Wal-Mart's business, accounting for 67.3% sales during the fiscal year ended January 31, 2005 (fiscal 2005). The segment consists of three different retail formats, all of which operate in the United States. The Company's SAM'S CLUB segment consists of membership warehouse clubs that operate in the United States, and accounts for 13% of fiscal 2005 sales. The international segment consists of retail operations in eight countries and Puerto Rico, and generated 19.7% of Wal-Mart's fiscal 2005 sales. In addition, the Company owns an unconsolidated minority interest of approximately 37% of The Seiyu, Ltd., a retailer in Japan.
(Source: www.msn.com)

External Factor Analysis Summary: Here we will analyze the affect of societal forces and to see what trends are like to affect the retail industry in which the Wal-Mart is operating in a brief manner.
? Economic Forces: One has monitor the economic trends like GDP trends, Interest rates, Money supply, Inflation rates, Unemployment levels, Disposable income. Currently in USA there is recession but in other parts of world there is growth especially in Asian countries. Individual economies becoming interconnected into a global economy.
? Technological Forces: Impact of Internet, virtual online stores, using Internet effectively to increase the reach and to reduce the cost. Portable ...

Solution Summary

Almost 3000 words give an internal analysis of Wal-Mart's weaknesses and strengths, an identifying of their external opportunities and a SWOt analysis. References included.