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External Analysis of Walmart's Environment

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Perform either a PEST analysis or a Porter's 5 Forces analysis of Walmart (Which ever you think to be most relevant.) You may do both if you'd prefer.

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Because WalMart is facing pressures from every element of its external environment, it must update its strategy to grow in the global marketplace. WalMart faces challenges from its political environment. Governments are challenging it, labor unions are fighting it, and bribery charges have been leveled against it. It must comply with US and host country laws. It faces challenges from the economic environment because of economic slowdown, lower consumer demand, and high rate inflation. The social forces are against Wal-Mart. Consumers feel that Wal-Mart pays less to suppliers, exploits laborers, and supplies substandard goods. Others feel that Wal-Mart is outright unethical. Technology has revolutionized retailing. Customers are turning to online retailing and brick and mortar stores are being compelled to close down. Wal-Mart must transform itself technologically to keep up with the latest online and website based shopping.

Pest Analysis:
Political factors: There is political action law suit against Wal-Mart. Wal-Mart has been sued for gender discrimination. The current political climate all over the world favors a positive ...

Solution Summary

The response provides you a structured explanation of the political, economic, social, and technological environment of Wal-Mart . It also gives you the relevant references.

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Discuss the external environment for Wal-Mart, at all levels, such as macro environment, global, and industry.

1. External analysis enables companies to identify threats and opportunities. Threats are conditions that preclude companies from functioning and making profits. Opportunities are conditions which enable companies to make profits.
The Five Forces model by Porter is a very useful framework utilized to perform industry analysis.
Let us continue with Wal-Mart. Discuss the external environment for Wal-Mart, at all levels, such as macro environment, global, and industry.

2. In Module 3, we focus on Internal Analysis and SWOT analysis.
In week one, briefly assess the internal environment at Wal-Mart. Do not try to analyze the whole internal organization, rather, identify one or two factors discussed in this module. Try not to repeat the observations made by another classmate, though you are encouraged to build on each other's observations. Or disagree!

3. In week two, integrate the external analysis from mod 2 with the internal analysis from week one of mod 3. The end result of an internal and external analysis is the identification of the company's strengths, weaknesses, opportunities, and threats. This is known as the SWOT analysis. It is very important for a company to assess its strengths so that it can use them to fight threats and take advantage of opportunities. Similarly, the company must recognize and work to shore up its weaknesses so that opportunities are not missed and threats are less likely to put the company at risk.
I am not expecting you to complete the full SWOT on your own in this TD. Rather, try to fully assess just one internal strength or weakness, and explain how it impacts an external opportunity or threat. Relate your own observations to those made by your classmates. Do you agree with their analysis, or does your analysis lead to a different conclusion?

4. Using the frameworks discussed in the background readings, analyze Wal-Mart's strategic choices at the business, functional, corporate and global levels. Choose one strategic choice, and identify which level it addresses. Later on in the discussion, consider whether the strategic choices are in sync with their generic strategy as described by Porter.

5. In order to implement a strategic choice, organizations use structures, control systems, HR policies, culture. Let us revisit Wal-Mart and analyze how they implement the strategies they currently pursue. Again, choose one implementation tactic, identify whether it concerns structure, controls, HR, or culture and whether or not you think it positively supports their strategy at the proper level.

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