Strategic Analysis of Walmarts Advantages in its Environment

strategic Analysis of Walmarts Advantages in its EnvironmentStrategic Analysis is to analyse Walmart macro-environmental and micro-environmental. The analysis methods use much(prenominal) as mould Analysis, Porters 5 Forces Analysis, SWOT Analysis and Competitive Advantage to analyse the corporal business environment.PESTLE AnalysisPESTLE is the structure to investigate the quicksilver(a) business environments in which Walmart operates by discovering the forces that effecting the corporate operation.Political and Legislations EnvironmentAs Walmart operates in the global scale the performances of the corporate atomic number 18 influenced by the policy-making and statutory righteousness of the domain invested. For instance, the employment statutory laws of a country are to ensure investors provide varieties of jobs to its population at large from flexible, topic totallyy based measly paid jobs to centrally located high impart jobs (Balchin, 1994). alike that, the go global s trategies has its impacts on the local anaesthetic retails market when a giant company such as Walmart penetrate into the country it causes local retails shutting down due to incompetent to compete in consideration of its predatory pricing policy (Basker, 2007). The author indictment that Walmart paying low lucre to its employees to protect its agonisticalness in its retails market but it track to high turnover rate of its employees.Economical EnvironmentFor the past iv years, the world veneer global economic crisis which leading to high unemployment, increases of provide legal injurys, and losing consumer confidence1. However, the crises assist Walmart to plump for its retail businesses even though the supply bell escalating above US$ 100/barrel because consumers becoming monetary value conscious on seeking products value for currency.The strategic uses by Walmart Canada 1. manduction the truckloads with the providers to ensure all fully loaded, 2. switching manual st ocking shelves to automatic tipped shelves which depart deliver next item to the front, and 3. lowering the lighting and change magnitude the roof insulation, (The Star, 2008), as to snip its operating cost.Socio-Cultural EnvironmentAs Walmart go globalise, the corporate has to adapt the changes of social and cultural differences because it can easily propel employees morale in workplace and consumer experiences. Based WPP (2008), Americanisation is not easy to make out in foreign countries because of the heterogeneity of perception, speech communication, cultural and needs especially in European, Asia-Pacific and Africa (Sorrell, 2008).Environment and technological EnvironmentEnvironmental and technological plays a real part in the Walmart products/services developments because it improves customer satisfaction and perception in their shopping experience and observation. Besides that Walmart is one of the fastest retailer to dramatise latest technology in their business operation. For example radio absolute frequency identification technology (RFIT) which reduces its out-of-stock goods with this technology (Wilbert, 2006) and using thin film solar technology to boost its re newable energy uses which could produce up to 22.5 meg kilowatts hours of clean energy annually (Walmart Stores sack up Site, 2010). Besides that, Walmart adopt eco-friendly products such recycle bottle, shirt made of transitional cotton and sustainable coffees (Walmart, 2008).Porters 5 Forces AnalysisIn order for Walmart to find an effective source competitive advantage the Porters five forces analysis is uses to analyse its market environment to sustain and develop its customer foundation and ensure a good (Collins, 2010). flagellum of substitute goods and services bane of substitution in supermarket/grocery terminal is lower on foragestuffs but moderate to high on non- food products. In food retailing pains the main concern is the convenience stick in and the greeng rocers which easily substituted by the consumers. However, it does not position a directly brat to Walmart because their market size relatively smaller and compare to Walmart they are no match in term of the corporate cost leadership generic dodge and its predatory pricing of everyday low bell which fixate difficult for a small retail set up to compete (Hayden et al., 2002). Nonetheless, Walmart is endlessly looking for economical substitutes on the market and to retain its loyal customers.Threat of entry of new competitorsIn supermarket/grocery stores threat of entry is minimize as it required a lump sum amount of money to build up brand name and competitiveness. However, the renowned leading food retailers have already secured its brand name globally such as Tesco, Carrefour, Aeon, etc2. Besides that, in order Walmart to set up a new supermarket it required extensive time and resources before the proposal authorised by the brass. In addition, government protectionism3on lo cal goods, suppliers and retails industry might compel unforeseeable threat of entry into new market.Intensity of competitive competitorRivalry in supermarket/grocery stores is commonly high due to direct competition against local supermarket, multinational supermarket such as Tesco, Carrefour, Aeon, etc. These retailers willing compete against pricing, products, promotions and expansion of its stores occasionally (Duff, 2010). During post global break 2010, Walmart profit boost 3.6 percent during second quarter from its cost cutting and whole global market growth in China, Brazil and Mexico (DInnocenzio, 2010). In additional, the power Walmart growth is due its emphasis on foodstuffs which helps the corporate survive during recession period compare to others retailers which more emphasis on non-foodstuffs products suffer loses (Gregory, 2009). negotiate power of buyersThe buyer power is moderately high because goods especially the foodstuff in the retails can be easily subst ituted with other brand name since the switching cost is relatively lower. Besides that, close to customers are price conscious which easily draw away by low prices since price can be easily compared and determined before purchase is make (Gregory, 2009).Bargaining power of suppliersThe suppliers power is quite low because suppliers are invariably concern of losing its contract with giant retailers such as Walmart. Besides that, Walmart easily obtain lowest goods price from the suppliers since Walmart is the leader in retail industry (Chandran, 2003).SWOT AnalysisSWOT analysis illustrates Walmart corporate strengths, weaknesses, opportunities and threatsStrengthsCompetent supplier chain management practices. To ensure Walmart products price remain competitive Walmart moderate out few techniques to lower its products costs as shown below.Obtaining goods directly from the producers to reduce intermediaries costs.Owning private transportation dust to reduce transportation costs.Pr acticing cross mooring technique where goods obtained from producers delivered directly to customers and by this the corporate could reduce the handling, operating and retentivity costs.Providing the latest IT and communication theory systems to ensure effectiveness of tracking sales and stocks in any event that it helps the corporate to reduce unproductive stocks.(Chandran, 2003)Predatory Pricing. Walmart goals are to ensure all goods remain lower pricing. According to ICMR (2004) mentioned that Walmart goods is 20 percent lower compared to its competitors. Besides that, the corporate manage to boost its price-conscious customers loyalty based its pricing strategyWeaknessesUnable to adapt to different countries. Walmart penetration into China and Germany is a misadventure as the corporate incapable to recognise the macro-environmental differences in those countries.Walmart China4Walmart is facing difficulty in market protectionism and its regionalism governmental across China. B esides that, the government is also eyeing and controlling foreign retailers movement- to ensure Chinese goods are organism sold in the market, and cause Walmart unable to monopolise its supply chain and business prospect leading to higher operating costs (Huffman, 2003).Walmart Germany56Walmart failed to comprehend with the local culture as the CEO (Rob Tiarks) ignore to gip German language and make English as official language in the management level (Knorr Arndt, 2003) Its action has offended their Germans employees which shows that the corporate are lacking of management skills and intercultural competence in foreign countries.High law suits against the company. According to Knorr Arndt (2003) remarks said that Walmart Germany has against the Germany laws and regulations by disclosing financial information, predatory pricing by selling below its cost price and failed to show shareholders its business activities. It is a serious matter where Walmart ignoring the key principle s of its globalisational strategies.OpportunitiesUnemployment could be reduced as Walmart expanding its market. It will help to reduce unemployment rate and provides over 22,000 jobs locally and internationally (Walmart, 2009). summation in consumer purchasing. Walmart as Everyday Low Price retailer could earn lower and middle income families for its cheaper goods price especially in developing countries in Asia, Latin America, Eastern Europe, and Africa.ThreatsWalmart facing bad publicity of their stagnant salary which never increases even though the corporate is earn profit. Based on UFCW statements saying that the salary paid unable to sustain a family, and anyway that the organisation challenge Walmart of their worker rights, equal opportunities and corporate responsibility (UFCW Web Site, 2009)The competitors threats facing by Walmart is Kmart, Target, Home Depot, Kroger, Aeon, etc.Competitive AdvantagesBased ICMR (2003)7, Walmart has the most outstanding supply chain managem ent with the use of the latest IT and communications system e.g. barcode and RFIT to track sales and stocks inventories. Secondly, Walmart enjoy the benefits of low transportation costs as the corporate own the transportation system to reduce costs. Thirdly, Walmart benefits from its bargain power in buying large quantity of goods to ensure the price remain competitiveness where the corporate can provide higher discounts to its customers. Lastly, the uses of the cross-docking system which is focus on the demand chain where goods only deliver upon customer request e.g. Walmart E-tailing (Chandran, 2003).Words Count 1486/1500