Walmart SWOT Analysis

In the Fortune Global 500 list of 2019 is Walmart, ranked first with a total revenue worth $514 billion. Briefly, this firm is an American-based multinational corporation operating retail businesses. It is headquartered in the USA, Arkansas and it runs a series of hypermarkets, groceries, discount department-based stores. The SWOT analysis, an acronym for strength, weakness, opportunity, and threat uncover the firm’s competitive merits, as well as organizational strengths. These merits are typically useful in mitigating competition detriments from other retailers, as well as other digital distribution companies, such as Amazon, and Apple, among others. In the light of the 2019 Fortune Global list, this paper will critically conduct a SWOT analysis of this enterprise that gives it an edge to be ranked first. Therefore, this process will provide insights on both external and internal forces that promote the firm’s strategy development while operating in the retail industry.

Starting with strengths, which are internal forces, Walmart exhibits three merits, including global organizational size, high supply chain efficiency, and worldwide supply chain. These three strengths enable the company to overcome dangers despite its shortcoming of being a low-cost retail firm. Because of the worldwide size, Walmart is able to finance its expansion anywhere (Ofori-Nyarko, Wang, & Annoh, 2020). This way, people can easily access goods and services from any store, noting there are several branches spread all over the country, and as such, it can still make significant profits even if the retail price is relatively lower compared to other small retailers operating in the same niche. Risks, such as local disruption in supply is adequately mitigated by having a global based supply chain, hence offering business resilience. Moreover, advanced technologies are instituted in the supply process so as to help in monitoring the goods transit from suppliers to specific stores. These are adequate merits to help the firm avert the demerits of stiff competition from other small retailers.

It is worth noting Walmart utilizes the cost leadership generic approach, which is directly related to weaknesses, such as a thin profit margin, a business model that is easy to copy, and stiff competition against high-end sellers. These weaknesses significantly impede the company’s capacity to overcome its threats. Specifically, a thin profit margin is a common impact of utilizing the cost leadership model (Bratton & Boak, 2020). In this light, Walmart relies on sales quantity while minimizing the selling prices of the items, leading to minimal gain. This gap, however, is bridged by relying on large company size, which enables to make large profits in the long run. In some way, the firm’s business model is easy to emulate and also it has no definitive competitive differentiators. Of noteworthy is that high-end retailers, especially those specializing in a given product, have high chances of attracting buyers seeking quality items, as most of them may be insensitive to price. These vulnerabilities can be exploited by innovative competitors, hence pausing significant disruptions to Walmart.

Opportunities are external forces, and in the case of Walmart, three major ones have been identified, including rapid expansion in developing nations, improved human resources, and enhanced quality standards. These merits are mainly related to business expansion and improvement practices, most of which are linked to the global situation. Walmart’s rapid expansion can be successful in other parts of the world, thanks to their high financial growth. The firm has significant monetary value, hence making it capable of setting up stores in developing countries. Walmart has been criticized on employment practices; therefore, it can respond positively by improving its human resource management, which can help attract high skilled workers (Izadpanah, 2020). Another opportunity worth improvement is addressing consumers’ concerns regarding health effects. This dimension can be mitigated by considering products’ quality and cost. Generally, this SWOT analysis section offers approaches that Walmart can use to mitigate its weaknesses, as well as threats pertinent to its operations.

Threats, which are the external forces, are connected to retail market conditions, as well as clients’ viewpoint about the items they purchase; and they include varying online retailers in terms of size, aggressive completion, and healthy lifestyle trends. Notably, healthy lifestyle trends can be classified as an opportunity and threat. The trending aspect, denoting Walmart’s products as not healthy for human consumption because they are neither organic and natural is not desirable for the business. Apart from health matters, close competitors can compete aggressively by luring Walmart’s loyal clients to their stores. Moreover, online retailers threaten Walmart’s prowess since they can use their own website to sell items to customers who are based online. These aspects should therefore convince the firm to institute significant competitive alterations.

In conclusion, Walmart’s SWOT analysis reveals potential internal and external forces worth considering in promoting the company’s strategy development in the retail market. Most of the unraveled aspects can help the firm to operate successfully and longer by using aggressive worldwide expansion, specifically in the developing nations. Most internal forces addressed the expansion capability while external ones hinted at the concept of value creation, specifically through the retail service value chain in order to counter the deterring threats from major competitors, including regional and local retailers. On the whole, this SWOT analysis demonstrates that Walmart should fully prioritize its strengths in order to exploit available opportunities in the retail industry while treating its weakness and threats as second priorities.

References

Bratton, J., & Boak, G. (2020). Strategic management, innovation, and leadership. In Organizational Leadership, 35.

Izadpanah, N. (2020). A study of human values at Wal-Mart company. Asian Journal of Multidimensional Research (AJMR), 9(7), 61-70. http://dx.doi.org/10.5958/2278-4853.2020.00234.7.

Ofori-Nyarko, N. S., Wang, F., & Annoh, W. O. (2020). SWOT analysis: Wal-mart stores inc. International Journal of Recent Research in Commerce Economics and Management (IJRRCEM), 7(3), 32-35. https://www.paperpublications.org/upload/book/paperpdf-1595065803.pdf.