Strategic Analysis of Walmarts Advantages in its Environment

Strategic abbreviation of Walmarts Advantages in its EnvironmentStrategic Analysis is to analyse Walmart macro-environmental and micro-environmental. The analysis methods use such as mash Analysis, Porters 5 Forces Analysis, SWOT Analysis and Competitive Advantage to analyse the somatic business environment.PESTLE AnalysisPESTLE is the structure to investigate the volatile business environments in which Walmart operates by discovering the forces that effecting the corporate operation.Political and Legislations EnvironmentAs Walmart operates in the global dental plate the performances of the corporate are influenced by the political and statutory law of the country invested. For instance, the employment statutory laws of a country are to checker investors provide varieties of jobs to its state at large from flexible, locally based disordered remunerative jobs to centrally located high pay jobs (Balchin, 1994). Besides that, the go global strategies has its impacts on the loc al 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 term of its predatory pricing policy (Basker, 2007). The author indictment that Walmart paying low salary to its employees to protect its competitiveness in its retails market but it leading to high turnover rate of its employees.Economical EnvironmentFor the past four years, the world facing global economic crisis which leading to high unemployment, increases of fuel prices, and losing consumer agency1. However, the crises assist Walmart to sustain its retail businesses even though the fuel price escalating above US$ 100/barrel because consumers becoming price conscious on seeking products value for money.The strategic uses by Walmart Canada 1. sharing the truckloads with the suppliers to ensure all fully loaded, 2. switching manual stocking shelves to automatic tilted shelves which will deliver near item to the front, and 3. l owering the lighting and increasing the roof insulation, (The Star, 2008), as to reduce its operating costs.Socio-Cultural EnvironmentAs Walmart go globalise, the corporate has to adapt the changes of social and ethnical differences because it can easy affect employees morale in workplace and consumer experiences. Based WPP (2008), Americanisation is not easy to establish in contrary countries because of the heterogeneity of cognition, language, cultural and unavoidably especially in European, Asia-Pacific and Africa (Sorrell, 2008).Environment and technological EnvironmentEnvironmental and technological plays a significant part in the Walmart products/services developments because it improves node satisfaction and perception in their shopping experience and observation. Besides that Walmart is one of the fastest retailer to adopt latest technology in their business operation. For example radio 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 reinvigoratedable energy uses which could produce up to 22.5 million kilowatts hours of cleared energy annually (Walmart Stores Web 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 debut and ensure a profit (Collins, 2010).Threat of substitute goods and servicesThreat of substitution in supermarket/grocery store is lower on foodstuffs but defend to high on non-foodstuffs. In food retailing industry the main concern is the convenience store and the greengrocers which easily substituted by the consumers. However, it does not position a direct threat to Walmart because their market size relatively smaller and compare to Walmart they are no match in term of the corporate cost leadership generic strategy and its predatory pricing of everyday low price which make difficult for a small retail chain to compete (Hayden et al., 2002). Nonetheless, Walmart is eer 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 minimise 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, etc.2. Besides that, in order Walmart to set up a new supermarket it required extensive sentence and resources before the proposal authorised by the government. In addition, government protectionism3on local goods, suppliers and retails industry might create unforeseeable threat of entry into new market.Intensity of competitive rival ryRivalry in supermarket/grocery stores is commonly high due to direct competition against local supermarket, multinational supermarket such as Tesco, Carrefour, Aeon, etc. These retailers will compete against pricing, products, promotions and expansion of its stores occasionally (Duff, 2010). During post global quoin 2010, Walmart profit boost 3.6 percent during second quarter from its cost cut of meat and strong global market growth in China, Brazil and Mexico (DInnocenzio, 2010). In additional, the reason 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).Bargaining military group of buyersThe buyer power is moderately high because goods especially the foodstuff in the retails can be easily substituted with other brand name since the switching cost is relatively lower. Besides that, most customers are price conscious w hich easily draw away by low prices since price can be easily compared and determined before purchase is done (Gregory, 2009).Bargaining power of suppliersThe suppliers power is quite low because suppliers are always 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 outride competitive Walmart carry out few techniques to lower its products costs as shown below.Obtaining goods directly from the producers to reduce intermediaries costs.Owning private transportation system to reduce transportation costs.Practicing fumble docking technique where goods obtained from producers delivered directly to customers and by this the corporate could re duce the handling, operating and storage costs.Providing the latest IT and communications systems to ensure effectiveness of tracking sales and stocks withal 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 failure 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. Besides that, the government is also eyeing and controlling foreign retailers movement- to ensure Chinese goods are being sold in the market, and cause Walmart unable to monopolise its supply chain and business prospect leading to high operating costs (Huffman, 2003).Walmart Germany56Walmart failed to comprehend with the local culture as the CEO (Rob Tiarks) ignore to learn 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. in high spirits 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 principles of its globalisational strategies.OpportunitiesUnemployment could be reduced as Walmart expanding its market. It will help to reduce unemployment r ate and provides over 22,000 jobs locally and internationally (Walmart, 2009).Increase in consumer purchasing. Walmart as Everyday Low Price retailer could attract 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 besides 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 management 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 bargaining 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