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Walmart Inc.

Introduction to Walmart:
Wal-Mart was launched in 1962 by retailer Sam Walton, who then owned a
small franchised variety store. The company was based on a simple vision; pass on
the savings from buying in bulk on to the customer and earn profits through
volume. This was in sharp contrast to other retailers, who did not change their
retail prices when a discount was given by suppliers. By controlling payroll costs,
fighting unions and hiring as little people as possible, Wal-Mart kept growing
steadily. Technology also played a big role; in 1970, the company began using
computers to link stores with warehouses, achieving greater efficiency through
reducing inventories. After the death of Sam Walton, the perception of Wal-Mart
became increasingly negative. Basing their strategy on Mr. Walton’s; the new
directors became increasingly obsessed by lowering costs, but they forgot to give
the employees a feeling of having a stake in the company. Press reports increased
in negativity and in 2004, a report by McKinsey and Co. found that 8 percent of
Wal-Marts former customers did no longer shop there because of the bad reports.
In order to turn this around, Wal-Mart has to work out its identity crisis in order to
become a model for the industry (Frank, 2006).

What Does Wal-Mart Do?


Walmart Stores, Inc. (WalMart) is a global brick and mortar- as well as
online Retail Company. It operates in three segments; the WalMart US segment.
Secondly, the WalMart International segment, with stores in 26 countries, and
finally the Sam’s Club segment. In 2011; the US segment accounted for 60% of net
sales while WalMart International accounted for 28%. Wal-Mart has wholly owned
subsidiaries in China, Brazil, Canada, Japan, the United Kingdom, Mexico and
Argentina. The company operates in six merchandise units; grocery, entertainment,
health & wellness and apparel & home, across a wide variety of stores including
supercenters, discount stores and neighborhood centers or smaller venues (Reuters,
2012).
History of Walmart:
The history of Walmart, an American discount department store chain,
began in 1950 when businessman Sam Walton purchased a store from Luther E.
Harrison in Bentonville, Arkansas, and opened Walton's 5 And 10. The Walmart
chain proper was founded in 1962 with a single store in Rogers, expanding outside
Arkansas by 1968 and throughout the rest of the Southern United States by the
1980's, ultimately operating a store in every state of the United States, plus its first
stores in Canada, by 1995. The expansion was largely fueled by new store
construction, although the chains Mohr-Value and Kuhn's Big K were also
acquired. The company introduced its warehouse club chain Sam's Club in 1983
and its first Supercenter stores in 1988. By the second decade of the 21st century,
the chain had grown to over 11,000 stores in 28 countries.

Walmart’s Mission Statement

Walmart Inc.’s corporate mission is “to save people money so they can live
better.” This statement reflects the ideals of the company’s founder, Sam Walton.
Strategic decisions in the business are a direct manifestation of this mission
statement, which is synonymous to the company’s slogan, “Save money. Live
better.” Based on this statement, it is clear that Walmart’s business strategies
involve using price as a selling point to attract target consumers. The significance
of such a selling point is exhibited in many of the company’s strategies. For
example, Walmart Inc.’s marketing mix or 4P involves low prices as a strategy.
Other areas of the company are determined by the need to minimize selling prices
as a way to achieve competitiveness.

Walmart’s Vision Statement

Walmart Inc.’s corporate vision is to “Be THE destination for customers to


save money, no matter how they want to shop.” This vision was officially
articulated in the company’s 2017 investment community meeting. The company’s
previous vision statement was “To be the best retailer in the hearts and minds of
consumers and employees.” The change in the corporate vision reflects strategic
changes that Walmart implements in response to changes in the competitive
landscape and the overall condition of the retail industry.
Walmart SWOT Analysis & Recommendations:
This SWOT analysis of Walmart Inc. (formerly Wal-Mart Stores, Inc.)
shows that the company’s leading position in the international retail industry is
based on the utilization of organizational strengths and corresponding competitive
advantages. These business advantages are used in countering the impacts of
competing retailers and digital content distribution firms, such as Amazon,
Target, Apple, and Google.

In this case of Walmart, the SWOT analysis gives insights on the internal
and external forces significant in the company’s strategy development in the retail
industry. While these factors vary over time, the company’s growth depends on its
ability to capitalize on its retail operational effectiveness and strengths. Also, in
spite of the company’s weaknesses, its strengths are far more significant
considerations. Walmart can use these strengths to exploit its opportunities in the
retail market. The firm can also use its strengths to counteract the threats to its
retail business, especially its e-commerce operations. Strategic implementations
based on the SWOT factors are important in ensuring Walmart’s competitiveness
and continued leadership as the biggest retailer in the world.

This SWOT analysis of Walmart shows that the company can have higher
long-term success potential through aggressive global expansion, especially in
retail markets in developing countries. The company’s internal strategic factors
(strengths and weaknesses) represent capabilities for this kind of expansion.
However, the firm’s external strategic factors (opportunities and threats) require
the creation of more value through the retail service value chain, to overcome the
hindering force of competitors, especially strong local and regional incumbents.
These considerations are in line with the factors identified in the PESTEL/PESTLE
analysis of Walmart Inc.

Walmart’s Strengths (Internal Forces)

In this part of the SWOT analysis, Walmart’s strengths are all related to the
size of its business. These competitive strengths enable the company to withstand
threats despite its weaknesses as a low-cost retailer. For exploiting global
expansion opportunities, Walmart’s strengths for further global growth are:

1. Global organizational size


2. Global supply chain
3. High efficiency of supply chain
Walmart’s global organizational size gives the business deep pockets to fund
growth and expansion. The global supply chain also provides business resilience
from market-specific risks, such as disruptions in local supply chains. In addition,
Walmart’s supply chain has high efficiency because of advanced technologies for
monitoring and controlling the movement of products from suppliers to its stores.
In this SWOT analysis, such organizational and business strengths provide
competitive advantage, especially against smaller retailers.

Walmart’s Weaknesses (Internal Forces)

Walmart’s weaknesses impose challenges on the firm’s ability to withstand


the threats also identified in this SWOT analysis. These weaknesses are directly
related to the company’s generic strategy and its implications in business
development, capabilities, resources, and profit margins. Walmart uses the cost
leadership generic strategy, which leads to the following weaknesses:

1. Thin profit margins


2. Easily copied business model
3. Competitive disadvantage against high-end specialty sellers

Thin profit margins are a typical effect of using the cost leadership strategy.
Because Walmart minimizes selling prices, it also needs to minimize profit
margins and rely more on sales volume. The cost leadership strategy also makes
Walmart’s business model easy to copy. The firm does not have significant
competitive differentiators, except for its business size and prices. Furthermore,
high-end specialty retailers have the upper hand in attracting quality-seeking
buyers who have low sensitivity to price. Thus, the weaknesses presented in this
SWOT analysis of Walmart reflect business vulnerability to innovative competitors
and disruptions in the industry environment, especially in the presence of major e-
commerce firms like Amazon.

Opportunities for Walmart (External Forces)

Walmart’s opportunities are mainly about expansion and improving business


practices. These opportunities are linked to the global economic situation. Also, the
human resources situation in the organization presents issues that are actually
opportunities for the firm to improve.
In this portion of the SWOT analysis, Walmart’s opportunities are:

1. Expansion in developing countries


2. Improvement in human resource practices to develop competitiveness in the labor
market
3. Improvement in quality standards

Walmart’s opportunity to expand in developing countries is based on their high-


growth economic condition. On the other hand, the opportunities in HR practices
directly relate to the criticisms on the company’s employment practices. Improving
these practices can attract higher quality workers relative to other retailers.
Walmart’s opportunity to improve quality standards addresses consumers’
concerns on the health effects of using low-cost and sometimes low-quality
products. This part of the SWOT analysis presents some ways for addressing the
company’s weaknesses and the threats to its retail business.

Threats Facing Walmart (External Forces)

The threats to Walmart’s business are linked to the retail market condition
and the changes in consumer perceptions about the products they buy. These
factors should compel the company to make some competitive strategic changes.
In the context of this SWOT analysis, the threats to Walmart are:

1. Healthy lifestyle trend


2. Aggressive competition
3. Online retailers of various sizes

The healthy lifestyle trend is a threat and an opportunity. It threatens


Walmart’s business because many of the company’s goods are perceived as not
healthful, not organic or not natural. It is an opportunity for the company to
improve its quality standards. However, this factor is more of a threat because the
retail giant currently does not prioritize healthful products in its stores. Aggressive
competition is another threat because other large retailers could use aggressive
marketing strategies to capture Walmart’s customers. Also, small-scale and large
online sellers are a threat against the company’s retail business. Through the
Internet, small sellers or individuals are able to compete and bypass the company’s
presence by using their own websites to sell products to online consumers.
Similarly, in this part of the SWOT analysis of Walmart Inc., large online retailers
have the ability to attract and satisfy consumers, especially those who prefer the
convenience of online transactions.
Recommendations based on SWOT Analysis of Walmart Inc.

This SWOT analysis shows that Walmart must prioritize using its strengths
to exploit opportunities in the global retail market. The company’s weaknesses and
threats should be secondary priorities. Walmart can improve its HR management
standards and product quality standards to improve firm performance. Also, the
company must continue expanding its business to exploit economic opportunities
in developing markets. Walmart’s strengths based on its global organizational size,
global supply chain, and high efficiency of the supply chain can support aggressive
global expansion in foreign markets. Still, the company must implement strategic
changes based on the weaknesses and threats presented in this SWOT analysis, to
prepare the business for the long-term developments of a globalized and
increasingly online retail market.

President and chief executive officer of Walmart Inc:

Doug McMillon
Doug McMillon is president and chief executive officer of Walmart Inc. As
CEO, Doug leads a strong management team that is working to deliver Walmart’s
purpose of saving people money and helping them live a better life. Under his
leadership, Walmart is bringing together its stores, digital commerce capabilities
and supply chain in new ways to make every day easier for customers. Each week,
over 275 million customers and members visit our more than 11,300 stores under
58 banners in 27 countries and eCommerce websites and apps.

From February 2009 to February 2014, Doug served as president and CEO
of Walmart International, a fast-growing segment of Walmart’s overall operations,
with over 6,100 stores and more than 700,000 associates in 26 countries outside the
United States at that time. From 2005 to 2009, he served as president and CEO of
Sam’s Club, an operating segment of Walmart, with sales of more than $46 billion
annually during his tenure.

Doug is a longtime champion of Walmart’s customers, its associates and the


company’s culture. In 1984, he started out as an hourly summer associate in a
Walmart distribution center. In 1990, while pursuing his master’s degree in
business administration, he rejoined the company as an assistant manager in a
Tulsa, Okla., Walmart store before moving to merchandising. He went on to serve
in successful senior leadership roles in all of Walmart’s business segments. He
remains a merchant at heart and understands where customers around the world are
heading next.

Doug has served on the board of directors for Walmart since 2013 and
currently is the chair of the Executive committee. In addition, he serves on the
board of directors of the Consumer Goods Forum, the U.S.-China Business
Council and Crystal Bridges Museum of American Art. He also serves on the
executive committee of the Business Roundtable and the advisory board of the
Tsinghua University School of Economics and Management in Beijing, China.

Originally from Jonesboro, Arkansas, Doug graduated from the University


of Arkansas with a bachelor of science in business administration. He earned his
MBA in finance from the University of Tulsa.

Doug McMillon’s leadership capabilities:


Doug Mcmillon is the current president and CEO of Wal-Mart stores. He
became the company’s fifth ever CEO in 2014. On November 25, 2013, Walmart
announced that Mcmillon would join the company’s board of directors and replace
Mike Duke as CEO on February 1, 2014.

Before Doug Mcmillon became CEO, he worked his way up through the
company. He started out as an hourly summer associate at a distribution center in
1984. He pursued senior leadership roles in all of Walmart’s business segments and
therefore understands all aspects of the company including what customers and
employees want.
As CEO, Doug leads a strong management team that works hard to promote
Walmart’s slogan and the core of its corporate mission: “Save money. Live better.”
Managing Walmart, the No. 1 company on the fortune 500 list for the third straight
year and for the 11th time overall, is not like managing a regular company. With
$487.7 billion in revenue in 2014, 11,000 stores in 27 countries and 2.2 million
employees, Doug has an enormous responsibility as well as many challenges. And
when he took the job in 2014, he inherited some big problems. These problems
included several years of sluggish sales caused by a challenging global economy,
changes in how people shop, and pay and treatment of its employees.

In the first 16 months on the job, Mcmillon put new executives into key roles,
accelerated investments in e-commerce, and made news by raising the minimum
wage for thousands of workers. McMillon believes that caring for his employees is
critical to the success of Walmart. Therefore, on Feb 19, 2015, McMillon
announced a pay increase for Walmart employees where the minimum hourly rate
is now $9/hour starting April. Doug believes that boosting the morale of the
employees brings better business and that today’s cashier is tomorrows store
manager.

Mcmillon’s leadership style and goals have not changed much from 50 years
ago when Sam Walton opened the first Walmart. Although he has had to keep up
with the social and technological trends shaping our world in order to successfully
continue leading his company. He proves to have a global sensibility and constantly
finds innovative ways to develop new markets globally and domestically.

McMillon definitely has a big job to do, as he figures out ways to keep Walmart
strong at home against competition from e-retailers like Amazon and traditional
retailers like Target. He'll also need to push international growth and move into
markets like India and China where its business model may not even work. And he
has to figure out an increasingly digital future for a company whose success is built
on a ruthlessly efficient supply chain, razor-thin profit margins, and the location of
its stores.
REFERENCES:

1. http://www.businessinsider.com/doug-mcmillon-wal-mart-ceo-bio-2013-11
2. https://en.wikipedia.org/wiki/Doug_McMillon
3. http://fortune.com/2015/06/04/walmart-ceo-doug-mcmillon/
4. http://corporate.walmart.com/our-story/leadership/executive-management/doug-
mcmillon/
5.http://upstart.bizjournals.com/entrepreneurs/hot-shots/2013/11/25/meet-new-and-
charming-walmart-ceo.html?page=all
6. Bell, D. E., Lal, R., & Salmon, W. J. (n.d.). Globalization of Retailing. Harvard
Business School.
7. Brea-Solis, H., Casadesus-Masanell, R., & Grifell-Tatje, E. (2012). Business
Model Evaluation: Quantifying Walmart’s Sources of Advantage. Harvard Business
School.

8.Helms, M. M., & Nixon, J. (2010). Exploring SWOT analysis–where are we


now? A review of academic research from the last decade. Journal of Strategy and
Management, 3(3), 215-251.

9.Hicks, M. J., Keil, S. R., & Spector, L. C. (2012). Mom-and-Pops or Big Box
Stores: Some Evidence of WalMart Impact on Retail Trade. Economic
Development Quarterly, 26(4), 311-320.