Giriraj R

Mounika M
Navaparvathi G
Silpa T
 Walmart-Five Force Analysis
In figuring out the diploma of aggressive competition inside the retail enterprise, a simple attention is
market saturation. The retail services market is fantastically saturated. As a result, Walmart Inc. Faces
hard competition, which warrants strategies and methods that build on the corporation’s strengths.
The SWOT evaluation of Walmart Inc. Enumerates some of strengths that the enterprise can make use
of to keep its enterprise position notwithstanding aggressive competitors. Based on the external
factors enumerated in this Porter’s Five Forces analysis, Walmart reports the subsequent intensities of
the 5 forces within the retail industry environment:

• Competitive rivalry or competition – Strong

• Bargaining power of buyers – Weak
• Bargaining power of suppliers – Weak
• Threat of substitutes or substitution – Weak
• Threat of new entrants – Strong

Wal-Mart is placed to maximize its stakeholder price whilst as compared to Amazon, which we deem a
vital factor whilst comparing Walmart's long-time period profitability.
 Failure and Success of Walmart
• Walmart failed in 4 major countries

• India- Walmart Require 30% of merchandise to be sourced from small and medium Indian
organizations, which the organization known as a “Critical stumbling block," Berfield reports
• Russia-Walmart spent 6 years to acquire local chain, but it failed ultimately
• Germany: Many Germans didn’t like their Walmart employees handling their groceries at check
out point and many Europeans prefer to shop at local shops.
• South Korea-Walmart sells many electronics items which south Koreans people prefer spending
most their amount on foods and drinks

• Walmart is successful in many countries like Mexico Canada and china. It

has adopted different strategies to achieve success in different countries
 Evaluate characteristics of Walmart and its
resources to identify whether it has competitive
advantage? How transferable are Walmart’s
advantages to new markets?
For evaluating the characteristics of Walmart and its resources to identify whether it has
competitive advantage, we are going to used VRIO framework

The VRIO framework is a strategic analysis tool designed to help organizations uncover and protect
the resources and capabilities that give them a long-term competitive advantages.
 Based on your analysis, how should McMillon how
should Walmart move forward in competing
against Amazon and expanding to new markets?
Briefly write your recommendations
• E-commerce and online shopping continues to rise. Thus, Walmart should continue expanding its
strategic resources and capabilities relevant to online retail.
• Delivery network is not yet comprehensive in reaching all target customers in markets where the
company already operates. To improve Walmart’s value chain, it is essential to continue
expanding the delivery network.
• Also, the corporation can integrate its information technology capabilities into this network to
make it difficult to imitate.
 PESTEL Analysis of Walmart
Political:
• Walmart have its operations mostly in regions
which are more politically stable
Economic
• Continuous growth in the developing
economies can bring in opportunity for
Walmart as their focus is on low prices for all
income group
• Expansion in developing counties will create
employment opportunities to many
Social
• Increase in migration and cultural diversities
will be an opportunity for Walmart to provide
wide range of products to different population
who has different culture
Environmental
• Can sell products in eco-friendly bags
• Take initiative to reduce plastics or other
harmful products for packaging
Technological
• Customers shift to online shopping has made
Walmart acquisition of Jet.com gain customer
base
• Walmart acquisition of Flipkart a ecommerce
website in India has let Walmart to expand its
market in India
Legal
• Tax reforms on the countries where Walmart
operates is a threat
• Increase wages to employees as per
government norms
 Comparison of cost structure and value chain
of Amazon & Walmart
Walmart Value chain
INBOUND LOGISTICS
• Walmart eliminates middlemen in its supply
chain purchases directly from vendors
• Walmart has high bargaining power as they
buy in bulk
• Once the product reaches the distribution
centre then it is stored in trucks and delivered
to the stores within 48 hours - “Cross
Docking”
OUTBOUND LOGISTICS
• Walmart to increase the efficiency in supply
for its ecommerce website orders have
fulfilment centres, to optimize its outbound
loads it has implemented ORTEC
Amazon Value chain
INBOUND LOGISTICS
• Fulfilment by Amazon(FBA) is an inbound
logistics for the company owned retail
business
• When a customer order products from FBA
and amazon owned inventory system both are
shipped in one package to improve efficiency
OUTBOUND LOGISTICS
• Fulfilment centres _ amazon has around 109
fulfilment centres worldwide and uses robotic
technology to manage the shipping, receipt
etc
• Have physical store Whole Foods which was
acquired in 2016
Cost Structure Analysis
• Net income of Amazon has increased around 40% in 2018 alone while for Walmart it is decrease
of around 30% when compared to 2017
• Cost of goods sold is reduced in Amazon by 2% in 2018 while for Walmart it is increased by 3%
• There is a growth in EPS of Amazon around 40% in 2018 alone while a decrease in Walmart
around 30%
Walmart traditional and future competition
• Walmart traditionally focused in rural areas were there where few competitors in those areas and
sold products at low prices
• Followed “Every Day Low Price”
• Consumers shift to online shopping has led to low sales in many retail outlets, Walmart should
start investing in ecommerce sites, make it user friendly.
• Consumers are ready to wait a for the product ordered when they get it in low cost. Walmart can
use this to increase its sales online
• Like Amazon pay Walmart can have their own payment model and provide higher discounts
• Walmart has entered the ecommerce market late, so they must first acquire the market share
rather than focusing on profits in initial stage