The company operates more than 10,000 retail stores in 27 countries (“Where in the World,” 2012, Para. 2). The largest grocer in the United States with more than $120 billion in food sales per year is Wall-Mart (Bustiest & Commodes, 2011, Para. 3). Wall-Mart’s ability to negotiate lower prices from other companies and pass that savings on to customers is also an advantage. The company’s customer base is so large compared to other retailers that it can negotiate reduced prices with suppliers on some products that make it virtually impossible for other businesses to compete (“How Did Wall-Mart,” 2006).
Wall-Mart has a very organized inventory, warehouse, and distribution structure that not only helps to maximize its ability to bring products to customers but also reduces costs for the company and its patrons. A computer inventory system is connected to Wall-Mart headquarters and keeps track of inventory as it is scanned at the check-out line and automatically sends order requests to the warehouse (“How Did Wall-Mart,” 2006). The system helps to ensure that products are available when needed and automatically adjusts orders for fast selling items to make sure the products are in the stores.
To maximize efficiency of distribution from he warehouses to the stores, distribution centers are planned and built sometimes five years ahead of projected new outlet locations so that each center can service the maximum number of stores within a minimal distance (“How Did Wall-Mart,” 2006). Wall-Mart’s distribution and technologically advanced inventory system allows the company to operate at a very high and stable level of efficiency.
Weaknesses
There are no perfect businesses.
Wall-Mart, like other businesses, has weaknesses.
One weakness can be the variety of products that Wall-Mart sells. The diversity of the company to specialize in any. Consumers may choose to shop at other businesses that can provide specialty products that big-box retailers like Wall-Mart do not carry (Brooks, 2011, expression 3). Wall-Mart’s size does not allow the more personalized customer experience that other companies can provide nor does it allow for a strong nostalgic connection with the community (Brooks, 2011 , expression 7).
Although the size of the company gives it an abundance of power and persuasion, Wall-Mart’s size does not allow for the finesse to win over certain demographics looking for a more specialized product or customer service. Wall-Mart’s ongoing resale to bring its customers the lowest prices causes problems and can be argued is a weakness. The company can negotiate the discounted prices for its customers, but trying to establish everyday low prices can limit the quality of items its stores carry.
Consumers are not always looking for the lowest price or average quality, and stores that offer high quality products have an advantage over Wall-Mart and their low cost philosophy (Brooks, 2011, expression 1). Companies like Nikkei offer discount retail versions of their products like Starter to Wall-Mart customers instead of their high-end merchandise (Climatic, 2005). If customers want the high-end product they have to shop elsewhere. The low price philosophy that Wall-Mart adheres to limits their ability to provide customers with some of the products they want.
Opportunities
There are many aspects a company can influence or control on its own, but there are outside events that can affect the business as well. The United States economy is one outside factor that companies like Wall-Mart cannot control. The recession has led to consumers needing to spend less as individuals have lost their Jobs or homes. Marshal Cohen, who is chief industry analyst at The NYPD Group Inc. Ho specializes in consumer behavior, says “Consumers still want name-brand products, but they want them for less” (Brisker, 2012, Para 9).
A company like Wall-Mart with its business plan of offering its customers the lowest prices benefits from this. Although the economy is bad for families, it is an opportunity for Wall-Mart to increase their customer base as more families hurting financially look to save money. Government policy changes can have an effect on Wall-Mart’s success. Analysts say that “foreign direct investment (FED) in Indian’s largely unrealized [sic] retail sector will help curb inflationary pressure by easing supply side constraints and revive economic growth” (“FED,” 2012, Para. ). Prime Minister Ammonia Sings of India helped make the decision to allow up to 51% FED in multi-brand retail (“FED,” 2012, Para. 4). This decision makes way for Wall-Mart to invest in front-end retail stores in the country. Governmental policy changes like Indian’s can open new opportunities for a business such as Wall-Mart that it did not have previously. Threats Just as outside influences can provide positive opportunities for a company, they can also pose threats to the company’s ability to do business.
Politicians and union roofs like those in New York City fear that Wall-Mart will have a devastating effect on local businesses so have worked tirelessly to try to block Wall-Mart from opening stores in their areas (Basin, 2012, Para. 3). Patrick Purcell, a spokesman for the United Food and Commercial Workers Union Local 1 500, claimed that blocking Wall- Mart from opening stores in New York City is a win for the community (Basin, 2012, consumer advocacy groups that prevent stores from being opened in communities.
Wall-Mart can control the way it operates itself to attract business, but it cannot control outside companies from drawing away its customers. Online shopping has become very popular and companies like Amazon do online retail extremely well. Even with its discounted prices, primarily brick-and-mortar stores like Wall-Mart cannot compete with some of the prices of online outlets like Amazon with its super low overhead and ability to sell merchandise without sales tax in some states (“Walter vs.. Amazon,” 2012, Para. 2).
Companies like Amazon that operate strictly online are better at watching for personal shopping trends and offer customers enrollment in discounted shipping programs that Wall-Mart cannot compete with (“Walter vs.. Amazon,” 2012, Para. ). Amazon became the thirteenth largest retailer in 2011, and although Wall-Mart can make adjustments to its own practices, it has no control of outside companies growing and competing with them in the new online markets (“Walter vs.. Amazon,” 2012, Para. 2).
Stakeholders
Employees are stakeholders who Wall-Mart invests in.
Sam Walton, founder of Wall- Mart, said, “Our people make the difference” (“Working at Walter,” 2012, Para. 2). Wall-Mart employs over 2. 2 million people and offers a benefit package that includes options like up-front cash to pay for eligible medical expenses as well as matching up o six percent of contributions to their kick program (“Opportunity,” 2012). The business also does its best to groom its employees to take on larger responsibilities within the company. Nearly 75% of Wall-Mart management team members began at Wall-Mart as hourly associates (“Opportunity,” 2012).
Wall-Mart’s employee pool is diverse and includes associates from countries all over the world, and the company promotes employees without regard to gender. There were 180,000 hourly associates in 2011 that received promotions and 53% of those associates were women (“Opportunity,” 2012). Developing a diverse and invested workforce assists in the success of the company. The community is another stakeholder in the company. Wall-Mart started the “Fighting Hunger Together” program in 2010, which is a $2 billion cash and in-kind commitment that will run until 2015 to help fight hunger in the communities the business serves (“Hunger Relief,” 2012).
The program to date has provided communities with more than $122 million in grants and 594 million pounds of food (“Hunger Relief,” 2012). Wall-Mart has nine disaster distribution centers across the country stocked and ready to provide rapid response to communities in the event of a natural disaster (“Walter Logistics,” 2012). In August 2012, Wall-Mart announced a program that provided 90,000 teachers with $4. 5 million in school supplies to bring back to their classrooms at struggling schools (“Walter Classroom Supplies,” 2012, Para. 1).
In addition to some of its charitable contributions, Wall-Mart brings Jobs to communities in a time when Jobs are sorely needed. Approximately 300 Jobs with benefits are created every time a Wall-Mart Superstructure opens its doors (“Our Story,” 2012). The company also encourages its managers to buy local produce in proximity to its distribution centers even if the local reduce costs more than what can be purchased much farther away (Bustiest & Commodes, 2011). Purchasing from local farmers may cost Wall-Mart more money but doing so helps put money back into the local economy.
Wall-Mart is very involved in Customers’ needs are met by Wall-Mart by providing the products they want at affordable prices. Sam Wallow’s belief in saving people money so they can live better still carries on today (“Sam Walton,” 2012, Para. 8). Not only are the prices low but Wall-Mart also attempts to make the shopping experience a positive one by hiring Reuters to welcome customers to the store and using a yellow smiley face to help bring attention to discounted items. Associates can use the electronic inventory system to help customers locate the items they need.
If that store is out of stock on the item, the associate can direct the customer to a nearby store that has it or can tell the customer when the item is expected to arrive on the delivery truck (“How Did Wall- Mart,” 2006). The customer is important to the business, and Wall-Mart has devised many ways to meet customers’ needs. Conclusion After performing a SWOT analysis on Wall-Mart, an argument can be made that the many would be worthy to invest in. The size and persuasion the company possesses are traits that will not soon go away.
The internal weaknesses of the company like its inability to offer high-end and luxury items or its inability to specialize are outweighed by the stranglehold the company has on everything else. External forces are always at work that can either help bolster Wall-Mart’s ability to do business or at other times slow it down, but the number of stores continues to increase. The company enjoys profits in the billions and has moved further into the global market. By keeping its stakeholders in mind, Wall-Mart should continue to trivet. References Basin, K. (2012). Walter has Just blocked again from getting into NYC.
