Essay Example on Walmart's Domestic Environment: Economic, Technological, Environmental & Legal Factors

Introduction

The domestic environment of Walmart is affected by various factors including economic, technological, environmental as well and legal. Walmart is greatly affected by changes in government regulations, which prompts the company to change its strategies to align with the policies and laws. During the past five years, the United States government has become stricter on labor and employment-related laws (Layne, 2014). Labor-related issues are not new to Walmart, it has been battling with employees in the United States, labor unions as early as 1970. The company focused on increasing profits while cutting labor costs, hence engaging in many state and local battles. Consequently, Walmart gets involved in various litigations concerning labor relations. Therefore, Walmart needs to change its domestic strategy in cost-saving. Alternatively, they can boost their strategy to reduce the number of workers or opt for automation instead of paying their workers high wages and reducing the number of working hours.

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Walmart Global Environment

Walmart operates in more than 27 countries globally, often, the company is widely affected by e-commerce policies and regulations in the international market. For instance, India enacted e-commerce policies that adversely affected the operation of global retailers including Amazon.com and Walmart (Kalra, 2019). The rules regulated companies from selling products through companies that have an equity interest, moreover, the policies barred Walmart from creating deals with sellers in their site (Polisetty et.al, 2019). In this regard, Walmart needs to re-strategize their relationships with other vendors to improve its corporation.

Walmart Hard and Soft Technologies

Hard technology entails the components put together to assist the operations of the company such as a computer. conversely, soft technologies refer to the process of creating strategies and decision making to ensure the company develops. The technology used in both domestic and global markets by Walmart is through the influence of purchasing power to get particular products or services from the cooperate giants including Pepsi. Therefore, such actions will have a detrimental impact on foreign markets. In 2017, Walmart started using VR, which is a soft technology to upgrade associates training. The technology improves confidence and retention of employees. Walmart needs to integrate its retail and technology management skills, especially in the foreign market to grow its operations. Although Walmart might have undergone various challenges and barriers in developing its IT systems and marketing its products/services in the international market (Li et.al, 2019). Walmart needs to innovate and upgrade its diverse portfolio.

Political-Legal Factors

Political factors have a significant impact on the economy and operation of domestic and international companies. The level of political stability influenced by the ruling and opposition party's perception of particular companies or a specific sector (Guo & Gallo, 2017). Walmart needs to abide by both domestic and international laws and regulations including employment and labor laws as well as health and safety. Walmart needs to settle cases such as the none witnessed in California concerning the payment of agreed $65 Million to employees. However, this resulted in long-lasting trials (Detomasi, 2018).

Socio-cultural Factors

Consequently, Walmart has failed to position itself in the global market despite its widely known brand. Walmart incurred detrimental reparations when they failed to market themselves to the German audience to fit in with the locals, which resulted in significant revenue losses (Ellickson, 2016). Global brands need to understand customer behavior and how of supplying particular products in the foreign market. Walmart's products are health sensitive, providing organic and healthy products to its clients. The global market is categorized by multifaceted social-cultural components.

Walmart Economic Environment

The primary factors influencing the economic operation of Walmart include taxation, interest, and exchange rates as well as the income level. Walmart aims at giving discounts in majority of their products. The company is significantly affected by volatility of an economy since production costs will increase. The investment strategy Walmart uses using the microeconomic theory mainly focuses the distribution of inputs based on consumer preferences and market equilibrium. A shift in the investment strategy also changes the allocation of inputs, hence affecting production and price of commodities.

Interaction between the Environments and Influence to Walmart

Walmart is a successful retail store across the world with its rapid expansion. Therefore, Walmart needs to update their legal and political regulations in various countries of operation to reduce the influence of the government and avoid shutting down. Walmart’s success depends on the evaluation of the business environment of the retail industry, which often change. Therefore, Walmart requires a strategic focus on the economic, legal and sociocultural concerns.

References

Guo, X. and Gallo, F.T., (2017). Multinational companies in China: Navigating the eight common management pitfalls. Emerald Group Publishing.

Detomasi, D., (2018). The multinational corporation as a political actor:‘Varieties of capitalism' revisited. Journal of Business Ethics, 128(3), pp.685-700. https://doi.org/10.1007/s10551-014-2099-6

Ellickson, P. B. (2016). The evolution of the supermarket industry: from A & P to Walmart. In Handbook on the Economics of Retailing and Distribution. Edward Elgar Publishing. https://doi.org/10.4337/9781783477388

Li, Y., Ye, F., Dai, J., Zhao, X., & Sheu, C. (2019). The adoption of green practices by Chinese firms. International Journal of Operations & Production Management. https://doi.org/10.1108/IJOPM-12-2017-0753

Polisetty, A., Manda, V. K., & Naveenan, R. V. (2019). Indian Online Retail Ecosystem–A study on Flipkart deal with Walmart. https://doi.org/10.1177/2277977919881404

Layne, N. (2014, December 24). New Minimum Wage Laws Will Force Walmart to Hike Wages At Over 1,000 Stores. Retrieved July 27, 2020, from https://www.businessinsider.com/r-exclusive-us-minimum-wage-hikes-to-impact-1400-plus-walmart-stores-2014-12

Kalra, A. (2019, July 12). Exclusive: Walmart told U.S. government India e-commerce rules regressive, warned of trade impact. Retrieved July 27, 2020, from https://www.reuters.com/article/us-walmart-india-exclusive-idUSKCN1U620R