Evaluation Essay on Walmart: America's Largest Retail Giant Since 1950

Introduction

Walmart Stores is one of the largest retail company in the United States. Over the past couple of years, the company has been ranked highly on the Fortune 500 Index by Fortune Magazine. Founded in 1950 by Sam Walton, it was initially known as Walton's 5&10. The first-ever recorded Walmart opened in Arkansas in 1962, and its slogan then was ''the lowest prices anytime, anywhere''. In a few short years, the store expanded to 24 different retail chains in the US. It was not however until the 1970s that the contemporary store rose to the limelight. Sam, the founder, had the vision to set his store to the national and the international market, a fete he achieved before his demise in the 1990s (Brooker & Hayward, 2018).

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External Analysis

Opportunities

The company has potential to expand its operations in the global market. These opportunities can be used by the company to increase its profitability by increasing its area of operations. Some of these opportunities are as follows;

Sales in the international markets have been consistently higher than those in the home market in the US. The reason for this is because the international stores had less competition in foreign markets than they did at home. The company can, therefore, leverage on this by increasing its base of operations in foreign markets. Doing so would ensure that the company maintains growth in emerging markets in other parts of the world.

In its 2013 report, Walmart recorded a 40% increase in the sale of its branded products (Walmart, 2013). The company can leverage this opportunity by increasing the amount of merchandise that it brands to increase sales in foreign markets.

Furthermore, Walmart can use its online platform to capitalize on the untapped online shopping. Since the company already has a reliable online system, it will be easier to introduce more merchandise on the online platform and turn a profit while doing so (Spicer & Hyatt, 2017). Additionally, the company will reduce the size of its employees if they increase the online shopping segment; therefore, there will be less employee and labor-related issues that management has.

With the sheer size of its revenue, Walmart has the opportunity to venture into banking services. The large revenue collected will be easily channeled to banking and transactions with its customers will not only be efficient but also cheaper than the current rates (Thomson, 2010). Processing charges will decrease considerably, and customers will like to be charged less for their purchases. The reduced charges will go a long way in ensuring that the company slogan of 'save money, live better' is realized.

The company can also improve its image by participating in energy-saving practices such as using electricity efficiently, reducing the amount of fossil fuel used in procurement and transportation of merchandise and investing in renewable energy projects in third world countries (Hunt, Watts & Bryant, 2018). The company will thus have an easier penetration in foreign markets like in Africa where it has not been successful in setting up a store there.

Threats

Going green by embracing sustainability projects in production will mean that the company has to revise its low pricing strategy. Producing merchandise such as groceries via the sustainable method is expensive, and consequently, procurement cost will be higher meaning that the company will realize lower profit margins. Additionally, undertaking a green initiative project in the designing and construction of buildings such as warehouses is expensive which will increase the company's operations costs further (Doligalski, 2014).

Competition from rival retail chains like Costco and Amazon, who are trying to implement Walmart's low price strategy could mean fewer profit margins for the company (Brea-Solis, Casadesus-Masanell & Grifell-Tatje, 2014). As such, the company has to identify new ways to maintain a competitive advantage over other players in the market.

A major threat to going global is the international barriers which will impact on transaction and procurement of merchandise. Some countries require that multinational companies source products from the nationals that the institution is operating, which poses a major threat to the profit margins earned by the company (Grunig & Morschett, 2016).

Global economies are subject to changes in various aspects of a country. Walmart can end up paying more for the procurement of a product which it could have acquired locally because of currency differences between countries (Grunig & Morschett, 2016). For example, countries which have weak currencies could impose higher taxes on multinational companies like Walmart.

Conclusion

Maintaining a large company like Walmart Stores Inc. is not a walk in the park. Strategic management principles come in play to ensure profitability and continued success. Walmart has made tremendous strides since it spread its operations to foreign markets. It has enjoyed steady profits in many countries that it is operating in except a few like Germany where it closed down a few years ago. Good management has played a key part in ensuring this continued success. For the company to expand its market in foreign countries, an in-depth and thorough analysis of the country is necessary. As such, an external analysis offers insight on such matters.

References

Brea-Solis, H., Casadesus-Masanell, R., & Grifell-Tatje, E. (2014). Business Model Evaluation: Quantifying Walmart's Sources of Advantage. Strategic Entrepreneurship Journal, 9(1), 12-33. doi:10.1002/sej.1190

Doligalski, T. (2014). Conceptual Model of Internet-Based Customer Value Management. Internet-Based Customer Value Management, 81-140. doi:10.1007/978-3-319-09855-5_3

Grunig, R., & Morschett, D. (2016). Determining the Market Entry Modes. Developing International Strategies, 105-123. doi:10.1007/978-3-662-53123-5_10

Hunt, I., Watts, A., & Bryant, S. K. (2018). Walmart's international expansion: successes and miscalculations. Journal of Business Strategy, 39(2), 22-29. doi:10.1108/jbs-02-2017-0013

Spicer, A., & Hyatt, D. (2017). Walmart's Emergent Low-Cost Sustainable Product Strategy. California Management Review, 59(2), 116-141. doi:10.1177/0008125617695287

Thomson, G. S. (2010). High-Performance Organizations: The Wal-Mart Stores Inc. Case Study. SSRN Electronic Journal. doi:10.2139/ssrn.1624245

Walmart. (2013). Annual Report, Wal-Mart Stores Inc. Retrieved from http://www.annualreports.com/Company/wal-mart-stores-inc