External Environment Factors Affecting Walmart: A Comprehensive Report

This report provides a detailed analysis of Walmart's business environment, focusing on the external factors impacting its operations. It begins with an executive summary and table of contents, followed by an introduction to Walmart and its global presence. The report identifies and analyzes various macro-environmental factors, including political, economic, social, technological, environmental, and legal factors, and their influence on Walmart's activities. It further examines the risks and challenges faced by Walmart, such as changes in government policies, technological advancements, increasing competition, and shifts in consumer behavior. The report then proposes strategies to counter these challenges and potential risks, including implementing competitive strategies, focusing on fast-growing economies, offering health-conscious products, and enhancing online presence. The conclusion summarizes the findings, emphasizing Walmart's ability to overcome challenges and succeed through strategic improvements. The report references various academic sources to support its analysis.

Running head: BUSINESS ENVIRONMENT
BUSINESS ENVIRONMENT
Student’s Name
University Name
Author note

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Executive summary
The purpose of this report is to identify and analyze the potential external environment
factors that is affecting the activities and functioning of the chosen organization that is Walmart.
The report identifies the macro environment factors that has affected Walmart and has analyzed
the macro environmental factors affecting the business organization. It determines the impact of
the external environment factors that have affected the business. It determines the challenges and
risks faced by the business organization. It proposes solutions to the challenges which counter
the challenges and potential risks of the company faced by the external factors. Lastly, it
concludes with focus on the ability of the company to overcome the risks and challenges and
summarizes the report.

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Table of Contents
Introduction......................................................................................................................................3
Identification macro environmental factors.....................................................................................3
Analysis of macro environmental factors........................................................................................4
Risk and challenges faced by Walmart............................................................................................5
Strategies to counter the challenges and potential risk....................................................................6
Conclusion.......................................................................................................................................7
References:......................................................................................................................................9

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Introduction
Walmart is a one of the famous company in Australia. The company was incorporated in
the year 1969. It is engaged into operating the retail stores and wholesaler units all across the
world. The company provides wide range of products and service at a competitive price. The
company operates in segments including the Walmart international, mass merchant and Sam’s
club (Australia - Walmart.com. 2019). It is considered to be one of the major retail stores and the
world’s largest corporations. The major competitors of the company include Sears, Kmart. The
company is one of the largest grocery stores in Australia. The report identifies the macro
environment factors affecting business and analyzes their impact on the business organization. it
identifies the challenges faced by the business organization and provides solutions to the
challenges. Lastly, it concludes the effects of the macro factors affecting the business
organization.
Identification macro environmental factors
The external factors affect the operating challenges of the stores of Walmart. The
company faces various challenges from the external environment and the competitive forces of
the economy. Therefore it is important for the organization to identify the factors affecting the
business and analyze them. The external factors affecting the business include:
The political factors are significant factors that impact the long term functions and
profitability of the organization. The changing trade regulations, and the tariffs related to the
service and products offered by the company affects the smooth functioning of the company. the

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industry safety regulations, mandatory employee benefits, pricing regulations of the economy
can affect the organization. The economic factors such as economic growth, government
intervention, education and literacy levels of the customers influence the operations of the
business organization. The quality of its infrastructure and discount given to its customers are
factors that influence the organizations activities (Barrientos & Dolan, 2016). The cultural and
social factors of the general customers and their pattern of buying products have significant
impact on the organization. The beliefs and attitudes of the population is important for the
business organization to analyze, by analyzing these factors the company design the marketing
message for offering discount. The technological changes in the business environment affect the
company’s competitiveness.
The increasing trend for business automation and the business analytics has increased the
opportunities of the business. The environmental changes in the business environment such as
the business sustainability trend in the environment and the increasing trend for Eco- friendly
products in the markets. With the changes of new trends and habits of the customers the
organization has to bring necessary changes in the organization. The legal factors in the business
environment such as the food safety laws and regulations of the business can bring about
necessary changes in the business organization. Further the employment regulation the tax law
reforms can affect the organizational activities (David & David, 2013). The other external factors
the foreign exchange rates, restrictions on the foreign investment, income level of the customers
that affect Walmart.
Analysis of macro environmental factors

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The various identified external factors affect steady flow of business. the political factors
impacts the profitability of the business, Walmart has to changes its operations regarding the
discount, and display of products as it operates with different types of political environment with
different countries. Therefore the company has to diversify its operations pertaining to the risks
of the political environment. The inflation rate of the economy, interest rates, foreign exchange
rates and the economic cycle determines the amount of aggregate demand, supply and its
aggregate investment in the economy. Other factors like the competitive norms of the business
and the competitors of Walmart impact the competitive advantage of the organization. The
growth rate of the economy, inflation rate, consumer spending pattern of the economy forecasts
the growth of the organization. The culture of the society, the attitudes, beliefs and customers of
the customers determines the type of message to be designed by the firm to intrigue the interest
of the population. The customer’s way of performing activities impacts the operations of the
organization and its culture (Fowler & Hope, 2017). The level of education, social conventions
impacts the firm’s dealing with the customers. With the changes in the technology, the company
has to bring about necessary changes its technology, emergence of online markets and implement
advanced technology in the organization so as to cope up with the changes in the external
environment. Moreover technology has significant impact on the products and services offered
by the organization. The environmental standards, various laws impacts profitability of the
company. There are significant risk pertaining to mishaps and environmental disaster. Several
laws regarding the business impact the growth and change the structure of the organization. The
health and safety law, consumer protection law and increasing trend of e commerce pose
significant threat to the organization.

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Risk and challenges faced by Walmart
The transition of the political system, the administration of the new government has
posed new challenge concerning the uncertainties of the business organization. The emergence
of new foreign policy and trade policy by the government has increased the level of uncertainties
to the business. The evolution of the digital world, at an unprecedentedly fast rate along with the
technological advancement has become a driving force for risk and challenge to the company.
The increase level of competitors in the markets has posed threat to the company. There is an
increasing level of emergence of multinational companies and global retailers in the market. The
change in various laws and regulations of the company has become a cause of concern to the
company, as it can lead to various lawsuits (Gamble & Thompson, 2014).
There have been significant changes in the buying habits and spending patterns of the
customers. The new emergence of the online shopping companies has taken away the share of
the market. With the rise in trend of online shopping, has increased the level of risk for the
company. Moreover, there is an increasing trend and awareness about the green consumerism
and ethnicity, which has increased the socio environmental costs of the company. The
environmental protection movement has increased the level of risk to the company. The
company faces challenges to produce environmentally friendly products in order to maintain its
reputation and positive public image (Gouldson & Murphy, 2013).
Strategies to counter the challenges and potential risk
In order to counter the various risks and challenges pertaining to the external
environment, Walmart needs to implement strategies to expand and develop its business along

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with proper financial strategies to achieve a global position in the industry. It needs to brings
necessary improvements and changes concerning to the policies and techniques of the business,
as the laws and regulations of the business are changing. The success of the company depends
upon its effective way in dealing with the business activities and fulfilling its business missions,
objectives and goals. Walmart needs to involve itself in implementing appropriate competitive
strategy to counter to the challenge of increase competition in the market. It must implement
necessary intensive growth strategies in expand and develop its business and gain a global
position in the market (Gupta, 2013). This will enable the company to increase and gain
competitive advantage in the market. The company needs to follows its goals and objectives and
development a cost leadership strategy to deal with tough competitors and the global online
retailers in the markets. The company needs to emphasis on the economies which are fast
growing and developing. This will increase the demand for the products and services offered by
the company.
Most importantly, the company needs to offer healthful products for its health conscious
customers. It can also increase the range of products offered in order to satisfy the cultural
preferences of the customers. The company needs to focus on online presence; this can increase
its revenue. Walmart can enhance product standard and improves policies, to strengthen its
marketing. The company can implement several food safety regulations to improve its product
quality and standard (Hattersley & Dixon, 2014). The company needs to implement necessary
intensive growth strategy such as market penetration and develop mint of market, this will enable
the company to achieve success and overcome the challenges from the external environment and
the potential risks faced.

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Conclusion
Therefore from the above analysis, the chosen company Walmart has been facing various
threats and opportunity from its external environment. However, the company can overcome and
counter the potential challenges and risks of the company by enhancing and improving the
strategies of the company. The report has indentified the potential external environment factors
that may affect the activities and functioning of the business. It has analyzed the factors affecting
the business and its impact on the functioning of the organization. The report has provided a
comprehensive assessment of the challenges and risks posed to the business and have proposed
the solutions to counter the potential challenge and risks of the company.

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References:
Australia - Walmart.com. (2019). Retrieved from https://www.walmart.com/ip/Australia/55989004
Barrientos, S., & Dolan, C. (2016). Transformation of global food: Opportunities and challenges
for fair and ethical trade. Ethical sourcing in the global food system, 1-33.
Brea‐Solís, H., Casadesus‐Masanell, R., & Grifell‐Tatjé, E. (2015). Business Model Evaluation:
Quantifying W almart's Sources of Advantage. Strategic Entrepreneurship Journal, 9(1),
12-33.
David, F. R., & David, F. R. (2013). Strategic management: Concepts and cases: A competitive
advantage approach. Pearson.
Fowler, S. J., & Hope, C. (2017). A critical review of sustainable business indices and their
impact. Journal of Business Ethics, 76(3), 243-252.
Gamble, J., & Thompson, A. A. (2014). Essentials of strategic management. Irwin Mcgraw-Hill.
Gouldson, A., & Murphy, J. (2013). Regulatory realities: The implementation and impact of
industrial environmental regulation. Routledge.
Gupta, A. (2013). Environment & PEST analysis: an approach to external business
environment. International Journal of Modern Social Sciences, 2(1), 34-43.
Hattersley, L., & Dixon, J. (2014). Supermarkets, food systems and public health: Facing the
challenges. Food security, nutrition and sustainability, 188-203.
Rothaermel, F. T. (2013). Strategic management: concepts. New York, NY: McGraw-Hill Irwin.

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Swank, D. (2018). Funding the welfare state: globalization and the taxation of business in
advanced market economies. Political Studies, 46(4), 671-692.