Competitive Strategies of Walmart - 2

COMPETITIVE STRATEGIES
STUDENT DETAILS
STUDENT DETAILS

COMPETITIVE STRATEGIES 1
Executive Summary
The competitive strategy is developed to help an organization for gaining competitive advantage.
Wal-Mart is the American discounted department store, it is founded by Sam Walton in 1962.
Headquarter of the company is situated in Rogers, Arkansas. Currently, there are over 11,200
stores of Walmart in different countries like Argentina, Brazil, Canada, Chile, China, Costa
Rica, El Salvador, Guatemala, Honduras, India, Japan, Mexico, Nicaragua, Puerto Rico,
the United Kingdom and the United States. In this study, it is concluded that the company faces
challenges due to the emerging competition and declining customer satisfaction.

COMPETITIVE STRATEGIES 2
Table of Contents
Introduction................................................................................................................................3
Analysis of Strategic issue.........................................................................................................4
Business Strategy.......................................................................................................................4
Utilization of business strategy in this case...............................................................................5
External environment analysis...................................................................................................8
PESTLE Analysis...................................................................................................................8
Porter’s five forces analysis.................................................................................................10
Recommendations....................................................................................................................12
Conclusion................................................................................................................................13
References................................................................................................................................14

COMPETITIVE STRATEGIES 3
Introduction
Competitive strategies are the long-term action plan of the company. These strategies are designed to
direct an organization for gaining a competitive advantage. It is important from the perspective of the
business to understand and deeply analyze the core principle of their chosen competitive strategy
(Borrescio-Higa, 2015). The selected competitive strategy in this assignment is the business strategy.
This business strategy is chosen for Wal-Mart China operations. Wal-Mart is the American
discounted department store, it is founded by Sam Walton in 1962. Headquarter of the company is
situated in Rogers, Arkansas. Currently, there are over 11,200 stores of Walmart in different
countries like Argentina, Brazil, Canada, Chile, China, Costa Rica, El
Salvador, Guatemala, Honduras, India, Japan, Mexico, Nicaragua, Puerto Rico, the United Kingdom
and the United States (Elder & Dauvergne, 2015). In this report, there will be a discussion about the
importance and implications of business strategy in the growth of the business. In this report,
strategic issues will be analysed with relevance to their business strategy. This concept will be linked
with the theoretical concept. Apart from this, the study of the external environment will also be done,
PESTLE and 5 forces analysis will also be conducted in this report from the perspective of Walmart
China.

COMPETITIVE STRATEGIES 4
Analysis of Strategic issue
Through the aspects of the critical analysis, it is noted that competition and decreasing
customer satisfaction are the biggest challenges for the company in China. As the company is
trying to enhance its market share but they face major challenges because of increasing
competition and the dynamic behaviour of the consumers (Hallinger & Lu, 2012). However,
it is noted that due to the strong competition, other supermarkets also create various offers to
fascinate the customer towards themselves. After some time, other supermarket tries to copies
the strategies of its competitors to attract customers. In this case, the customer also feels
confused that where they should go (Haiven, 2013). In China, retail supermarkets change
their organizational structure to reduce the cost structure so that they can provide effective
deals to their targeted audience. Apart from this, strategic analysis of these issues also
concluded that due to strong competition in China, it is reducing the profitability and quality
of goods as well. In 2016, the company posted the bulk sale of $1.6 billion in China with a
net loss of $25million due to emerging competition.
Business Strategy
Business strategy is the master plan about enhancing the probability of profitability, initiate
sales, methods to increase the market share price, delivering better customer satisfaction
services, adopting measures to rise above the competition in the market. Business Strategy
provides a solution to all the problems related to profitability and gaining competitive
advantages (Heineman, 2014). This strategy will help the company to strengthen its business
performance and to gain a competitive advantage. This strategy can only be applied by top-
level management after considering the interest of all the stakeholders in the market (Harsoor
& Patil, 2015).
Walmart in China should utilize the business strategy with the purpose of:

COMPETITIVE STRATEGIES 5
 Gaining competitive advantage
 Accomplishing effectiveness
 Engaging more and more customers.
 Directing the efforts of their human resource inappropriate direction to provide the
consumer.
 Gaining access to authority over the current position.
The environmental, social & governance report of Walmart China, 2019 indicated that they
are committed to providing the better corporate social responsibility initiatives in three
primary fields such as Women’s economic empowerment, children’s food safety & nutrition,
sustainability & community. For accomplishing this objective, they invest in making their
stores' energy efficient with the aspect to minimize the environmental footprint. With the
relevance to their environmental, social & governance report they encourage 275 million
customers. The recorded revenue of Walmart in 2019 stands at $1.90billion. At the global
level, they incorporate the net profit of $3.8billion in 2019 and their stock prices also up by
3.5% (Macrotrends.net, 2019). On the other hand, the management forecast the growth of
Walmart in the Chinese market and as per their analysis it is recorded that in the year 2020
they may face intense competition through an increasing number of competition and dynamic
changes in the behaviour of their targeted customer because of psychological aspects of
customer behaviour (Macrotrends.net, 2019).
Utilization of business strategy in this case
The objective behind choosing the business strategy lies in the two fundamental concepts to
run effective operations in China. First, to get an advantage over the competitive forces.
Second, to gain the market share by encouraging customers for a long period of time
(Heineman, 2014). This business strategy model of Walmart consists of an action plan which

COMPETITIVE STRATEGIES 6
will include effective marketing strategies, offline campaigning strategies, financial strategies
and methods to encourage the participation of customers. This action plan will empower the
organization with the optimum utilization of their existing resources so that they can face
upcoming challenges and threats from major competitors such as Suning Commerce Group,
Yonghui Superstores, China Resource Vanguard, etc (Hwang & Park, 2015). All these below
strategies are the subpart of business strategies:
Marketing strategies: This strategy part will be divided into further three parts: positioning,
segmentation and targeting strategy. However, from the point of view to accomplish success
on the competitive forces, the first two parts of these strategies are important i.e segmentation
and targeting. The segmentation part will help the management in adopting psychographic
and demographic segmentation. This part will empower the management with an overview of
the psyche of their potential audience. Due to emerging competition, customers are getting
products at the lowest prices because new and existing companies are offering a wide range
of offers to the customers (Michelson, 2013). Thus, Walmart should use its evergreen
strategy on stands on the parameters of segmentation strategy. The strategy of EDLP –
everyday low prices. Apart from this, targeting strategy will help the organization to capture
the market share in the Chinse market. For targeting a mass number of customers, they are
currently incorporating a low pricing strategy but the major catch here is other competitors
are also incorporating the low pricing strategy. So, the management should focus on offering
more better customer service with low pricing strategies so that they will encourage a large
number of customers because the majority of customers always seek great service at low
prices, not just for low prices (Merriman, Perskv, Davis & Baiman, 2012).
Financial strategies: The company has a major influence on their suppliers because they
purchase goods at large quantities. Thus, suppliers offering great discounts to them. Walmart
has a specific budget for each category. Since the primary goal of the company is to acquire

COMPETITIVE STRATEGIES 7
more market share. Currently, the market of Walmart in China is and every year management
estimates the increasement of 3.4% in their net market share. Due to emerging competition
management is estimated challenges in accomplishing their early growth in their market share
(Stankevičiūtė, Grunda & Bartkus, 2012). Thus, it may also decline their profitability ration
this year because in order to enhance market share it is important to fascinate customers.
Now, the Chinese market scenario of 2020 is indicating competition from various
competitors and these competitors will focus on low price strategy. This will initiate the price
war among retails. So, offering products at low prices will lower down the profitability of the
company. Thus, in order to produce the financial resources, it is suggested from the
perspective of financial strategies that the company should not focus on low down their price
at the bare minimum, instead, the management should focus on offering better services. As
customers do not just fascinate from the low prices they also fascinate with the great services
(Michelson, Boucher, Cheng, Huang & Jia, 2018).
Another aspect of financial strategies is that the company should focus on digital promotion
methods more than other promotional methods. The reason behind linking focusing on digital
promotional strategies with financial strategies is that digital promotional methods
incorporate very much less cost then promoting the brands on television, celebrity
endorsement, etc (Yue, Rao & Ingram, 2013). When Walmart will choose to imply a focus on
digital promotion methods then they have the opportunity to minimize huge promotional
costs. Walmart in China spends around $15million on promoting their brands. Focusing on
digital or on online promotional methods will reduce the cost of the company. It can be
estimated that this form of marketing will save around 60% of their money which is currently
spending on their marketing activities. Apart from this, it is noted that digital promotion
methods are extremely effective and these promotion methods are also capable to deliver
great results. In China, there is a strong influence of social media and thus it is a great

COMPETITIVE STRATEGIES 8
opportunity for the management to start promoting their brand over the digital platform. As,
still the company is promoting its brand on social media but here it is suggested that they
should only focus on digital promotional methods because it will lower down their cost by
60% (Walton, 2013).
This business strategy plan for Walmart China focuses on the methods to lower down the cost
by spending less money on expensive promotional methods and by offering huge discounts to
customers. Now, the management needs to understand that all the competitors who are
offering huge discounts to their potential audience are failing at delivering quality services.
On the other hand, it is a fact that in the retail industry even the financially sound person also
falls for a low price (Cutting, Cahoon, Flood, Horton & Schramm, 2011). Here, the
management should understand that competitor is successfully offering products at low prices
but they may fail at offering quality services. Thus, the psyche of customer behaviour implies
that customer falls for quality service at low prices. So, by focusing on offering quality
services with less discounted prices, the company can emerge profits effectively and
efficiently (Chan, 2011).
External environment analysis
External environment analysis is the primary study of micro environmental forces for the
purview of an organization's growth. In this section, external environment analysis will be
done through PESTLE analysis and Porter’s 5 forces analysis about the operations of
Walmart in China.
PESTLE Analysis
Political analysis:
The government is stable in China. Present Xi Jinping, process a stable government in China
and their political agenda always focuses on FDI because it is noted that FDI in China is rose

COMPETITIVE STRATEGIES 9
up-to 6% year to year to CNY 845.9 Billion in January to November 2019. Thus, can be
analyses that are the positive implication for Walmart from the political stability view of
China (Macrotrends.net, 2019).
Economic analysis:
Under economic analysis, it is important to study the continuous GDP rate of the country. It
is important for the growth of Walmart in China that there is a continuous growth of GDP. It
is recorded that China's GDP grows at a 6.9% annual rate. Economic analysis of the country
also shows that they are the world’s largest manufacturing economy. Due to positive
economic growth, Walmart also experiences sales growth by the annual rate of 6.3%. Apart
from this, the major threat here is that due to the growing economy, the company has to face
growing competition in the retail industry (Marketwatch.com, 2020).
Social analysis:
The social analysis will conclude the study about the healthy lifestyle trend and choices of the
people. Social factors also deliver opportunities for the company. It is important for the
company that people should make a social habit to shop from the departmental stores instead
of approaching local vendors for their daily needs. The current population of China is 1.38
billion which implies a great opportunity for the company but here the major catch is that
people should add the feature in their lifestyle to approach departmental stores to satisfies
their daily needs instead of approaching the local vendor (Michelson, Boucher, Cheng,
Huang & Jia, 2018).
Technology analysis:
Walmart requires the fast mover technology trend in order to gain a strong competitive
advantage among the competitors. Here, the positive aspect is that in China there is

COMPETITIVE STRATEGIES 10
increasing business automation and there is increasing mobile usage among the population.
This implies that with the advancement of technology, there will be more opportunities for
the company to gain a competitive advantage. China is moving towards the utilization of
Artificial Intelligence and Machine Learning, the company have the opportunity to
incorporate the operations into their business (Michelson, Boucher, Cheng, Huang & Jia,
2018).
Environmental analysis:
The company needs to take care of the ecological and environmental factor consideration in
order to fulfill environment-related duties. At the global level, the company claims that it will
reduce the 1Billion carbon emission by 2030 that produces through its operations. For
accomplishing this objective, they will issue environmental, social and governance (ESG)
reports (Marketwatch.com, 2020).
Legal factors:
The company has to process and make its operations in line with the legal policies of the
country. This is the critical factor because any fault in fulfilling the legal policy can put the
management in a major legal challenge. For example: Occupational Safety and Health Act,
Labour Laws and Regulations of the Republic of China 1993, etc.
Porter’s five forces analysis
Competitive rivalry:
This force is strong for the company while operating in China. Major competitors for
Walmart in China are Suning Commerce Group, Yonghui Superstores, China Resource
Vanguard, etc. The primary reason behind it is that China’s economy is growing and their
government process major benefits for FDI (Marketwatch.com, 2020).

COMPETITIVE STRATEGIES 11
Bargaining power of buyers:
This force is week because all the products in stores have to fix price tags and even customers
in the department stores do not try to bargain. Currently, Walmart has more then 5millon
customers in the country and their management practices always try to target 1.38billion
people in China (LeCavalier, 2016).
Bargaining power of suppliers:
This force is also week because instead of bargain suppliers provide the goods to the
company at the discounted rates. As Walmart orders large quantities of the goods so suppliers
are bound to provide them a heavy discount (Hwang & Park, 2015).
Threats of Substitutes:
This force is strong but it is limited to a certain scenario. As in China, there are many vendors
who provide goods at a cheap price and also offers free home delivery services. In this case,
it arises the strong threat of substitutes in this little form but overall Walmart is the company,
thus it requires huge capital to create a proper substitution of the company (Hwang & Park,
2015).
Threats of new entrants:
This force is strong because due to the economic growth of the country many supermarket
giants are putting their eyes on establishing their operations in the country. Apart from this, it
is suggested that the company should always prioritize their strategic planning methods to
fight the challenges process by the other competitors. They need to make strategies to offer
great customer satisfaction so that customers will never be thought to switch to other
competitors (Michelson, Boucher, Cheng, Huang & Jia, 2018).

COMPETITIVE STRATEGIES 12
Recommendations
 The company should focus on making their process automated with the use of
Artificial Intelligence and Machine Learning in its operations. This will fascinate
more and more customers and it is beneficial for both, Walmart and customers. AI
and ML will save the time of customers and this will also help the organization in
reducing work pressure from their human capital (Michelson, Boucher, Cheng, Huang
& Jia, 2018).
 They should create a better and more enhanced online shopping platform because it
will fascinate more and more customers. Developing an online shopping platform will
help the company to keep more better-centralized data about the interest of the
customers (Marketwatch.com, 2020).
 The management should focus on giving more better customer services. Currently,
Walmart in China is facing tough competition through its major competitor. Thus, the
management is bound to offer low prices in order to gain competitive advantage but
they should not just focus on offering products at a bare minimum, instead,
management should focus on offering quality services. Giving quality services is also
the prime factor that is responsible for the fascinating audience (Michelson, Boucher,
Cheng, Huang & Jia, 2018).

COMPETITIVE STRATEGIES 13
Conclusion
In this study, through strategic issue analysis it is concluded that Walmart is facing the
emerging challenge from their major competitors and decreasing customer satisfaction. The
competitive strategy is developed to help the organization for gaining competitive advantage
and also support the organization to engage large number of customers in the organization. In
the present case it is demonstrate that Walmart use several business level strategies that is the
social, environment report indicate that company take initiatives to adopt better sustainability
practices so that loyalty among the customers will be increased. However, still the company
face various issues because of conducting the operations in competitive environment. To
overcome, this issue the company can adopt Artificial Intelligence as well as can also use
Machine Learning in their activities.

COMPETITIVE STRATEGIES 14
References
Borrescio-Higa, F. (2015). Can Walmart make us healthier? Prescription drug prices and
health care utilization. Journal of health economics, 44, 37-53.
Chan, A. (2012). Walmart in China. Ithaca: Cornell University Press
Cutting, R. H., Cahoon, L. B., Flood, J. F., Horton, L., & Schramm, M. (2012). Spill the
Beans: GoodGuide, Walmart and EPA Use Information as Efficient, Market-Based
Environmental Regulation. Tulane Environmental Law Journal, 24(2), 291-334.
Elder, S. D., & Dauvergne, P. (2015). Farming for Walmart: the politics of corporate control
and responsibility in the global South. The Journal of Peasant Studies, 42(5), 1029-1046.
Haiven, M. (2013). Walmart, Financialization, and the Cultural Politics of
Securitization. Cultural Politics, 9(3), 239-262.
Hallinger, P., & Lu, J. (2012). Overcoming the Walmart syndrome: Adapting problem-based
management education in East Asia. Interdisciplinary Journal of Problem-Based
Learning, 6(1), 4, 89-95.
Harsoor, A. S., & Patil, A. (2015). Forecast of sales of Walmart store using big data
applications. International Journal of Research in Engineering and Technology, 4(6), 51-59.
Heineman Jr, B. W. (2014). Who’s Responsible for the Walmart Mexico Scandal?. Harvard
Business Review, 15(1), 89-95.
Hwang, M., & Park, S. (2015). The impact of walmart supercenter conversion on consumer
shopping behavior. Management Science, 62(3), 817-828.
LeCavalier, J. (2016). The rule of logistics: Walmart and the architecture of fulfillment.
Oxford: Oxford University Press.

COMPETITIVE STRATEGIES 15
Macrotrends.net. (2019) Walmart Gross Profit 2006-2019 | WMT. [Online] Available at:
https://www.macrotrends.net/stocks/charts/WMT/walmart/gross-profit [Accessed on: 15th
January, 2020]
Marketwatch.com. (2020) Walmart Inc. [Online] Available at:
https://www.marketwatch.com/investing/stock/wmt/financials [Online] Available at:
https://www.marketwatch.com/investing/stock/wmt/financials [Accessed on: 15th January,
2020]
Merriman, D., Persky, J., Davis, J., & Baiman, R. (2012). The impact of an urban WalMart
store on area businesses: The Chicago case. Economic Development Quarterly, 26(4), 321-
333.
Michelson, H. C. (2013). Small farmers, NGOs, and a Walmart world: Welfare effects of
supermarkets operating in Nicaragua. American Journal of Agricultural Economics, 95(3),
628-649.
Michelson, H., Boucher, S., Cheng, X., Huang, J., & Jia, X. (2018). Connecting supermarkets
and farms: the role of intermediaries in Walmart China's fresh produce supply
chains. Renewable Agriculture and Food Systems, 33(1), 47-59.
Stankevičiūtė, E., Grunda, R., & Bartkus, E. V. (2012). Pursuing a cost leadership strategy
and business sustainability objectives: Walmart case study. Economics and
Management, 17(3), 1200-1206.
Walton, S. (2013). Walmart. Oxford: Oxford University Press.
Yue, L. Q., Rao, H., & Ingram, P. (2013). Information spillovers from protests against
corporations: A tale of Walmart and Target. Administrative Science Quarterly, 58(4), 669-
701.