Business Level Strategy for Walmart

This document discusses the business level strategy of Walmart, including its strategic purpose, position, capability, and choice. It also provides recommendations for leadership and change strategies. The document analyzes the corporate governance, stakeholder expectations, and corporate social responsibilities of Walmart. It further examines the strategic position of Walmart using PESTLE analysis and Porter's Five Forces model. The document concludes with an analysis of Walmart's strategic capability using the resource-based view and VRIO framework.

Running Head: WALMART 0
BUSINESS LEVEL STRATEGY

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Table of Contents
Introduction................................................................................................................................2
Strategic Purpose........................................................................................................................3
Strategic Position.......................................................................................................................5
Strategic Capability....................................................................................................................8
Strategic Choice.......................................................................................................................12
Strategies for leadership and change........................................................................................15
Recommendations....................................................................................................................16
References................................................................................................................................18

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Introduction
A business always strives for a sound strategic plan having set of clear goals to guide
business operations over a long period of time. Strategy can be defined as an action
undertaken by the management to reach to predefined goals and it is significant in the
business as it helps the firm to deal with various uncertain external forces in the business
environment (Kuratko and Audretsch, 2009).
On the other hand, strategic management is the process of building capabilities enables an
organisation to build value for the customers, society and shareholders while functioning in
the competitive market (Hitt et al, 2011). There are various approaches and roots of strategic
management and they are elaborated with the help of taking real example with a company.
The name of the company is Walmart, an American multinational retail corporation.
About Walmart
Walmart is the number one enterprise listed in Fortune Global 500 with a revenue of
$500,343 and has more than 2.2 million employees worldwide (fortune.com, 2018). The
company was founded in 1962 by Sam Walton and publicly traded on the New York Stock
Exchange in 1972. It is the largest grocery retailer in USA with having its operation in more
than 27 countries.
With having 11000 plus stores all over the world, the company is offering wide-ranging
variety of products in nearly all category starts from hardware, groceries, appliances,
furniture, health products, to entertainment.
The corporate mission statement of the company is – “to save people money so they can live
better” (Powers, 2012). It imitates that the business strategy of Walmart includes price as a
selling point to appeal target consumers.

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In addition, the company vision is to be the destination for all the consumers to save money,
no matter how they want to shop. The organisation vision was modified in 2017 in
community meetings. Hence, it imitates strategic changes that the company emphasis in
return to variations in the dynamic business environment and the industry competitiveness.
Strategic Purpose
Corporate governance
Corporate governance is the classification of guidelines and principles followed by an
organisation while achieving the strategic long-term goals and satisfying needs of the
stakeholders (Huang, 2010). There are two types of corporate governance mechanism used by
Wal-Mart in relation with their effective managerial actions. The first mechanism is
concerned with auditing which involves reviewing of company financial transactions. It
checks that the business operations of Walmart are in synchronize with set guiding principle
of national accounting. Auditing helps the company and management to gather and evaluate
information in relation with the investors and shareholders. In Wal-Mart, board of directors
are known as the second corporate governance mechanism characterizing the stakeholders of
the company by protecting their interest in the business. These stakeholders within the board
of director work as per the guiding principles of New York Stock Exchange. The firm overall
performance is managed by these individuals as they fill and make the gaps amid
organisation owners and other stakeholders.
Stakeholders Expectations
Walmart stakeholders influence the strategic direction of the company and thus it is important
to consider interest of stakeholders while acknowledging the dynamic relationship between
business and stakeholders.
To gain stakeholders expectations more clearly, they are being grouped as on their shared
interests. These stakeholders groups also have different priority depend on organisation

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policies and beliefs. All below stakeholders hold a position in the company strategic decision-
making.
 Investors – The Company have given investors with highest priority and they demand
the company to earn profit at a higher rate as then only they will get higher dividends.
As per various theories, the key objective of any organisation is to earn profit and
Walmart simplify this approach by minimizing various costs at places and turning into
profit for the whole enterprise and respective stakeholders (Holmes, 2011).
 Customers – These are given second priority by Walmart and they are interested in
lower prices and affordability. To maintain their needs, the company follows cost
leadership strategy offering products to the customer at lowest prices. Considering
Walmart success, it can be said that the company is adopting right strategy at right
time in extent with strategic direction.
 Employees – In company managerial decision making, Wal-Mart employees are
given significant consideration and the major interest of these stakeholders is job
security and higher wages. However, the company is continuing to give low wages to
its staff and thus addressing only partial interest of these stakeholders.
 Suppliers – These are the Walmart least prioritized stakeholders that provide the
goods to the various stores of Walmart. However, the company is operating on a
bigger scale and thus have more power than suppliers and therefore these suppliers
are required to work in compliance with Walmart like selling their products at low
prices. However, their interest is related to selling of products at profitable price point.
After analysing, all it can be said that the company is partially effective in fulfilling the
interest of stakeholders. For instance, low wages to the employees, not fully satisfy the needs
of suppliers and so on. To enhance its performance, Walmart is required to promote its
stakeholder management practices in various areas.
Corporate Social Responsibilities
Walmart made a significant business decision aimed at fulfilling the needs of Society that it
would significantly address the global impact by undertaking a sustainable program. Walmart
also aims to be ethical and become socially responsible in three areas includes safety,
diversity and sustainability. The business decision in area of sustainability leads Wal-Mart to

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change its operations to become more eco-friendly. For instance, the newer stores of Walmart
will be planned to design in such a way, to be more energy efficient creating lesser
greenhouse gasses. With regards to this, Walmart installed more solar panels on the store's
roofs so that to create more green energy and be more environmentally friendly. Other than
this, the company also modify its vehicle fleet by installing fuel-saving technology that
supplies the products from the chain stores (Balan, 2010). Moreover, the organisation is also
committed to ethical sourcing in collaboration across organisation and industries.
Strategic Position
Strategic positioning is a more sophisticated method to strategic planning determining the
essences of how a firm competes and serves customers in the market (Teece, 2010).
However, to build necessary strategies, it is necessary to identify various external forces in
the business and industry environment of Walmart. It can be done with the help of PESTLE
tool and Porter 5 Forces industry framework –
Walmart PESTLE
 Political Factors – The political factors are related to the government policies laid
directly on Walmart in the respective country where they operating. The political
stability of every country differs and it is important for Walmart to adapt with all
business landscape characterized by different political structures. The company also
required to be alert from various political actions as it may impact brand image
negatively. For instance, gender discrimination lawsuit was trailed counter to Walmart
in 2007. On the other hand, EU also targeting big US brands from past several years
and so is important for Walmart to develop necessary counterfeit strategies
considering these political forces (Kunz et al, 2017).
 Economic Factors – The performance of the company like Walmart is also depended
upon the economic stability in which the company is operating. Some of the common
economic factors that impact the business operations of Walmart includes rate of
taxes, inflation level, tight credit plan, etc. From a long period of time, Walmart is

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pursuing various strategies to grow in terms of revenue and profits such as reducing
the level of wages, installing automation in stores and so on.
 Social Factors – Walmart has an immense popularity and it is known to be as one
stand destination encompass the lifestyle and beliefs of the people. The customers
also accepted company online stores and it can be seen with the increase in the
numbers of followers and shoppers. In addition, the company aims to achieve
diversity in employees group and Walmart already received appreciation for
extending the antidiscrimination policy. Other than this, using increased smartphone
usage and digital technology also promoted online shopping and this also affects retail
sector. Walmart is also planning to invest $41 Million in the new online grocery
initiative online (Nima, 2018).
 Technological factors – The Company have implemented technological advancement
at various places, as there is an increasing trend of automation in the business
strategies creating various opportunities for gaining the market share. From its stores
to the supply chain delivery system, the company is using various sorts of strategies
such as RFID tags, Artificial intelligence, and data mining to get real time data and
analytics and so on. Microsoft and Walmart also proclaimed a partnership of give
years to drive digital transformation across Walmart boosting speed of shopping and
empowering retail allies (Maras, 2019).
 Legal factors – The legal elements bind various strategies of Walmart and its
competitors. There are several laws in every country and the company is required to
comply with them to do business in the respective region. In its history, Walmart has
confronted various lawsuits associated to workforce extending from low wages to
discrimination and these had made the condition hard for Walmart. Other than this,
the company was also fined with $80 million for poor administration of hazardous
wastes (Koehler, 2014).
 Environmental Factors – The Company is already adopting series of steps and
strategies considering environmental measures for raising energy efficiently. Walmart
has undertaken various practices for the environmental sustainability embedding with
the bottom line of their strategies. In 2016, Walmart announced series of sustainability
goals by the year 2025 such as using of 100 percent recyclable packaging for entire
private label brands, double sales of locally grown produce and so on
(corporate.walmart.com, 2016). Articulating these business strategies and practices
will help the brand to create positive image in the retail industry.

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PESTLE analysis is a great way to understand these six factors, however, it cannot offer the
full picture as it only provides outside perspectives of a business enterprise. It is just like
telling one side of the story and allowing the same assumptions. In addition, external factors
keep on changing and their influence cannot be measured with this tool.
Walmart five forces analysis
The five forces model of analysis was established by Michael E Porter to analyse the industry
competitiveness, It has been applied below on one of the famous retailer firms i.e. Walmart.
(Source: Harding, 2017)
 Bargaining power of suppliers – The company has an prevailing network of more
than 2800 different suppliers and for their suppliers, working with Walmart means
access to the 275 million consumers who shop their stores around the world each
week (Demil et al, 2015). Due to these high numbers of suppliers, their bargaining
power is low. This shows that Walmart is in a position to impose special demands and
ethical guidelines over its suppliers.
 Bargaining power of buyers – Bargaining power of buyer is relatively high as
customer can easily switch to other brand due to any of aspects such as offers, price,
and quality. It leads Walmart to articulate necessary strategies for the satisfaction of

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customers. This will ensure that customer did not seek to compare their products with
any of other brands.
 Threat of substitutes – This is moderate as various other retailers are not offering
products at lower prices like Walmart. The only relatively brand is Costco, which is a
membership, based retail chain. Walmart has an advantage of economy of scale and
brand recognition, which makes it difficult for other companies to attract potential
customers.
 Threat of new entrants – It is low in retail industry of US as Walmart has a
dominant position not only in US but in various other countries also. The company
also has a prolonged distribution network and channel. Hence, it is significant for
Walmart to earn more revenues by attracting more consumers through its strategies
and thus sustain a competitive position in the market.
 Competitive Rivalry – There is high rivalry in retail sector and Walmart is
competing in the industry on the basis of cost leadership. The major competitors of
Walmart include – Amazon, Costco, Target, Best Buy, Kroger, ALDI Einkauf,
Safeway, Kmart, Jet and Macy's (He et al, 2015). The company is required to develop
necessary strategies as these competitors may have negative impact strategic direction
of the firm.
Strategic Capability
The resource based view (RBV) centers into intra-industry heterogenic organizations and put
up with that corporates are distinctive packets of resources and capabilities giving the
foundation for attaining competitive edge. It expresses that a firm should pull self-owned
resources also in unstructured global marketplace.
Wal-Mart is being able to effectively exploit its resources and competencies in creating
sustained competitive advantage, with adequate and shared application of RBV theory, in
order to cater to variable, dissimilar and localized merchandise likings, desires and
requirements of their customers. The strategic capability of Wal-Mart can be further
elaborated with VRIO framework.

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Walmart VRIO analysis
This VRIO analysis comprises the organization’s inventory management systems as a core
competency for competitive advantage. In extent with resource-based view, these systems are
a strategic resource established explicitly for Walmart and thus help the retail business in
earning greater revenue and margins. With regards to this, Walmart’s supply chain
management and technology is a core competency as it satisfies all of the VRIO variables.
The company is a valuable, rare, and tough-to-imitate resource.
Walmart
Resouces/Capability Valuable Rare Difficult to
Imitate
Exploited by
the
organisation
Competitive
implication
Organisation
Structure Yes No Yes Yes Competitive
Parity
Supply Chain
Management Yes Yes Yes Yes Sustainable
advantage
Human Resources
(Man Power) Yes No Yes Yes Competitive
Parity
Pricing Tactic Yes Yes Yes Yes Sustainable
advantage
Innovation and
Technology Yes Yes Yes Yes Sustainable
advantage
Procurement
Process Yes No Yes Yes Competitive
Parity
Store Location Yes No No Yes Competitive
Parity
Training and
Development Yes Yes Yes Yes Sustainable
advantage
Walmart Value chain analysis
With the help of value chain analysis, Walmart internal activities can be identified and also
the company business activities to check how it can create a competitive edge for itself.

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Source: (Van Weele, 2009)
Primary Activities
 Inbound logistics – Walmart depends on its suppliers to keep the cost lower than the
competitor does. The company can also put pressure on supplier for lower prices due
to its size and brand image. Walmart also deploys efficient supply chain management
practices and maintained long-term relationship with its suppliers in extent with
ethical sourcing. These suppliers need to work as per the code of conduct of the
company.
 Operations – The Company operates in retail industry and in U.S. retail sales expected
to top $3.8 trillion in 2019 (Fares, 2019). Walmart operates in more than 27 countries
with having 11000 plus stores all over the world. The company also had employed
more than 2.2 million individuals globally.
 Outbound logistics – There is a supply chain practice in the company named as cross
docking where in the distribution center, the products obtained from the suppliers are
cross-docked and then processed to the stores. This saves a lot of costs related to
transportation and therefore eliminates inefficiencies. This also saves Walmart stores
to be from out of stock. In addition, this reduced cost benefit will be transferred to
customer side. The company operate 150 plus distribution centres for its business.
 Marketing and Sales – The Company spend billions on promotion and advertising.
From 2016 to 2017, its advertising expenses was grown by more than 400 million

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dollars. In 2018, the company spend $3.1 billion on advertisement. The company also
uses social media to gain various feedbacks from the customers and thus create a
better reputation in the industry.
Secondary Activities
 Technology – For effective supply chain management, the company adopt extensive
use of technology. In stores, SmartLife permits Walmart to help consumers with their
technology-related questions as employees can demonstrate any number of digital
products.
 HRM – The Company was criticized for a long time in relation with policy of wage,
however, it has now been enhanced as the company announced lowest wages to more
than $13. Walmart also invested $2.7 billion in education, training and wages (Janoski
and Lepadatu, 2014).
 Procurement – Walmart has maintained long-term relationship with the suppliers to
retain the cost of material lesser.
 Firm infrastructure – Walmart has a big and large infrastructure comprising its human
resources, management and supply chain, fulfilment and distribution centres. The
company is continuously investing in new technologies for the growth and expansion
of brand. For instance, the Company proclaimed a five-year partnership to pull digital
transformation across Walmart boosting shopping speed and empowering retail
acquaintances.

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Walmart SWOT analysis
Strengths
 Loyal customers
 Great pricing
 Stores at prime location
 High brand awareness
 Scale of operations
 Extensive product range
Weakness
 Various criticism over wage policy
 Carry large inventory
 Greater employee turnover
 Little differentiation
Opportunities
 Retail Market growth in developing
markets
 Online shopping and e-commerce
 Trend towards healthy food
Threats
 Rising competition from online
competitors and brick and mortar
 Employee union
 Rising commodity prices
It is important for Walmart to prioritize using its strength to gain various opportunities in the
international retail marketplace. The organisation is required to develop various HR practice
strategy to ensure that every action is meeting HR management standards. The company must
expand its operations in emerging markets like India and China. The company is also needed
to develop necessary strategies for the rising e-commerce market.
Strategic Choice
Porter generic strategy
Walmart utilize its generic strategy to attain competitive edge in the industry centred mainly
on low cost and the
similarly low selling prices
of goods presented to
customers in the worldwide
retail sector.

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Walmart adopts the lower cost competitive strategy of cost leadership. According to Zott,
Amit and Massa (2011), Cost leadership aims at the wider market and needs control over
various facilities related to sales, operations and production.
This strategy allows Walmart to continue to earn profits during times of heavy competition.
Cost leadership comprise of low product differentiation. Walmart retail service are not
distinct as they are focusing on lower price as a selling point. To thrive in applying its generic
competitive tactic, Walmart must rely on management approaches, process efficiency and
other strategies like as intensive growth strategies that benefit in reducing costs.
Walmart

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Strategic direction – Ansoff matrix
Product Development
The company adopt product development as a
slight intensive strategy for increasing the retail
business and thus focus on sales and marketing
with more investment in R&D.
Market Penetration
It can be considered as primary strategy
Walmart utilize market penetration by adopting
the selling point of low prices, which is attained
with the help of cost leadership generic
strategy.
Market Extension
New stores are opened by Walmart in the
countries where they does not have any
operations. However, the company is planning
to expand into these nations via e-commerce
platform.
Diversification
Walmart do diversify in its business life cycle
as it move in the video streaming marketplace
in 2010. However, the company has a low rate
of diversification, as the company focuses more
on retail operations
Products
Existing New
INCREASING RISK
INCREASING RISK
Existing
Market
New

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Strategic Methods
A strategy method is the way by which a strategy can be pursued. These methods comprises
of organic development, mergers, acquisitions and strategic alliance, all of which are
common ways to achieve growth strategies (Varadarajan, 2010).
In relation with strategic method, the company ensure its growth through various
acquisitions. Some of the major business and companies that Walmart acquired are Bonobos,
Cornershop, Eloquii and Flipkart. In addition, Walmart also develops global alliances with
tech players to battle Amazon. The company forges with Microsoft, Google and other tech
companies to build a strong e-commerce business. Strategic alliance with Microsoft help
Walmart to get cloud based services over the next five years across all the retailers business.
Hence, the choice between M&A and alliance involves balancing requirements for
commitment.
Strategies for leadership and change
Doug McMillion, the current CEO of Walmart gives various insights into strategic leadership
and change. The first lesson from his leadership style is that a leader cannot lead from behind
as during transformation, a leader must come out with highlighting what he learns from past
experiences and this introduces new ideas. The next thing is related to risk that is something
Walmart has had to embrace to sustain in the rapidly changing retail environment. According
to McMillion, there is no growth without change and he also reflects about forward thinking
with priority the position of company for the long term success. Last, it is also related to trust
which can be built by effective communication.

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Recommendations
An enterprise that is growing and wishes to maintain the growth requires a set of strategies to
lead its program development and be ready for future challenges. In other terms, it require a
strategic plan that will become an organisation vision stating what and how necessary goals
are to be achieved.
Future strategy development in Walmart is related to the development of a plan to share new
perception of strength and opportunities with the stakeholders and to explore critical issues
that may impact organisation in future. Some major recommendation for Walmart includes –
 Walmart should adopt turnaround strategy to lower down their weakness of
negligence towards welfare of employees. This has created various issues before
leading to high employee turnover and lawsuits. It will also harm Walmart reputation
and cause decreasing in market share. Hence, a strategic change is required to be
implemented in relation with the employee benefits. For instance, Walmart could
raise minimum wages of the employees and offer number of different incentives as
renewed with the growth of the company. This strategy will benefit Walmart from
both perspectives i.e. increasing in brand reputation and rise of market shares.
 Walmart can also go for more strategic alliances to expand its e-commerce platform.
With help of strategic alliances, the company can expand into new markets and
emerging countries with the help of e-commerce. Recently, Walmart has closed its
biggest deal in India through acquisition of Flipkart, India’s biggest e-commerce
company giving tough competition to Amazon in the domestic markets. Through such
acquisition and with various strategic change, the company can ensure its growth and
sustainability over a longer period of time.
 Walmart can also diversify its business like in 2010, the company entered into video
streaming market. This will help the company in minimizing risk of loss or reduce the
potential loss of company investment portfolio from concentrating all the capital
under one type of investment.
 Walmart has gained immense success in the U.S. marketplace but the enterprise has to
look overseas for growth, as their revenue is not increasing at breakneck speed.
Instead, operating income is rising gradually and for enterprise of this size, it will be a

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bigger pressure in future. For instance, the company should invest more in emerging
nations such as Brazil, India and China.
 In relation to environmental sustainability, Walmart is required to reach out to
certified organic farmers as this will change the way Walmart is viewed by organic
shoppers. This will help the company to take customers away from stores like
Wholefoods and thus this strategy can be considered as biggest hit. Other than this,
Walmart should not view profit as the be-all end-all. The company needs to ensure
that the business is conducted in a right and more responsible way.
Hence, these are some major recommendation Walmart is required to adopt while changing
proactively in the strategies.

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