Walmart's Business Model and Challenges

This assignment analyzes Walmart's business model using the nine building blocks of Osterwalder & Pigneur's framework. It explores key aspects such as customer segments, value propositions, channels, and revenue streams. The analysis also identifies challenges faced by Walmart, including legal and regulatory changes, and proposes recommendations for improving service delivery through innovation, social responsibility, and customer-centric strategies.

Running head: BUSINESS MODELS 1
Walmart’s Business Model
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Introduction
A business model is a blueprint, used by businesses, to identify the various ways in which
it will run its services. Business models highlight the means of operations incorporated by a
business to help improve service and maximize profits. Business models are part of the strategic
plan of an organization. Different organizations employ different business models, as they deal
with a different variety of products and target different market shares. The construction of a
business model is in alignment with the value proposition of the business (Osterwalder, Pigneur,
Bernarda, & Smith, 2014). The value proposition is a direct view of the benefits the business
aims at providing to its clients and target population. There are multiple business models, due to
increase in globalization. As companies compete to gain a competitive advantage over each other
(Parnell and Lester, 2008), they employ different business models. One such organization is the
Walmart Stores.
Walmart Stores Incorporation
Walmart is the World’s largest retail store (McGee, 2018). The store has its headquarters
in Bentonville, Arkansas. Walmart uses various methods of operations, one being the Sam’s
Club. Through this, Walmart provides services to various parts of the world including the United
States, Brazil, Mexico, and China. Walmart operates on an international market and serves over
fifty million customers daily. The store provides inventory services to its customers. It deals with
a wide variety of products among them being garden supplies, electronics, health and beauty
supplies, furniture, sporting attire, and equipment, as well as children accessories and toys. With
increased globalization, the store faces various benefits as well as challenges. Among the
significant benefits are increased market share, use of advanced technology, and efficient
workflow. The significant challenges faced by Walmart include competition from other firms,

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legal and regulatory laws, and myriads of cultures in the business environment. However, despite
these challenges, Walmart is still the largest retail shop in the world and enjoys much of the
market share. The business model it incorporates gives it its competitive advantage over other
firms (Parnell and Lester, 2008).
Walmart’s Business Model Canvas
A business model canvas is a chart that comprises of all activities undertaken by a firm.
Walmart employs the Osterwalder and Pigneur’s model, which incorporates the nine building
blocks. It consists of various factors affecting the business, which include the principal partners,
essential activities, crucial resources, the costs and financial structure, customer relationships,
channels, revenue streams, and customer segments (Osterwalder & Pigneur, 2010). These factors
are incorporated into the business’ value proposition.
1. Key Partners
Key partners include the various stakeholders with whom the business is contact. They
include all activities that build the bond between the suppliers and the buyers in the supply chain
(Morschett, Schramm-Klein, & Zentes, 2015). The key partners for Walmart include the
suppliers and buyers. Walmart stores create a conducive environment whereby the suppliers can
meet and satisfy their client’s desires. Through this, suppliers gain access to a larger market,
whereas the buyers have a wide variety of options to choose.
2. Activities
Walmart runs on several business operations including the purchasing, storage, delivery
of inventory as well as the overall price control. It incorporates advanced technology to help in
the movement of inventory along the supply chain. As a result, the company enjoys lower
operation costs, while at the same time providing efficiency in its workflow.

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3. Resources
Walmart seeks resources from different locations, thus attaining the cost leadership
advantage. Through this advantage, Walmart stores incur low production costs, which appeals to
its advantage of providing services at low costs. Other resources include the inventory stores and
logistics for operations, the human resources, managers, and the organizational culture. These
resources help in streamlining workflow in the organization.
4. The Cost Structure
The cost structure refers to a model aimed at reducing operating costs through economies
of scale. Globalization played a crucial role in aiding the organization to gain the economies of
scale. These economies of scale reduce operation costs mostly due to the factors associated with
the use of advanced technology. Additionally, the store passes on a percentage of the operating
costs to suppliers.
5. Customer Relations
Walmart creates an environment that is conducive to the customers. The store advocates
for self-service where customers can access their desired products easily. The store seeks
supplies in bulk, thus stocking them to feed the ever-increasing number of customers.
6. Customer segmentation
Additionally, the store controls prices of prices to meet the levels of each consumer.
These levels include the brand-aspirations consumers, price-sensitive consumers, and the value-
price buyers.
7. Distribution Channel
The company store the excess inventory, from suppliers, in its warehouses. Through this,
the company can easily distribute the products, to the various stores, when the demand arises.

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Additionally, it uses the client segmentation technique to determine how it will distribute
products and goods.
8. Revenue streams
Majority of the revenue of Walmart arise from the sales it makes to the different
customers in the various segmentations. The company also sells its products and brand thus
increasing the revenue. Moreover, the company firsts sell products from suppliers before paying.
9. Value proposition
A value proposition is the core part of operations in the industry. The company’s
activities aim at achieving this objective. Walmart’s value proposition is directed towards
offering Every Day Low Prices (EDLP). Additionally, Walmart aims at being a one-stop supply
store where customers can access all their desired products, thus saving them time and money.
Key Relationship
The nine building blocks of the business are integrated with each other. They all provide
ways of achieving better services for the business. The critical component of the nine building
blocks in the business model canvas is the value proposition for Walmart. As it aims at providing
low prices and saving time for consumers’, Walmart’s supply chain relies on these factors. The
company relies on the internal factors of operations to improve their external service providers.
The internal factors include the key activities, resources, partnerships, and the costs structure.
The external factors relate to service provision, which includes distribution channels, revenue
streams, customer relations, and customer segmentation. Walmart ensures that it considers these
factors simultaneously for the benefit of the company.
Critical Success Factors

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Walmart faces competition from other global terms. Although it maintains its top position
of being a leader in the global production of retail services, the business has had to consider
various success factors in its operations (Casadesus-Masanell and Ricart, 2012). One of the
factors is the use of advanced technology. Walmart offers its services to a global market, and
thus there is need to meet the relevant factors to ascertain efficiency. Technology ensures that the
business enjoys a streamlined way of operating. It also ensures that the company keeps a clean
record of its inventory and its movement along the supply chain (Stadtler, 2015). Technology
saves the company the labor costs and reduces the time consumed in running operations.
Walmart needs to consider the culture of the area it is operating. To be successful,
Walmart needs to emphasize on inclusion as its primary operation strategy. Inclusion refers to
creating a conducive environment, where the business and the surrounding community relate
harmoniously. Walmart can achieve this by respecting and adopting the community’s culture as
well as participating in community-based operations. This creates a good rapport with the
community, resulting in business growth (Morschett, Schramm-Klein, & Zentes, 2015).
Downside Risk
Although Walmart has a useful operating system leading to its overall success, the
company is prone to several challenges. One of the significant risks is the changes in the laws
and regulations affecting operations. As it operates in different parts of the world, the host
countries can deploy unattractive laws and regulations, which limit the operations of the business
(Rothaermel, 2015).
Recommendations
Walmart can consider several actions to improve service delivery. First, it can employ
policies, which are customer focused. Additionally, the company can advocate for the need for

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improved innovation (Clauss, 2017). Innovation allows the business to incorporate new
strategies aimed at improving service delivery, while at the same time developing a person’s
abilities. The company should also consider policies that will advocate for social responsibility
and sustainability (Wells, 2013). This means the provision of services in a manner that will
ascertain the development of the society more sustainably (Rothaermel, 2015).
Conclusion
A business model is a blueprint that highlights the techniques employed in business to
meet sustainable growth and maximize profits. Walmart, being a leading service provider for
retail activities, employs the Osterwalder & Pigneur business model, which highlights nine
fundamental building blocks. The nine building blocks relate with each other simultaneously to
aid the store to achieve maximum output in overall service production. Walmart considers
critical factors such as the culture and technology to maintain its success. However, the company
faces risks in its operations, including the changing laws and regulations, which could affect its
operations. To improve service delivery, the business can incorporate various strategies such as
advocating for social responsibility and growth, innovation, and customer-focused strategies.

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References
Casadesus-Masanell, R., & Ricart, J. E. (2012). 22 Competing through business
models1. Handbook of Research on Competitive Strategy, 460.
Clauss, T. (2017). Measuring business model innovation: conceptualization, scale development,
and proof of performance. R&D Management, 47(3), 385-403.
McGee, R. (2018). How large is Walmart? A Comparison of Walmart Sales to Nations
GDP. SSRN Electronic Journal. http://dx.doi.org/10.2139/ssrn.3102735
Morschett, D., Schramm-Klein, H., & Zentes, J. (2015). Strategic international management.
Springer.
Osterwalder, A., & Pigneur, Y. (2010). Business model generation: a handbook for visionaries,
game changers, and challenges. John Wiley & Sons.
Osterwalder, A., Pigneur, Y., Bernarda, G., & Smith, A. (2014). Value proposition design: How
to create products and services customers want. John Wiley & Sons.
Parnell, J. A., & Lester, D. L. (2008). Competitive strategy and the Wal-Mart threat: positioning
for survival and success. SAM Advanced Management Journal, 73(2), 14.
Rothaermel, F. T. (2015). Strategic management. McGraw-Hill Education.
Stadtler, H. (2015). Supply chain management: An overview. In Supply chain management and
advanced planning (pp. 3-28). Springer, Berlin, Heidelberg.
Wells, P. E. (2013). Business models for sustainability. Edward Elgar Publishing.

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