Walmart Business Strategy and Competitive Advantage Assignment

Running Head: MANAGEMENT 0
Strategic Management

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Executive Summary
Just like other corporate enterprises, Wal-Mart has its own corporate strength and relying on
it, the company can achieve competitive advantage within the retail industry. It is one of the
oldest organisation founded in 1962 and therefore, the company has a good understanding of
the market. In many of strengths, it helps the company to leverage various sort of
opportunities and with stronger e-commerce network, the company can give direct
competition to the market.
In order to retain its sustainability over longer period of time, the company can develop
positive relationship with the suppliers and ultimately, offer products at low prices. In
addition, the company should tap digital medium for gaining long term benefit in the retail
industry while binge competitive for longer period.

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Table of Contents
Introduction................................................................................................................................3
Internal Environment Analysis..................................................................................................4
External Environment Analysis.................................................................................................6
Recommendations of Generic Strategies...................................................................................8
Strategy Execution.....................................................................................................................9
Conclusions and Recommendations........................................................................................10
References................................................................................................................................12

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Introduction
In current era of globalisation, the evolution of marketing has been increasing towards edge
of consumer experience at various touch point including developing long term relationship
and driving their ideas into operational and production process. Helfat and Peteraf (2015)
defined strategic management as the course of involving capabilities benefiting enterprise to
create worth for the community, employees, consumers and various significant stakeholders
by competing with various internal and external factors. A company requires to have a viable
strategic plan with clear purpose and goals as it will help in dealing with various uncertain
external environment variables. In order to understand the roots of strategic management, this
report is taking out an example of Walmart, one of the biggest multinational retail business
organisation.
There are various international and multinational retailers all over the world, however,
American and European organisations all ruling the industry for a long period of time. In
1962, Walmart has been incorporated and currently, it is having its root of operations in more
than 28 countries while called to be the leading grocery retailers all over the USA. Globally,
Walmart has established nearly 1100 stores offering varieties of products in several
categories comprising health and electronic products, grocery items, hardware appliances and
so forth (corporate.walmart.com, 2019). The United States has well-established distribution
channel for all retail corporations and The U.S. retail sector directly employs about 29 million
individuals and assist more than 42 million jobs (selectusa.gov, 2019).

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Walmart mission is to save money of individual and make them live better and it shows that
this multinational chain is drawing the interest of targeted consumer by considering price as a
selling mark. Furthermore, Walmart vision is being modified in 2017 to be one stop
destinations to number of customers to save money irrespective of how they seek to buy. To
offer constant product and service to its customers, Walmart also has developed a network of
more than 2800 supplier with developing long term contractual agreements and therefore,
achieve competitive edge in the whole retail sector. As per the Fortune Global 500, Walmart
attained number one position with an income of $500, 343 million and developing network of
2.2 million workforces globally (fortune.com, 2019).
Internal Environment Analysis
Strengths
 Consumer trustworthiness
 Affordable pricing
 Store location at major places
 Superior brand responsiveness
 Scale of operations
 Wide product range
Weakness
 Wage plan criticism
 Not much differentiation
 Higher turnover of employee
 Huge stock is taken out by the
corporation.
Opportunities
 Growth of e-commerce
 Increasing trend of healthy foods
Threats
 Union of employees
 Rising competition from local stores
 High prices of commodity and
supplies
 Increasing competition from brick
and mortar stores
 Employee union
Walmart biggest strength is its loyal customer base who always shop from buyers irrespective
of discounts and rebates from other retailer and corporations. The key reason is the big
discount, pricing and one stop shopping convenience meeting all the fundamental criteria of a
consumer. Most of the Walmart stores are located at prime locations and this gives advantage
to the company as higher traffic leads to visiting of more people in the stores. Higher brand
awareness is another strength of Walmart and it can be seen through company investment in
2019 for the promotion and marketing of nearly 400 million dollars higher than the previous
year (statista.com, 2019). The company have spread throughout the world with nearly 150

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distribution centres and stores in nearly 50 states and with more than 2 million members. In
the end, Walmart fulfils the changing needs of the consumer in one or other way through its
broad product portfolio and innovative technologies.
In terms of weakness, there is various criticism over wages on the company and it forces
Walmart to maintain at least $15 an hour. The company also faced several issues in its supply
chain as of massive stock and it requires the company to adopt and invest in supply chain and
logistics technology such as RFID. The rate of employee turnover is also associated to
Walmart weakness representing 10-15 percent each year. In relation to product portfolio and
services, Walmart does not maintain big differentiation and it can threaten to company
sustainability over longer period of time. Considering this, company low cost leadership
tactics will also not much help the company and may eliminate Walmart competitive
advantage.
Considering opportunities, Walmart has a bright future to increase its footprint higher into
emerging countries like India as there are projections that retail market will rise to the US $
1200 billion by 2021 financial year from the year 2017 which was at US$ 672 billion
(taxguru.in, 2019). Walmart also has a great opportunity to strengthen its e-ecommerce
channel and give tough competition to Amazon. Lastly, the company also have an
opportunity to bring healthier product portfolio as the demands of customers is changing
constantly and this may provide a competitive edge in the retail sector. One of the biggest
threat of Walmart is the competition from small local stores as they are one who can cause
big harm to the company other than the e-commerce retailers. Union from employees is
another big threat and the company is stimulating many times to employees not to form
union, as the management is ready to resolution for any issue, occurs through labour
advocates (Haiven, 2013). Ultimately, higher consumer bargaining power can have negative
impact on profit margins of Walmart in relation to increasing prices of products.
Putting Strategy into Action
Walmart has sustained great brand awareness from long period of time and it will
make effective for the company to tap into emerging markets and segment the customers
according to its strategy. The management of Walmart can plan of attractive prices on its e-
commerce channel and network and this may be considered as the biggest advantage to the
company in terms of increasing number of customers. Walmart has an issue of greater
employee turnover and this requires management and HR divisions to adopt new employee

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retention practices and undertake weekly appraisal to evaluate demands of each and every
employee. Through increasing their private brand products, the company can bring more
differentiated products and while making long term contractual agreements with the
suppliers, the product prices can also be controlled.
External Environment Analysis
The external environment of Walmart can be evaluated with the use of PESTEL framework
that helps the management to analyse the impact of external variables on the decision making
of the enterprise.
 Political Factors – Walmart is having its presence in various countries and the
political environment of each country cause significant impact on company
operations. In addition, it requires Walmart to adjust its business as per the different
market conditions and political structures or different political actions can be targeted
to the company and may hamper company brand image negatively. For instance,
Walmart is being accused of gender discrimination in 2007 and for the same, lawsuit
is also been trailed against the corporation. In addition, the big brands in the US are
also targeted by EU from last many years (Engler, 2016) and therefore, it is very
significant for the corporation to build various counterfeit tactics against such political
actions.
 Economic Factors – The business performance of Walmart is also directly related to
the economic constancy in which Walmart is functioning and stability of economy
can be hampered with the tight credit policies, level of inflation, tax rates and so on.
From a long period, the company is undertaking several approaches to increase its
growth in relation with profits and revenue like changing stores with automation,
decreasing wages level and so forth.
 Social Factors – All over the world, Walmart has reinforced its brand image at a
positive note with offering its products at one place comprising the individual beliefs
and their lifestyle. Most of its loyal customers also started to shop with its online
channel and it can be seen through its increase in a number of shoppers and followers.
Walmart also aims to attain employee diversity and the company by this time gain
appreciation for doing positive alterations in its policy of antidiscrimination. The

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sopping practice in retail sector has also been changed with increasing use of digital
technology as well as mobile usage. It was also identified that the company is
approaching to raise $41 Million with online grocery initiatives (Rajan, 2018).
 Technological factors – Being a leading retail corporation, Walmart believes in
offering quality services while continuously refine its operational and internal
processes. Walmart comes up with various technological investment from its stores to
supply chain to customer delivery process. Some of the major technology includes
RFID tags at warehouses, artificial intelligence in its management information system
to forecast the actual demand in the market, data mining and so forth. Towards digital
transformation, Walmart and Microsoft agree on five-year partnership to increase
shopping speed as well as positively stimulate various retail member and associates
(Warren, 2018).
 Legal Factors – Walmart internal and business practices are bound by legal
environment of the particular country or market in which the company is having its
presence. Being a leading corporation in retail sector, Walmart also has to confront
several lawsuits such as labor union due to wages and discrimination and this impact
negatively on the company goodwill and brand image. It is important for Walmart to
emphasis on each legal aspect relating to the market or the company may confront to
fines like once Walmart improper management of hazardous wastes results the
imposition of fine on company of nearly $82 million (Clifford, 2013).
 Environmental Factors – Showing sustainability towards environment is very
important for an organisation like Walmart, however, the company is currently
practicing various measures as Walmart publicized its various goals related to
sustainability achievable by 2025. These include change packaging of all its private
label brands to 100% recyclable, boost sale of locally source products and so forth
(Makower, 2016). All these practices will benefit Walmart to make positive brand
image in the retail sector.
Analysing such external environment variables and factors will benefit Walmart to attain a
comprehensive understanding of the market that helps management to identify which factor
positively or negatively impact on company decision making process. With access to this
knowledge, the management of Walmart put the company strategies in the direction of
achieving various goals and objectives through proactive planning.

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Recommendations of Generic Strategies
The generic strategy of Walmart is related to achieving competitive advantage through low
cost leadership strategy. The retail industry has very low level of differentiation in terms of
product portfolio and therefore, all players compete on price element in the industry.
Hence, the generic strategy of Walmart is associated to cost leadership and Lee, Feiock and
Lee (2012) defined cost leadership as a mechanism of developing a competitive advantage by
maintaining the lowest cost of operation in the industry. This strategy benefits the company
to constantly gain revenue at the time of string competition with involving low differentiation
of product. With offering products at reasonable and low prices, the retail service of the
company also include low difference, however, to thrive with the generic competitive
strategy, the company requires to do modifications in its day to day management procedures,
efficiency in processes and other strategies with the aim to reduce costs like intensive growth
plans.
Walmart

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Strategy Execution
Strategy execution is a way through which respective plan can be followed and its tow related
component is organisational structure and corporate culture.
Walmart organisation structure
The organisational structure of Walmart is highly hierarchical because of the big size of the
corporation and no alternative organisation structure is there for the company to ensure
effective management. It is also formal and bureaucratic and therefore, requires strategies to
be directly followed by the lower level management. The unity of various team divisions was
organised into three geographic units including south, west and north Wal-Mart’s. The
corporation also uses divisional organisational structure in the company as executives believe
that when organisation grows and become progressively diversified, they discover that
functional divisions face challenges while managing wide product variety, customer and
geographic regions (Koca-Helvaci, 2015). There is also a need for higher number of human
resources to manage such division and it requires Walmart to refine its process of recruitment
while reducing employee turnover ratio as it is almost constant from past several years.
Walmart Corporate Culture
Culture is the foundation of everything one does at Walmart. As per Walmart, it is their
values in action while creating a great front line work environment and enhance performance
so as to attain common aim of saving people money. To some extent, the culture at Walmart
is a paradox and the corporation stands for a unique spirit of involvement and motivation that
has been created within the company with giving of responsibility and constantly evaluating
the performances. With including technology and corporate culture, the company ensures to
deliver the ultimate goal of lowest prices possible. There is uniformity in implementation of
strategy as the company culture depends upon open door policy relying on open
communication necessary for understanding and fulfilling needs of consumers (McGregor
and Doshi, 2015).
Based on the analysis of the culture and structure of Walmart, it can be said that it plays a
major role in the success of company as well as strategy implementation. The mission
statement of Walmart also encompasses around the culture of the company and it is also
modelled by Sam Walton values and principles.

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Conclusions and Recommendations
Ultimately, Walmart has been called one of the pioneer corporation leaving its impact all
over the world. It is praised by various big organisations and magazines such as Forbes, IBEF
and so on. The company revenue is also been increasing, however, parallel to the operation
cost and this requires the company to achieve economy of scale by establishing business into
untapped market and strengthening corporate culture and brand goodwill. With regards to
this, there is an intense competition in current retail environment and because of this,
Walmart must rely on dynamic strategic management tools to attain competitive advantage in
the marketplace.
Moreover, a proactive strategic plan is also needed encompassing the vision of the company
and help Walmart in its strategic growth and development through respective mergers and
acquisitions through alliances. For example, strategic alliance with Microsoft will help the
company to attain cloud based services over the next few years and therefore, future strategy
development of the company relates to company opportunities and strengths while exploring
vital issues that may hamper organisation in future. Various key recommendations for the
company comprises of -
 The company can go on with turnaround strategy to reduce their weakness of
carelessness towards workers welfare. Formerly, it has already been resulted to high
turnover of personnel and legal allegations. It also cause negative impact on the
company reputation leading reduction in the particular market share. Therefore, a
change in strategy is needed to be executed to the employee welfare. For instance, the
company could increase minimum wages of the workers and bring various career
development programme so that lead with their actual growth and this will help
company with raising company brand goodwill and increase in market share.
 To strengths its e-commerce network and channel, Walmart can go for further
partnership and it will also help Walmart to expand into new markets like the
company has entered India with acquisition of country biggest e-commerce channel
i.e. Flipkart and it will lead high competition to Amazon in the local markets. Such
strategies and plans can benefit Walmart in the longer run and help organisation to
gain a pioneer position in the industry.
 Diversification can be the another way for Walmart such as in 2010, the company tap
into video streaming market as it will benefit the corporation to reduce risk of loss as

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during tough time, the company can allocate its resources to the other side of the
business.
 Considering sustainability, the company can source from local farmers, as it would
support the company in terms of conducting business in an ethical way, therefore,
strengthen company goodwill and brand value.

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References
Clifford, S. (2013) Wal-Mart Is Fined $82 Million Over Mishandling of Hazardous Wastes
[ONLINE] Available from: https://www.nytimes.com/2013/05/29/business/wal-mart-is-
fined-82-million-over-mishandling-of-hazardous-wastes.html [Accessed 12/12/2019].
corporate.walmart.com. (2019) Our History [ONLINE] Available from:
https://corporate.walmart.com/our-story/our-history [Accessed 12/12/2019].
Engler, J. (2016) EU has gone too far targeting US companies [ONLINE] Available from:
https://www.cnbc.com/2016/02/24/eu-has-gone-too-far-targeting-us-companies-
commentary.html [Accessed 12/12/2019].
fortune.com. (2019) Walmart [ONLINE] Available from:
https://fortune.com/global500/2019/walmart/ [Accessed 12/12/2019].
Haiven, M. (2013) Walmart, Financialization, and the Cultural Politics of
Securitization. Cultural Politics, 9(3), pp.239-262.
Helfat, C.E. and Peteraf, M.A. (2015) Managerial cognitive capabilities and the
microfoundations of dynamic capabilities. Strategic Management Journal, 36(6), pp.831-
850.
Koca-Helvaci, Z.C. (2015) Walmart and its employee relations: organizational stance-taking
and legitimacy. On the Horizon, 23(4), pp.374-386.
Lee, I.W., Feiock, R.C. and Lee, Y. (2012) Competitors and cooperators: A micro‐level
analysis of regional economic development collaboration networks. Public administration
review, 72(2), pp.253-262.
Makower, J. (2016) Inside Walmart's 2025 sustainability goals [ONLINE] Available from:
https://www.greenbiz.com/article/inside-walmarts-2025-sustainability-goalsl [Accessed
12/12/2019].
McGregor, L. and Doshi, N. (2015) How company culture shapes employee
motivation. Harvard Business Review, 11(1), pp.1-13.

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Rajan, N. (2018) Walmart Is Investing $41 Million In This New Online Grocery Initiative
[ONLINE] Available from: https://xtalks.com/walmart-is-investing-41-million-in-this-new-
online-grocery-initiative-1569/ [Accessed 12/12/2019].
selectusa.gov. (2019) RETAIL SERVICES SPOTLIGHT [ONLINE] Available from:
https://www.selectusa.gov/retail-services-industry-united-states [Accessed 12/12/2019].
statista.com. (2019) Wal-Mart Stores, Inc advertising cost worldwide in the fiscal years 2014
to 2019 (in billion U.S. dollars) [ONLINE] Available from:
https://www.statista.com/statistics/622029/walmart-ad-spend// [Accessed 12/12/2019].
taxguru.in. (2019) FDI in Retail Trading sector in India [ONLINE] Available from:
https://taxguru.in/rbi/fdi-retail-trading-sector-india.html [Accessed 12/12/2019].
Warren, T. (2018) Microsoft and Walmart team up to take on Amazon [ONLINE] Available
from: https://www.theverge.com/2018/7/17/17580744/microsoft-walmart-azure-partnership-
amazon-rival/ [Accessed 12/12/2019].