Business Strategy Report: Walmart Strategic Management Decisions

This report provides a comprehensive analysis of Walmart's business strategy, examining its macro environment through PESTEL analysis, assessing its internal capabilities using SWOT analysis, and evaluating strategic resources and capabilities via the VRIO framework. It further applies Porter's Five Forces model to assess the competitive landscape and utilizes the Ansoff Matrix to devise growth strategies, including market penetration, development, and diversification. The report also discusses Porter's generic strategies, highlighting Walmart's cost leadership approach, and offers recommendations for growth, emphasizing strategic priorities and objectives, all based on the provided assignment brief. The report concludes with a strategic management plan, integrating tactical and tangible objectives, and covers the application of McKinsey's 7S model to assess organizational effectiveness.

Running head: BUSINESS STRATEGY
BUSINESS STRATEGY
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Introduction
The purpose of this report is to analyze and influence the macro environment of the
chosen organization Walmart and describes the strategies to determine and inform the strategic
management decisions that can be taken by the business organizations.
Task 1
1.1 Environmental Analysis: PESTEL (LEYVA et al. 2018)
Political factors: According to Ho (2014), there is high level of political stability and
governmental support for globalization in UK which is an opportunity for Walmart. However,
there are political pressures to raise the wages of the employees which poses threat to the
business organization.
Economic factors: The economy of UK is stable; there is continuous growth in the economy of
the country and decreased unemployment. This is a favorable situation of the country which is an
opportunity to the company.
Social factors: there is a trend for healthy lifestyle in the country which offers an opportunity to
the company to increase its array of healthful products. It can also increase its range of products
to meet to needs of the customers (LEYVA et al. 2018).
Technological factors: There is an increase in the trend of automation and advancements of
technology such as business analytics and big data which is an opportunity for Walmart. It can

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increase the usage of mobile devices among the customers. Walmart needs to take advantage of
the opportunity.
Environmental factors: There is an increasing trend for business sustainability; therefore
Walmart needs to improve its operational efficiency (Ho 2014). Improves standards and policies
of the products and the services in the retailing sector is an opportunity for Walmart. It needs to
address the ecological factors.
Legal Factors: The tax reforms in the country can be a threat to the company as the company
has to give higher tax rates. The food safety regulations and improved quality standards can be
an opportunity for the company (Ho 2014).
1.2 Organisational Audit: SWOT analysis
Strengths: Walmart is an established brand and has a global recognition. Its global presence is
one of the biggest strength of Walmart (Walmart.com. 2019). The company has a technologically
advanced information system which helps the company to carry out its operations in an enhanced
way. The company has a better customer relationship management and volume sales enable the
company to gain competitive advantage.
Weakness: According to Gürel and Tat (2017), the Company has faced many issues and lawsuits
regarding their treatment of employees such as unequal wages and salaries, issues of labor
discrimination, poor benefits and environments. High employee turnover is one of the
weaknesses it needs to work upon. There have also been claims of inferior quality products being
sold to the customers.
Opportunities: There is a trend for healthy products and items. Therefore, there is an
opportunity for the company to introduce more options for fresh and healthier products such as

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gluten free options and more organic food items (Blockeel et al. 2016). It also has an opportunity
to increase its online presence and expand its online store.
Threats: Increase in the level of the competition is an increasing threat to the organization. There
are social threats from the local communities. The recessionary periods in the country still
continues to be a treat to the business organization. There is an increase in the labour costs,
increased cost for raw materials as other regulatory issues such as law reforms which pose to be
a threat to the company (Gürel and Tat 2017).
Task 2
2.1 Analysis of strategic capabilities using the VRIO framework.
VIRO Analysis (Chatzoglou et al. 2018)
Wal-Mart
Capabilities/
Resources
Valuable Rareness Limitability Organization
Organization
structure
YES NO YES YES
Pricing strategy YES YES NO YES
Innovation and
technology
YES YES YES YES

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Supply chain
management
YES YES YES YES
Human resource
management
NO NO NO YES
Value: According to Chatzoglou et al. (2018), the structure of the organization, its strong
relationship with the suppliers, the pricing strategy of the company and its implementation of
advanced technology are some of the most valued resources and capabilities of the organization.
Rarity: The innovative approach of the company and implementation of automation and other
technologies are rare in the retail industry. The company has implemented a POS system which
is rare in the industry. In the opinion of Chatzoglou et al. (2018), its strong relationship with the
suppliers of the organization is also rare. However, the human resource management of the
organization is not rare in the organization.
Imitability: Building the organization structure similar to Walmart requires highly amount of
investment and time. Therefore, it is not imitable by the new start-ups. Building strong
relationship between the suppliers also requires lot of time and effort which is not imitable easily
(Chatzoglou et al. 2018).
Organization: The employees and the staffs of the organization are very knowledge and
effective in every aspects of the store. They have the ability to handle any customer issues. This
helps the business organization to run the operations smoothly and in an effective manner
(Chatzoglou et al. 2018). The hierarchy and functional based structure of the organization is an
advantage to the business organization.

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2.2 McKinsey’s 7S model as a management tool
Hard elements:
Strategy: Walmart follows a cost leadership strategy. It claims to offer ‘everyday low prices’
(Walmart.com. 2019). The company strategically sustains this strategy by implementing its
bargaining power to secure low prices from the suppliers, however, the organization has been
facing issues and criticism for low wages offered to the employees and consequently it has
affected the quality of customer service.
Structure: Walmart follow a traditional tall structure. It is highly hierarchical due to the size and
the scope of the business. However, according to Singh (2013), recently the company has taken
initiative to delayer the structure of the organization. It plays to delayer and reduce bureaucracy.
This will enhance customer service.
Systems: there is varied range of system in the business organization which increases the level
of complexity. The systems of Walmart are not limited to selection, IT, employee performance
appraisal and recruitment.
Soft elements
Shared value: The mission and the goals of the business organization to stated in alignment with
the shared value of the business organization(Singh 2013). The company highly believes in the
sophistication of the management practices rather than just being a simply manufacturing
company.
Staffs: the employees and the staffs of the business organization are the strength of the company.
The company has more than 300,000 employees all across the world(Singh 2013).

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Style: The working style of the company enables the company to achieve the goals and the
objectives of the company. The company gives importance to the main areas of the business
including employee performance, customer satisfaction and operations.
Skill: The capabilities and the talents present in the business organization have helped the
company to grow and expand(Singh 2013). The company provides opportunity to enhance the
skills and talents of the employees and enable them to work as per the standards of Walmart
Company.
Task 3
3.1 Applying Porter’s Five Forces model evaluate the competitive forces
Intensity of competitive rivalry: There is high level of competition in the market. There are
various forms of different sizes in the retail industry to compete with Walmart (Dobbs 2014).
There is large variety of retail forms in the industry. The other varied retail organizations are
highly aggressive.
Bargaining power of the customers: According to Dobbs (2014), the bargaining powers of the
customers are weak. The population of buyers is huge which imposes a significant pressure on
the retailing organizations. The diversity of buyers and smaller individual purchases weakens the
bargaining powers of the buyers.
Bargaining power of suppliers: The bargaining power of suppliers is weak in the industry.
There is large number of suppliers and there is stiff competition among the suppliers (Dobbs
2014). The high availability of suppliers weakens the bargaining power of the suppliers.
Threats of substitutes: the business organization offers wide range of products and services are
have very little substitutes. The low availability of substitute products makes it difficult for the

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customers to shift their preference over Walmart (Dobbs 2014). Further, the cost of substitute
products and services available in the market are of high price.
Threat of new entry: there are low barriers to entry. Small retail markets are easily influenced
by the supernormal profits and compete with Walmart on the basis of specialty, convenience and
other factors. However, there is highly cost of brand development and modernly high capital
(Dobbs 2014).
3.2 Ansoff matrix Devise appropriate strategies to improve competitive edge and market
position
Market penetration: The primary strategy of Walmart is market penetration. According to the
Ansoff’s model this strategy entails around offering products and services in the current market
by giving discounts and offers. Further, the organization enhances the online presence of the
company and this contributes to the growth in the sales of the company(Hussain et al.2013).
Market Development: Walmart implements its intensive strategy to support its business growth.
The organization open new stores all across the globe and increase its global presence.
Moreover, it establishes its online presence for reaching a wide range of consumers. It
implements a cost leadership generic strategy which supports intensive growth by offering high
quality and low price goods and services to the customers(Hussain et al.2013). This enables the
business organization to attract the consumers in the new markets.
Product Development: According to the Ansoff Matrix, product development implies
developing and offering new products to the markets. Walmart mainly focuses on investment in
sales and marketing which are the core activities of the retail business operations. It also invests
in research and development using its intensive growth strategy.

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Diversification: The intensive growth strategy of the company involves offering new products
and new markets. Walmart considers entering a new market extensive marketing policies and
advertisements(Hussain et al.2013). However, Walmart has a low rate of diversifications as it
mainly emphasizes on the retail marketing operations.
Task 4
4.1 Porter’s generic strategies
The generic strategy of Walmart is cost leadership (Walmart.com. 2019). According to
the definition by Michael Porter, cost leadership that focuses on attaining low costs is the generic
competitive strategy of a business organization. Walmart gains its competitive strategy as
offering its products and services at a lower cost. The organization implements various
approaches to maintain a lower cost such as automation and minimized spending on human
resources(Salavou 2015). Lower pricing policy is one of the fundamental strategic objectives of
the business organization.
4.2 Recommendations on Growth strategies
Based on the SWOT analysis, Walmart has a global recognition and recognized brand
name, therefore, the organization needs to continually focus on strengthening its position and
consider entering in new markets and other retail industry. There is stiff competition in the
market scenario which threatens the position of the company; there it needs to prioritize
competition in the retail business operations(Salavou 2015). It is highly recommended the
company must focus on investing in the automation of internal business operations. This will
improve the operations of the company and improve the overall efficiency of the business

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organization(Tanwar 2013). Further, the organization must consider employee satisfaction by
offering equal and fair wages this will reduce the employee turnover rate and ensure quality
service to the customers. These recommendations will enable growth and expansion and
counteract the effects of strong force of competition in the market(Pulaj, Kume and Cipi 2015).
It is also recommended that the business organization must develop additional enhancements for
its intensive growth strategy.
4.3 strategic management plan (Tactical and tangible strategic priorities and objectives)
The mission and the vision of Walmart is the base for strategic planning of the goals and
objectives which shapes the tactical and the operational level of the business organization
(Ansoff et al. 2018). The company needs to aim to improve the shopping experience of the
people and increase its sales. According to David and David (2013), the organization needs to
consider operational efficiency and effectiveness by connecting in-store merchandising along
with back end logistics. Walmart needs to improve the shopping experience of the customers and
provide access and visibility to all the levels of the business organization within the store. It can
consider doing super promotion aisle in order to shuffle the departments for the customers. This
will enhance the shopping experience of the customers and maximize the demand for the
organization(Mitchelmore and Rowley 2013). The front-line managers and the supervisors must
be responsible for focusing on specific task and help to meet the tactical and the strategies goals
of the business organization to attain customer satisfaction.
Conclusion
Therefore, from the above analysis it can be concluded that the Walmart can implement
various technological advancements such as automation to improve the performance of the

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organization. The report has described the macro environment that can impact the business
organization. The strategies and plans that can be implemented by the company has been
recommended.

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