Walmart: Strategic Directions, Analysis, and Competitive Advantage

This report presents a strategic analysis of Walmart, examining its past strategic directions, including its mission, vision, and strategic objectives. It assesses Walmart's external environment using PESTLE analysis and evaluates its competitive advantages through Porter's Five Forces model. The report also explores Walmart's competitive positioning, strategic capabilities, and the application of the Business Canvas Model to understand its value creation. Furthermore, it discusses potential strategies Walmart could employ to defend its core business and evaluates the resource implications of these recommendations. The analysis covers strategic drift, transformation change, and the alignment of Walmart's mission and vision with market demands. The report provides a comprehensive overview of Walmart's strategic management practices and future strategic options.

Strategic Management

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Strategic directions followed by Walmart in past and development of strategic thinking ....1
TASK 2............................................................................................................................................4
External environment analysis .............................................................................................4
Company's competitive advantage among its direct competitors...........................................6
Porter five force model......................................................................................................6
Probable industry scenarios facing the company ..................................................................6
TASK 3............................................................................................................................................7
Company Strategic Drift.........................................................................................................7
Phase 4: Transformation change .....................................................................................................8
Alignment of mission and Vision statement to demand of market place...............................8
Company strategic capabilities...............................................................................................9
Business Canvas Model for determining rationale and core logic of company's value creation
..............................................................................................................................................10
TASK 4..........................................................................................................................................11
Possible strategies that the company could follow to defend its core business....................11
TASK 5..........................................................................................................................................13
Evaluation of Resource implications of recommendations that the company has to address13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Strategic management involves formulation and implementation of various important
goals and initiatives taken by the top management of organisation on behalf of owners. It is
usually based on consideration of resources and assessment of internal and external environment
of company. It provides overall direction to business enterprise and involves specification
organisation's objectives.
Present report is based on analysis of Walmart that is American multinational retail
corporate that operates a chain of supermarket, discount departmental stores and grocery stores.
Strategic direction which is followed by company in past 5 years is discussed along with the
ways to develop strategic thinking . PESTLE Analysis Model is also used to review external
environment of Walmart (Chernev, 2012).
In addition to this, Porter's Generic Strategy Model is used for critical discussion of
Walmart's competitive advantages among its direct competitors. Further, strategic capabilities
of company in retail sector is also discussed with Business Canvas model to portray and explain
rationale and core logic behind how Walmart creates, delivers and captures value in retail sector.
At last, possible strategies that company could follow to defend its core business is also
discussed along with evaluation of resources implications of recommendations provide to
organisation.
TASK 1
Strategic directions followed by Walmart in past and development of strategic thinking
In competitive business scenario, organisation needs to adopt a strategic direction for
sustaining business innovation and construction of various important features that helps in
completion of business operations. Walmart Inc. is analysed as largest retailer in the world in
terms of revenues and number of employees worldwide. Company has become leading retail
business enterprise of the world. With the top position in retail sector, WalMart's annual
revenues have also exceeded $485 billion in financial year ending 2015. Moreover, success of
organisation is depend on the effective application of strategies to reach company's vision and
mission. Walmart's generic strategy and intensive strategy are based and aligned with its vision
and mission statements. Thus, corporate strategic directions, mission, generic strategies for

competitive advantages and intensive growth strategies are considered as contributing factors
towards the success of organisation.
2

Below given are the strategic directions which are followed by Walmart such as:
 Strategic objectives: These are considered key objectives of company, that needs to
achieved in order to strategic mission and vission. Strategic objectives are based upon
vision and mission of an organisation that they need to achieve for growth and
development (Das, 2011). In this context, Strategic mission of Walmart is analysed as
Saving money of customers so that they can live a quality life. In order to achieve this
vision, company has formulated objectives to provide quality products to customers at
low selling prices. In last 5 years, Walmart's profitability in retail sector has been
increased continuously due to its cost leadership strategic
 Competitive analysis: It an essential part of company' strategic direction, which implies
analysis of policies and procedures followed by direct competitors of organisation in
retail sector. The key competitors of Walmart in market can be considered as TESCO,
Sainsbury, ASDA, Marks and Spencer. In order to increase market share, Walmart has
acquired operations of Asda that has provided them major growth opportunities.
Ansoff's matrix is also used to determine strategies adopted by Walmart in last 5 years for
sustaining its business operations in market.
Market penetration: This strategy involves selling more goods and services to current target
market. Walmart uses this strategy as its main intensive strategy for growth of business. It is
mainly focused towards selling of more products and services to current target market by
offering discounts, promotions and special packages. For example: Walmart offers discounted
wholesale packages of various products.
Product development: Walmart only minimally uses product development as an intensive
strategy for growth. In this intensive strategy, the focus in on offering new products to the
market. Walmart provide its major focus on sales and marketing rather making invesment in new
product development. Thus, product development is not considered as significant strategy for the
growth of organisation. Instead, the company's focuses on sales and market. Thus, organisation
development is not a significant intensive strategy for its growth.
Market development: In present competitive environment, Walmart uses market development
as its secondary intensive strategy for growth (Kunnanatt, 2011). This intensive growth strategy
involves entering new markets in order to sell differentiated products to consumers which are
3

not provided by competitors. For example, Walmart establishes new stores to achieve market
development. Moreover, company opens new ventures in overseas location to tap consumers in
those open markets.
Diversification: this is considered as another important strategy that involves selling new
products in new market, which helps the organisation to maximize high revenues and operations.
This strategy is not adopted by Walmart as its aim is to sell its products in retail sector. This
strategy involves high risk and investment because it eventually provides success to organisation.
However, . Company needs to follow its strategic vision and mission through keeping its
costs and prices low.
TASK 2
External environment analysis
Walmart is the crowned head of physical retail marketing industry and always have a
competitive pressure. There are various macro- factors that determine the development, growth
and success of walmart.
POLITICAL FACTORS
Walmart is operating in various domestic and international countries so it faces political pressure
from various countries. Since the Asian economy is operating at a fast growth then too walmart
was able to open around 400 stores in China and few stores in other country (Mathur, 2011). The
number of stores are quite disappointing as compared to the stores they have opened in US. The
reason for difference in figures is that of the political interference in these countries. Many
countries have imposed restriction on foreign direct investment (FDI) which have a pessimistic
effect on their expansion. A good political support for globalisation can be an opportunity for
walmart.
ECONOMIC FACTORS
For any business working globally, a good sign of growth depends upon the buying power of the
customers. In the US economy the purchasing power of the customers is good which means a
high growth of walmart. Any change in the economy will have direct impact on company's
revenue. Economic trends like more employment will bring growth for walmart and many other
retail brands. Increase in other brands means more competition for walmart. A growth in
economies of developing sector means increase in walmart market globally.
4

SOCIAL FACTORS
These factors have a major influence on the profits of the walmart. There are many countries
where people do not prefer to buy the goods from the stores instead they prefer to buy from the
local vendors in that case the business may have to face high losses (Ferrell and Hartline, 2010).
Many stores of walmart couldn't survive in the Korean and German market, and they hd to close
their stores because of the competition from local vendors. Trends in the technology have impact
on the buying pattern of the people. Now more people prefer to shop on online which is a threat
for retailers like Walmart, as they have not entered into the online market.
TECHNOLOGICAL FACTORS
There has been plenteous use of technology worldwide. Walmart has a huge investment in
supply and distribution of products. What soever is the business, technology is everywhere.
Walmart stores have started investing in the supply chain and in the stores with the upgraded
technology to provide customers with better shopping experiences. Artificial intelligence is key
to success for retail business and a lot retailers depend on real time data analysis. Walmart uses
new technologies to attract their customers and to increase their profits in the market.
ENVIRONMENTAL FACTORS
Conservation of environment is a important concern of every business. Even if it is retail
business, they are required to look upon the packaging, waste, energy consumption etc. walmart
have started focusing on zero waste and better packaging (Flander, 2014). These factors are
important concern as they help brands to manage their image in the society and other areas also
in the other areas. More than 80% of material flowing out from different stores is diverted from
landfills.
LEGAL FACTORS
Retailers are required to follow rules and regulations. Non compliance will impact the reputation
and will result in financial losses. If the tax rate increases then it is a potential threat for
customers. They have faced many suits of labour force like the HR issues, low wages and salary.
Walmart is trying to improve the working conditions for their staff.
5

Company's competitive advantage among its direct competitors
Porter five force model
 Intensity of competitive rivalry
There are many firms of different size facing huge competition in the retail market.
Factors to be considered by walmart are large number of retailers in the market, increasing
number of firms, high aggressiveness are the strong force the company should keep. The have
maintained a good position in the market because of their pricing strategies.
 Bargaining power of buyer
Faces a weak force of bargaining power of buyer. Large population of buyer make a strong force
in the retail market as customers have low switching cost. Heterogeneous buyers and small size
of purchase by people and not in lots makes a weak force (Hyde, 2014).
 Bargaining power of supplier
They have low bargaining power. High competition among suppliers and high availability of
supply are the weak force. The switching cost for walmart is low which attracts many suppliers.
Some large companies supply to walmart which gives them strong bargaining power.
 Threat of substitutes
Though there are number of retail industries but not all of them are offering their products at a
low price. Walmart have a strong price advantage (Kiptoo and Mwirigi, 2014). They sell variety
of products and also the substitutes in their stores. They face challenges from online websites but
the price are still very low even if you buy from online walmart stores.
 Threat of new entrants
It applies moderate force on walmart. Since walmart is among the largest retail brand, any entry
of competitor is not possible. It requires a lot of time and investments. It is difficult to have a
strong supply chain management system like that of walmart. Burt small companies can bring
some specialised product. Cost of establishing new firm and running it at a lower cost are from
low to moderate.
Probable industry scenarios facing the company
 Small store large profits
They have opened small stores in US providing basic products to their customers. They have
opened around 15 stores which are 38000 sq. ft. have provided them large profits.
 Online investments
6

They have contributed a major amount in its online business which grew its sale to 15% and also
increased its profits over time (Njeru, Stephen and Wambui, 2014).
 Keeping it fresh
They are focusing on keeping the quality of their goods fresh and improving the quality of the
food they are providing and train their employees to remove the rotten food items.
 Overseas stores
Walmart have opened various stores in many countries and still planning to widespread globally
in parts of Canada.
 Better stores
Though they have improved and trained their employees to make better sales but a huge
improvement is required in stores operations.
TASK 3
Company Strategic Drift
Strategic drift occurs when strategy of a business no longer relevant to external
environment in which it operates. It attempts to determine the reason why strategies of Walmart
lost touch with dynamic external environment where it operates. In last 5 years, market-leading
businesses have suffered from strategic drift and lost their ways.
Walmart has faced this situation due to inability of their business to adopt changes in external
environment (Parnell, 2010). Changes in legal policies and procedures have provided major
influence on business procedures that affects business enterprise and its process. When business
is highly affected by external environment, a company needs to implement changes in its
strategic capabilities and position at workplace.
There are four phases of strategic drift which are as follows:
Phase 1: Incremental changes:
In this phase, little change occurs in external environment. A series of small, incremental
changes to strategy enable the business to remain in touch with external environment. At this
stage, Walmart has also remained in touch with external environment such as increase in
economic growth and technological advancement.
Phase2: Strategic Drift
It involves the rate of change in the external environment is accelerating and small,
incremental changes are not enough in their own to remain in touch. After increase in
7

competitive pressure in market, Walmart has also lost its competitive advantage of low price
retailer.
Phase 3: Flux
The phase has been characterised by management in decision. In this stage, Significant
gap arise between the market expectation and products & service delivered by organisation in
market. Management of Walmart has recognised this gap and began to alter strategy, however,
there is no decisive improvement have been arised.
Phase 4: Transformation change
It is the stage at which the management recognise the requirement of transformational
change in strategic direction or the business fails. It often takes new and external leadership for
this recognition to be made and relevant strategic changes programme has been implemented.
Walmart takes support of market research for analysing the requirement of transformational
changes which helps to resolve the negative impact of strategic drift (Rumelt, 2010).
Alignment of mission and Vision statement to demand of market place
Walmart's stratgies and its choices are based upon its mission statement which is
developed by organisation after analysing demand in retail sector. In present scenario, Vision is
analysed as statement that clearly defines the position of organisation in market. The company
strategic decisions are also direct manifestation of its mission. In strategic management, it is
essential for organisation to develop strategies and vision statement so that they will be able to
attain high competencies at workplace (Abraham, 2012). The company' strategic direction are
also considered as direct manifestation of its mission. Walmart's mission statement is Saving the
people so that they can live better. Firm has developed this, strategy after analysing the fact that
people need in retail industry needs to buy quality products at lowest possible prices. However,
the firm follows and succeeds in fulfilling the saving people money components of mission
statement. For completion of this mission statement, company needs to apply cost leadership
strategy so that customers can save money. However, there are also criticism have been arised
about the long term effect of this strategy of large scale sale of cheap and sometimes hazardous
effects. For example: The company has more than 1,100 online grocery pickup locations, a free
service where customers can order groceries and drive to pick them up. Encouraging pickup will
help Walmart avoid expensive grocery shipping costs.
8

Company strategic capabilities
SWOT analysis model is used to determine the strategic capabilities of Walmart such as:
Strengths Weaknesses
 High financial strength in market has
provided them major opportunities to
sustain their competitive positive in
market.
 Global organisational size also strategic
capabilities of Walmart which enable
them to attain large number customers
across countries.
 Global supply chain also provide
business resilence from market specific
risk (Allison and Kaye, 2011).
 The profit margin are analyses as major
impact of using the cost leadership
strategy. As company minimized its
selling prices, it also required for them
to reduce its profit margins and rely
more sales volume.
 Moreover, the cost leadership strategy
also makes Walmart's business model
easy to copy.
 It does not have essential competitive
differentiators that excepts for its
business.
 Decline growth due to competitive
pressure is analysed as major weakness
of company.
Opportunities Threats
 Company can expand its business
operations in developing countries by
adopting low cost leadership strategy. It
is based on high growth economic
conditions.
 Improvement in human resources
practice also enable the organisation to
attain potential employee which helps
them in sustaining innovation and
retention of previous customers.
 Continuous increasing pressure of
competitors in market.
 Continuous changing preference of
customers
 Political issues and strategies that
address the affects business operations.
 Increase in inflation rate has also
created major influence on business
operations of organisation.
 Increase in small online retail
companies have also captured some
9

 market share of Walmart.
Business Canvas Model for determining rationale and core logic of company's value creation
This model involve various important elements that determine the core logic of Walmart
behind value creation.
 Key partners: It involves partners which are involved in business operations of
enterprise and helps in creating value such as Distributors, government, local farmers
and e commerce websites (Carlson, Harris and McLeskey, 2013).
 Key activities: It involves key activities performed by organisation such as Product sales,
customers service, marketing and advertisement and innovative promotions and
operation management etc. Walmart tends to create value for managing its key
operations.
 Key resources: This involves real estate planning, products, management, sales,
marketing. Human resources which are employment by organization to sustain its
competitive advantage in market (CConduit and Mavondo, 2015).
 Value preposition: This factors involve the strategies such as low price, strategies that
affects operations of organisation.
 Customers relationship: Personal assistance in long standing transition of offering audits,
merchandise returns and privileges.
 Channels: There are various important channels have been used by Walmart such as
online stores, retail stores, values preposition etc.
 Customer segments: Mass market segments in adopted by organisation and its also helps
in completion of research in appropriate manner.
 Cost structure: It is also considered as cost structure that affects the business model in
completion of research and strategies that affects the completion of research.
 Revenue Streams: It involves the elements such as products sales, fixed rates and
discount which influence the customers to purchase products and service of organisation
10