Critical Review: Strategic Management and Leadership at Wal-Mart

This report provides a comprehensive analysis of Wal-Mart's strategic management and leadership. It begins with an executive summary and introduction, outlining the company's strategic approaches. The report delves into Wal-Mart's human resources, financial performance, and core competencies, highlighting its strengths in these areas. An external market review is conducted using SWOT and PESTLE analyses, and the Porter five-force model to assess the competitive landscape and identify key trends in the retail sector. The report concludes with a discussion of future challenges and recommendations for Wal-Mart's continued success. The study incorporates aspects of strategic management, leadership, and market analysis to determine the competitive advantages and challenges of the company.

Running Head: STRATEGIC MANAGEMENT AND LEADERSHIP 0

STRATEGIC MANAGEMENT AND LEADERSHIP 2
WAL-MART
SAVE MONEY AND LIVE BETTER

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Executive summary
The following report discusses about the strategic management of one of the global food retailing
companies Wal-Mart. The report discusses and analyses the current human resource and
financial status of the company. It describes its value added competencies that make it one of the
best players in the global food retailing industry. Further, the external environment of the Wal-
Mart is analyzed using SWOT and pestle. In the end, the report discusses about its trends and the
future challenges of the company.

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Contents
Introduction......................................................................................................................................3
About Strategic management of Wal-Mart......................................................................................3
Human resources.........................................................................................................................3
Financial performance.................................................................................................................5
Value- adding Core competencies of Wal-Mart..........................................................................5
External market review of Walmart............................................................................................6
SWOT Analysis.......................................................................................................................6
Porter five-force model............................................................................................................8
Pestle Analysis of Walmart.....................................................................................................9
Key trends in the retail sector....................................................................................................11
Future challenges of Wal-Mart..................................................................................................12
Recommendation...........................................................................................................................13
Conclusion.....................................................................................................................................14

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Introduction
Every organization has some strategic approaches to management that makes it best in the field.
These strategic approaches guide the management towards the right track of achieving the good
position in the market place. One such organization is Walmart. It is a multinational retail
company which has its grocery stores, hypermarkets, discount departmental stores. It offers
wide variety of products ranging from retail goods to pharmacy and various kinds of services
including financial and wireless services. The competency that makes Walmart the leader in the
market chain is that good quality of goods and services are provided at low prices to costumers.
The following report will be discussing about the Wal-Mart core competencies, its external
environment, trends, and the future challenges faced by Wal-Mart.
About Strategic management of Wal-Mart
Walmart operates with its various discount stores in many parts of the world. The discount
departmental stores offer the high-quality of products at low prices to middle-class population.
The prime reason behind the driving factor of the industry is its goal of cutting cost. Its strategy
of cost cutting results in lower prices for its products (Spicer & Hyatt, 2017). The lower prices
of the products improve the affordability of the consumers thus increasing its sales. Its leadership
strategy of “everyday low price” makes Walmart the great leader in the industry. The reason for
its success is that customers value the quality of the products and services so their focus is more
on saving money. The effective human resource management also leads to the better working
environment in the organization thus improving of its overall position in the market.
The critical evaluation of Walmart’s Key resources-
Human resources
Walmart consist of team of talented human resources. The effective human resource
management is the core reason behind the company’s success. The human resources managers in
the organization are efficient enough in managing all the tasks. The human resource planning in
the Walmart is done at the top management (Banerjee, 2015). As the organization is large, it has
various departments so the personnel needs of every department differ, these departments then
translate the corporate goals of human resource planning in its goals. The software used by the
Walmart for forecasting is efficient enough to effectively manage the workforce. The forecasting

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system software helps in analyzing all the major changes taking place in the organization. Such
changes are helpful in bringing in the required changes in future (Bonsu, 2019). This software
helps in the correct analyzation of the requirements of employees. The analyzation helps in
determining the right demand for the employees. The Walmart is helpful in balancing the
qualified human resource demand and supply in the organization.
The approach used for job analysis and design by Walmart is matching approach. The matching
approach is one of the best approaches as the method helps in the correct alignment of needs
with the jobs (Casadesus-Masanell & Ricart, 2015). The matching approach gives Walmart the
advantage of right match between the individual’s potential and the job requirements.
The use of diverse sources of recruitment gives Walmart the great competitive advantage as it
helps in bringing the diverse talent in the organization. The sources of recruitment used by the
Walmart for recruitment are online, direct recruitment and other various sources (Chatterjee,
2017). The retention policies of the company results in the increased retention rate of the
employee’s organization. The increased retention rate is possible due to various retention
strategies. The retention strategies included are recognizing the performance of employees,
providing them benefits or rewards based on their position in the organization and improvised
incentives based on employee’s position. The employee’s training and development is also
given the focus. The company initially focuses on its need analysis approach. The need analysis
approach is helpful in knowing how its needs of the employees will be satisfied. The need
analysis approach is good at determining the training needs of the employees in the company.
The approach helps in designing the adequate training program for the employees thus closing
the gap between the job expectation and the performance (Courtemanche & Carden, 2011).
The performance of the employees and workers are also effectively managed. The effective
management of the employees leads to higher productivity in the organization. The Walmart also
uses the software to measure the performance of the employee’s teams in the organization. The
company also conducts various programs that help in increasing the skills, knowledge, and
abilities in the employees. The job level in the organizational structure is based on the
compensation strategy . Some parts of the compensation are based on the performance of the
workers in the organization. The incentive plans for the Walmart’s company act as a booster for

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many employees as it motivates them to better their organizational performance to earn
incentives that are more lucrative (Elder & Dauvergne, 2015).
Financial performance
In the past few years the Wal-Mart’s financial outcomes have improved. It had achieved 500.3
Billion dollars in 2018 from 2017 total revenue that was 485.9billion. The net sales in 2018
were 495.8 Billion dollars while in 2017 was 481.3 Billion. There was an increase of 3 percent
in its net sales and revenue when compared with 2017. The gross profit of Wal-Mart remained
24 percent in for the last five years but it rose to 24.7 percent in 2018. There was a decline in
operating income of the company in 2018 the income of the company declined to 20.43 Billion
dollars from 22.8 in last year (Steen, 2016).
Value- adding Core competencies of Wal-Mart
The low strategy of pricing of Wal-Mart is the luring factor for its consumers. Wal-Mart offers
services and products that are of high quality available at an affordable price. The high quality
offered at an affordable price is its biggest attraction to consumers. The company brand image
has been formed with its high focus on high quality of products and services. The company low
price strategy is accomplished by purchasing the large amount in bulk from suppliers to later sell
it at low price. The other important competency is high quality of customer services. The
costumer-focused strategy is concerned with obtaining the high level of customer satisfaction or
convenience (aillie & Popkin, 2016). The increased consumer convenience relates to increased
growth of consumer base.
The third important competence is the increased growth in the technology. Wal -mart, in recent
years has invested lot amount of money in the development of its e-commerce sector. It had also
purchased its major stake in Flip kart thus improving its technological growth. In its past years,
the company used to focus on reducing its cost by paying lower salaries to staff but now it’s
good financial strength make it easier to retain employees (Xie & Cooke, 2018).
Culture is another important core competency of Wal-Mart. The culture of the company is very
positive and motivating. Such kind of culture promotes efficient and hard-working employees.
The employee retention strategy is also good at Wal-Mart. The needs of the employees and
organization are taken care in Wal-Mart (Wurthmann, 2019).

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The robust distribution system of Wal-Mart is another important reason for its success. The
company operates strong network of distribution of 146 centers. The robust distribution system
reduces the lead-time of the products thus leading to efficient management of the stock.
External market review of Walmart
SWOT Analysis
Strengths
 Robust financial performance
 High quality of diverse products and
services
 Attractive brand image
 Increased market share
 Global presence
Weakness
 Issues related to human resource
management
 Negative image
Threats
 High competition from other brands
 Increase in regulatory and legal
pressure.
 Profits getting affected due to strong
dollar
Opportunities
 Increased growth of e-commerce
operations
 Dynamic consume habits and
preferences
 Management of human resource

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Threats
High competition from retail and wholesale brands-
Walmart as a food retail company is facing major competition from the growing global retailers.
The increased competition is from various several competitors. In other areas the Walmart is
facing extensive competition like Amazon is growing at a fast pace leading the Walmart to focus
on innovation and keeping the prices of its goods low. Walmart has competition the major
challenge for growth (Taillie & Popkin, 2016).
Increase in regulatory and legal pressure-
Many regulatory and legal issues on the various brands of the Walmart has increased. The legal
issues on the brand have led to the increased compliance for the industry. There are cases of non-
compliance in the industry so the fines claimed in the situation of non-compliance are huge
(Ahmadi & Wheatley, 2016).
Profits getting affected due to strong dollar-
The profits of the international market are also affected by the robust dollar image. The stronger
dollar has a negative impact on the brands of the company. The higher fluctuations in the dollars
is responsible for low level profits (Spicer & Hyatt, 2017).
Opportunities
Increased growth of e-commerce operations
There is an increase in the growth of electronic platforms globally. There is increase in the rise of
the major markets using E-commerce. The increased e-commerce operations are the great
opportunity for the Walmart to expand its approach globally.
Dynamic consume habits and preferences
The ever-changing consumer needs and wants due to the coming up of various companies
globally. The habits and preferences of consumers in today’s world are changing rapidly due to
evolution of very innovative approaches in the market. Walmart can come up with various

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innovation strategies and online techniques to improve the consumer experiences (Courtemanche
& Ndirangu, 2018).
Management of Human Resource
Walmart provides great opportunity for innovation in its human resource policies. It can bring
more collaboration, creativity, and innovation. The good human resource management in the
environment can lead to good reputation of the company in the market as employee will be
satisfied. The satisfied employees will lead to better word of mouth (Pope & Pope, 2015).
Porter five-force model
To review the external environment of Wal-Mart, it is important to apply the porter’s five-force
model. The elements of five force model include such as negotiating power of suppliers, buyers,
threat of substitute brands and products, threat of new competitors and rivalry from competitions.
Bargaining power of suppliers
The US retail industry has low bargaining power. The brands such as Wal-Mart and Costco
purchase goods in large amount at low prices from suppliers. The suppliers have the higher
tendency of losing the business as they render the products to consumers at low price.
Bargaining power of buyers
In the 21st century, the buying power goes in the hands of buyers. The customers are happy and
satisfied with the efforts of retail brands. To provide the best customer experiences the retail
brands like Wal-Mart are doing their best. These results in moderate bargaining power of the
buyers are the availability of good quality products at low prices, and a good image of brands.
The bargaining power of the buyers ranges from moderate to high (Brayton, 2014).
Threat of substitute brands and products
The retail industry is highly competitive as the industries are manufacturing competitive products
of good quality and affordability pricing. There are various easily replaceable brands and
products available in the market. There is a competition between Costco and Wal-Mart for
affordable high-quality products (Levine & Nagel, 2018).

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Threat of competition
There is moderate level of threat for new competition to come up in the industry, as the
requirement for investment is not so large. The big brands that are ruling the market have low
threats in terms of competition in the market due to high consumer loyalty. There are switching
threats between the close competitors such as Wal-Mart and Costco as both brands offer good
quality products at affordable pricing (Thompson & McLarney, 2017).
Retail industry rivalry from competitors
There is highly competitive rivalry in the retail industry. In the case of Wal-Mart, its competitors
are Kroger, Wal-Mart, Costco, and Bets buy. Other players in the market offer competition.
Those players include small and big players in the market (Cavaleri & Shabana, 2018). The
competitive strategy of Walmart’s competitors affect the company’s strategic move.
Pestle Analysis of Walmart
The global retail sector is doing well from the last three years. It is expected that by the end of
2020 the sector would grow to $28 Trillion. Walmart is considered the king of retail. Although
the food retail sector of Walmart has made its mark but the Walmart also faces with many
competitors globally. The e-retail is also the major challenge for the Walmart. It has to make a
difference to make it better.
The company is operating its more than 11,500 retail outlets in more than 27 countries. It has its
e-commerce websites that are operational around 11 countries. There are many factors
responsible for the Walmart analysis that include.
Political
Global brands like Walmart operate globally so political forces are important factor for their
successful operation. Doing international business means to be aware of differing governance
models and political structures. Many governments put various restrictions on international trade
and business. (Leuprecht & Sokolsky, 2015) There are various fastest growing economies in the
world. Asia is the fastest growing economy in the retail sector but the Walmart has been able to

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operate only 20 retail outlets and In China, only 439 outlets have come up. These figures are
reflective of extensive trade barriers in these countries as they have various complex rules and
regulations for operations. The other important reasons are unfriendly political environment in
these countries. There is high number of Wal-Mart stores in USA. The red-tapsim and complex
regulatory system in India are big obstacles for stores like Walmart get established.
The environment affects the international retailers. Every country has a different political
environment that affects its establishment. The instable political environment causes the
instability in the economy. Frequent political disruptions lead to high disruption in the political
environment thus causing complexity for the business to get established. The political
disturbance could lead to greater turmoil in the business environment. The high political turmoil
can also negatively affect the supply chain in the organization.
Economic
A good global economy is helpful for the business to flourish. In the times of recession, people
had to cut down their expenses that had negatively influenced the revenues and profits of the
business. As the economy of the world got back on track, the spending of the people on items
started again (HUANG & Yu, 2015). The sign is positive for the retail sector as it is expected to
rise at a good rate. There was also the improvement in the performance of the labor market
which led to the increase in their earnings. The whole scenario led to increase in the
indispensable income. The retail sector profitability also jumped to great heights. Currently the
economical trend of the macro environment has also improved. The improvement in the
economic trend led to the growth in the Walmart but with the improving economic trend came
increased competition.
Social
The social forces affect the profitability of the international business. Buying behavior of the
costumers is affected by the fluctuating social trends. In last decade, there has been the major
change in the costumer’s demographics. One such change is the increase in the online shopping
trend that is due to excessive use of digital media. Such kind of social trend is the biggest threat
for Walmart. As Walmart has established more of its physical presence than the online presence.
The e-commerce websites of Walmart have presence in 11 countries. The growth in the