Holmes Institute - HI6006: Walmart Competitive Strategy Report

This report provides a comprehensive analysis of Walmart's competitive strategy, examining its history, development, and growth within the retail market. It begins with an executive summary and an introduction to competitive strategies, emphasizing the importance of planning and action for gaining a competitive advantage. The report then offers a detailed company overview of Walmart, including its global presence, product portfolio, and expansion strategies. A thorough SWOT analysis is conducted to evaluate Walmart's strengths, weaknesses, opportunities, and threats, followed by an application of Porter's Five Forces model to assess the external environment. The report also includes an analysis of the life cycle model and evaluates Walmart's operations using a TOWS matrix. Corporate and business-level strategies are discussed, along with an assessment of the organizational structure and control system. The report concludes by offering insights into Walmart's competitive position and strategic approaches.

Running head: COMPETITIVE STRATEGY
Competitive Strategy
Name of the Student:
Name of University:
Author Note

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COMPETITIVE STRATEGY
Executive Summary
The significant objective of the report is to provide an analysis about the history, growth and
development of Walmart with respect to how it may attain a competitive advantage in the retail
market. In order to analyze the competitive strategies of the company, an evaluation of its
strengths, weaknesses, opportunities and threats have been made. Furthermore, the report also
makes an analysis of the external environment in which the company operates, through the
model of Porter’s Five Forces and the life cycle model. A competitive analysis of the company
has been made along with an evaluation of its operations using the TOWS matrix. The corporate
and business level strategies of Walmart have also been discussed along with an evaluation of
the organizational structure and control system.

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Introduction
Competitive Strategies can be regarded as the planning and action which is required for a
company to grow in an industry and gain competitive advantage. This allows a company to be
ahead of its competitors in the industry by channelizing the areas of strengths and working on the
aspects which operate ads demit for the company. This evaluation process plays a very important
role and helps a company grow while making important changes to the structure of the company.
The strategies are developed in accordance with the market conditions and internal environment
of the company. Implementing these strategies which enable a company to be able to deal with
market pressures and attract the most number of buyers in the market by securing its own
position (Rothaermel 2017). Planning and ideas can be developed in the form of offering unique
services and products which helps a company to be ahead of the other companies in the market.
A company can outperform the rival forces in the market by following the strategies and
upholding the value of stakeholders and company. Walmart is a company which employs
competitive strategies to sustain through the market pressures and forces
Company Overview
Walmart Inc. is one of the largest retailers and companies across the world. It is an
American retail corporation which operates in many countries worldwide. Walmart has
hypermarkets and departmental stores which offer discounted products and grocery. The
headquarters of the company is situated in Arkansas, Bentonville. Walmart was a venture by
Sam Walton which was founded in the year 1962 which later on went to become Incorporation in
1969 (Walmart.com 2020). It is recorded to be one of the largest companies according to the
revenue collection of the company which is amounted to be approximately 14.405 billion dollars,
as put forward by Fortune Global List of 2019. The company has over 2.2 million employees and

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thus, is the largest employer in the private sector in the world. The company is family owned but
publicly traded one by the Waltons. The company ranked as the largest retailer of grocery in
United States in 2019 with over 65% of total Walmart’s share United States. Walmart got to be
listed in the Stock Exchange List of New York in 1972 while it went on to become the most
profitable one by the end of 1988 and with the greatest revenue by the end of October 1989.
Walmart has become geographically diverse and made investments outside United States of
America such as Canada, United Kingdom, China and so on (Walmart.com 2020). Whereas,
globalization did not really yield to great result for the ventures it made in regions such as South
Korea and Germany. Walmart has become one of the most indomitable forces in the retail
market, thus.
SWOT
SWOT Analysis is an effective way to analyze the internal strengths and weaknesses of a
company which is essential for understanding the current position of the company. It is very
important to develop strategies which help companies decide next plans and development for the
company which ensures growth and sustenance. SWOT Analysis can be made use of the best
advantage which can help a company diminish the probabilities of being unsuccessful in their
business and operations (Korableva and Kalimullina 2016). The risks and threats can be easily
avoided which may be the cause behind the downfall of the company. The strategies helps the
company to be distinguishable from the other companies in the market and gain competitive
advantage. With the help of SWOT analysis, Strengths, Weaknesses, Opportunities and Threats
of the internal environment of the company can be easily analyzed.
Strengths

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1. Walmart as a company has global presence which gives it a great brand recognition of the
company. It is one of the most recognized brands in the world. There are millions of
customers who make purchases from Walmart almost every day. Walmart has great
portfolio of products which help company.
2. Walmart has been making expansions across various geographical locations. This also
include several merger and acquisitions which Walmart has been making to grow as a
company. It has purchased companies such as ASDA and Flipkart in UK and India
respectively.
3. Walmart’s strategy is based on the idea of economies of scale for which it offers products
at the lowest of prices in the market. Walmart, thus is considered to be the cheapest place
for shopping according to buyers across the globe.
Weaknesses
1. Walmart has faced several challenges which rose due to poor working condition of
employees. They have been criticized immensely for engaging in the act of ill treatment
of workforce as the employees are often receive low wages for the effort they put into the
operation of the company. Inadequate conditions of work have been of great concern for
the company as Walmart was publicly criticized for the same.
2. Walmart has great chances of being imitated when it comes to business level strategies
and products. The competitive advantage of Walmart are restricted to few domains such
as the extraordinary size of business and market dominance in several parts of the world.
3. Walmart has profit margins which are quite thin. The leadership strategy which is
followed by Walmart is cost leadership, according to which the prices are kept very low,
which restricts the margin of profit to quite an extent. This has been one of the strategies

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followed with which they have yielded to large sales, however, this also is the reason for
low profit margins on products.
Opportunities
1. Walmart can enhance its prospects by expanding in different countries which should also
include the developing nations where the GDP is rising. They can enter markets which
have not been explored yet and have great scopes for ventures such as the Middle East
Countries and Latin America.
2. Walmart can get into strategic alliance with companies such as other global retailers
which will help them grow intensely. They can also make acquisitions of medium and
small sized companies which will be profitable opportunities for Walmart.
3. Walmart can enhance their Human Resource Management and practices which will help
them gain favorable advantages as the employees will feel motivated to contribute in the
process of positive growth of the company (Teeratansirikool 2013). Several
advancements and improvements can be made to the existing structure by innovating
newer ways to manage the backbone of the company, which is the human resource.
Threats
1. There can be political and legal issues which Walmart might face in their process of
operation such as the controversies of Impeach 45 and Fake Craft Beer. These
controversies and events may pose serious troubles to Walmart which should be avoided
in order to reign supreme in the market.
2. There can be medium and small scaled online companies posing competition which are
entering market due to widespread of internet and online shopping. Similar products

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could be offered by these companies in the market which might bring down profit and
market share.
3. Walmart’s website is extensively used by the users as they provide cheapest products in
the market and shopping online has become one of the most convenient ways. However,
Walmart has been facing complaints that there have been technical glitches which led to
repulsion of customers and unsatisfactory experiences. If this continues, Walmart may
lose valued and loyal customer base in the market.
Porter’s Five Forces Model
Walmart is the largest retailing company in United States of America which has gained
immense brand recognition over the years and expanded over various geographic locations.
There are significant external forces which operate within the market and influence operation
and business of Walmart (Dobbs 2014). These forces can be analyzed with the help of Porter’s
Five Forces which aims to analyze five aspects of the market such as Bargaining Power of
Buyers, Bargaining Power of Suppliers, Threat of New Entrants, Threat of Substitutes,
Competitive Rivalry in the market (Tanwar 2013). Walmart also faced strong competition in the
market which will be analyzed with the help of Porters’ Five Forces.
Bargaining Power of Buyers
The magnitude of influence which Walmart faces in the market is not quite high in the
retail industry. Walmart has great customer base which exposes them to conduct business over
large population, which limitedly allows the companies to come under the pressure from buyers
and influence the retail firm. The market in which Walmart operates in is highly diverse and as
has been stated by Dobbs (2014), it brings down the bargaining power of the buyers. Due to the

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higher rate if buyer diversity, there is weaker influence on the company as they make individual
purchases in small sizes which often differ in needs.
Bargaining Power of Suppliers
The power of suppliers in the retail market is considerably low as there are many
suppliers in the market, which usually brings down the capability to bargain and control the
market. Walmart is a large company which possesses capability to control and regulate forces of
the suppliers in the market. Suppliers in the industry have intensive competition among them,
which also brings down the bargaining power of the suppliers altogether (Dobbs 2014). Thus,
there are abundance of supply in the market, leading to nominal impact of suppliers in the
business of Walmart. This is also managed and controlled with the help of corporate social
responsibility of the company.
Threat of New Entrants
Walmart needs to pay close attention to completion rising from new entrants in the
market. Entry of small or medium sized companies are being possible even though the market is
dominated by forces such as Walmart. Small companies can enter the market and pose severe
competition to Walmart when they become location specific, bring convenience and cater to
specialty needs of the customer. Conducting business by large companies and entering new
markets are considered to be no big deals which should Walmart look out for.
Threat of Substitutes
There are many substitutes of Walmart products which are available in the market.
According to Dobbs (2014), Walmart has great portfolio of products which make them be ahead
of the competitive companies in the market. Walmart keeps the cost of production of the

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products very low, which makes it troublesome for other companies to make similar products
available in the market at such low prices. Thus, it often becomes difficult for the other
companies to introduce similar products at same or less price range to grab the market. This thus
makes the chances of threat posed by availability of substitute product is moderate.
Competitive Rivalry in the market
The magnitude of competition in the market is quite high in the retail industry. There are
multiple companies which operate in the market while there are several dominant forces which
pose considerable amount of competition to Walmart. Competitive rivalry increases due to so
many companies operating within the market and aggressiveness of the retail companies in the
market (Madsen and Walker 2015). Walmart copes up with the competitive environment in the
market with the help of diversity approaches in the market and to remain competitive. Walmart
should make it a priority to make expansion and grow in order to be competitive in the market.
Life Cycle Model
There are five stages of a business which denotes the phase at which it is currently in and
the way development is happening. The cycle of business goes through different phases which is
usually divided into five phases such as Launch, Growth, Shake Out, Maturity and Decline. The
cycle is represented with the way the company makes progress in different phases and the
aspects which are considered in the process include Sales, Cash flow, Profit and so on. A
company is founded in the phase of Launch, while it makes growth in the second phase as sales
increase and profit is made (Bocken and Short 2016). The third phase comprises of the period
when profits are made through sales even though the rate is quite slower. The fourth phase is
when a company attains maturity and the margins of profits start growing thinner. The last phase

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is when the company is the declining phase when the company is often unable to withstand the
changing market scenario, adapt and sustain and thus, ultimately fails. Walmart has gone through
phases such as Launch, Growth, Shake Out and is currently at the phase of maturity as they have
been able to expand over various locations and market. They have flourished and seen shakeout
as their business ventures have largely spread over the world. Walmart had attained maturity as
their profit margins have decreased even though the revenue collection of the company is quite
high (Joyce and Paquin 2016). The company is not near decline as they are constantly evolving
and making changes to sustain the changing market scenario.
TOWS Analysis
TOWS MATRIX Strength Weakness
Opportunities  Walmart can make use
of their brand
recognition if they
face challenges in the
market.
 Walmart can make use
of their low cost
strategy to gain
customer loyalty while
making expansion in
developing countries.
 Walmart can develop
strategies to enhance
their employee
management by
making alliances with
dominant forces in the
market.
 Walmart may intend
to increase their profit
margins by
introducing in
differentiated products

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in developing
countries’ market.
Threats  Walmart should intend
to expand in
politically stable
countries to avoid
risks and regulations
which might pose
challenges in their
operations.
 Walmart should
maintain a cross check
to balance the
competition which is
posed by other
companies in the
market by constantly
evolving, innovating
and expanding in
various markets.
 Walmart should
ensure that their
websites provide best
services to their users
to retain loyal buyers.
 Walmart should
prioritize that the
employees are given
security and proper
working conditions
which will ensure
better position in the
market.
Corporate Level Strategy

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The Corporate Level Strategy which is followed by Walmart in the market is to grow and
cater to the needs of the customers with wide variety of products. Even though there are severe
competition in the market, Walmart makes it a priority to serve the customers with the best in
affordable prices and be ahead of the competitive forces which enriching customers with great
experiences from the company (Rothaermel 2017). Walmart makes it a point to continually
evolve and improve their business to sustain changing business environment. The customers are
provided with opportunity to choose the best from their offerings which come in great ranges.
The services can be availed through various channels and platforms, which makes it convenient
and easy for the buyers to make purchases every single time.
Business Level Strategy
The Business Level Strategy which is followed by Walmart is to follow Cost Leadership.
The company makes their products available to the buyers in the market at the lowest prices
possible. Thus, their products are more purchased by the customers as compared to other brands
and products available in the market (Ellickson 2016). The sales thus increases by leaps and
bounds even though the prices of the products are kept low. This adds competitive advantage to
the company as the cost of production is also low, which allows them to keep low profit margins
and increase of sales (Drnevich and Croson 2013). Walmart does not follow differentiated
strategy or focused strategy to capture the market. The primary reason behind Walmart’s success
is their way of cutting costs and offering products at Everyday Low Prices.
Structure and Control System
Walmart follows a hierarchical organization structure which allows the company to be
functional. The organizational structure determines how work is performed in the company in