Walmart: A Situational Analysis Using SWOT and PESTLE Frameworks

This report offers a comprehensive situational analysis of Walmart, the world's largest retailer. It employs SWOT and PESTLE frameworks to evaluate the company's internal and external environments. The SWOT analysis highlights Walmart's strengths, such as its global supply chain and organizational size, while also identifying weaknesses like thin profit margins and an easily copied business model. Opportunities include expansion in developing countries and improvements in human resource applications, while threats involve health-related issues, increasing competition, and online retailers. The PESTLE analysis examines political, economic, social, technological, legal, and environmental factors affecting Walmart, including its international operations, economic stability, social perception, technological advancements, legal compliance, and environmental concerns. The analysis concludes by emphasizing the importance of leveraging strengths, addressing weaknesses, and adapting to the dynamic market conditions to ensure Walmart's continued success.

Situational Analysis of Walmart
Situational analysis is a collection of methods used by managers to analyze a company’s internal and
external processes to understand its consumers, capabilities and business atmosphere. Walmart, the
largest company in the world in terms of generating revenue, is an American grocery store and retail
department. The company has largest number of private employees in the world i.e. 2.2 million. This
company was founded by Sam Walton in Rogers, Arkansas, in 1962. They deal in Electronics, home
improvement, clothing, home and furniture, footwear, jewelry, toys, garden supplies, sporting goods
and fitness, photo finishing, grocery and craft and party supplies. Till January 31st, 2021, Walmart has
11443 stores and clubs in 26 countries, operating under 54 different names (Walmart Investor Relations
- Investors - Financial Information - Unit Counts & Square Footage, 2021). The situational analysis of
Walmart can be understood by the help of swot analysis and pestle analysis of this company.
Swot analysis of Walmart
Swot analysis of a company tells about the company’s competitive position in the market by assessing its
strengths, weaknesses, opportunities and threats (GRANT, 2021). The swot analysis of Walmart tells us
about the company’s leading place in retail industry worldwide based on the implementation of the
organization’s strengths and competitive advantages. The business advantages are used in the nullifying
the impacts of other competing retailers like Google, Amazon and Apple.
Strengths
The strengths of Walmart depends on the size of their business. These strengths make this company to
endure threats despite weaknesses being a low cost retailer. For utilizing global growth opportunities,
strengths of Walmart are as follows,
1. Global supply chain
2. Global organization size
3. High efficiency of supply chain
Global supply chain make sure business flexibility from risks of the market like disturbance in supply
chain at local level. The global organization size of the company opens path for fund growth and
evolution of the company. Supply chain of company has high efficiency because of modern technologies
of supervising the movement of goods from suppliers to the consumers. In Swot analysis like this,
organizational strengths provide comparative advantages against medium scale retailers (SMITHSON,
2021).
Weaknesses
Weaknesses that always dare the company to hold up against threats are also analyzed in the swot
analysis. The weaknesses of the company are related to the inclusive strategy and its implementation in
development of business, resources, capabilities and profit margins. Weaknesses of the company are as
follows
1. Thin profit margins
2. Easily copied business model
3. Competitive disadvantage against high end specialty sellers

The companies that uses cost leadership strategy have thin profit margins. Walmart has minimize their
prices. For this reason they have to minimize profit margins and depend more on sales volume.
Walmart’s business model is easy to copy just because of the cost leadership strategy. The company
does not have notable competitive differentiators, excluding their size of business and prices. Moreover,
the high end specialty sellers have more control on attracting quality product seekers who have
minimum to no issues with the price. Thus, these weaknesses manifest business destructibility to the
new competitors and disturbance in the industry environment as well, more importantly in the presence
of e-commerce giants like Amazon (SMITHSON, 2021).
Opportunities
Walmart’s opportunities include expansion and improvement in business practices and these are highly
connected to the international economic situation. If the human resources in the firm bring forth some
issues they are also considered as opportunities to work on and improve. Opportunities of the company
are as follows
1. Expansion in the developing countries
2. Improvement in human resource applications to keep up competitiveness in the market
3. Upgradation in the quality standards
Depending upon their rapidly growing economic margins, Walmart has this opportunity to expand their
business in developing countries. The opportunities in the human resource department are related to
the employees’ productivity and behaviour. Improving their conduct will make the company able to
attract more workers from the market in comparison to other companies. At last the quality standards
are related to the customer satisfaction on what they have thought of the product and were told about
it and what actually the product was. Minimum the difference is, maximum the quality will be. The swot
analysis of the opportunities addresses some drawbacks of the company and present the ways to get rid
of them (SMITHSON, 2021).
Threats
The threats of the company are directly related to the market conditions and the view of the customer
about the product they get. These two points impel the firm to have some competitive changes in the
strategy. In the wake of swot analysis the threats to the company are
1. Health related issues
2. Increasing competition
3. Online retailers of manifold masses.
The healthful products has become a threat and an opportunity for the company. It is now a threat as
most of the products are not perceived as good for health, unnatural and non-organic. Now it is also an
opportunity for the company to improve its quality standards. But as per current conditions this is mere
a threat for the company as there is no check and balance on quality as required by this retailer giant.
Increasing competition is another threat for the company because other companies can use aggressive
competitive techniques to attract more customers comparative to Walmart. Another threat is the
presence of online retailers who have the capacity to bypass the company’s presence by using their own
websites to sell products to the customers online. This part of swot analysis shows that the large

number of online companies have this ability to gather customers, especially those customers who are
prefer online transactions.
Pestle analysis
Pester analysis is a methodology to analyze the important factors such as legal and environmental,
political, social, economical and technological, that influence a company from outside (PESTLE Analysis |
Factsheets | CIPD, 2021). By helping a company to understand the effect of external factors on its
business, it can help a company to determine the long term impacts of these factors on business
activities and performance (PESTLE analysis example | nibusinessinfo.co.uk, 2021). The pestle analysis of
Walmart shows that how this company is facing challenges associated with six basic macro
environmental elements, including politics, legal factors and technology.
Political factors
As Walmart is an internationally recognized store, it serves almost over 250 million customers across the
borders every week. So in order to work efficiently Walmart must follow policies that it has designed.
These policies have the ability to directly affect the manufacturers and suppliers. Walmart operates on
politically stable locations which make their operations go smoothly without any interruption. If
company doesn’t do so it can impede its operations. For example, one of the stores on Walmart in china
was sealed temporarily once for selling prohibited items. So government can intervene any time if a
company fails to follow the designed policies (Frue, 2021).
Economic factors
Walmart is well known for its low prices of the goods thus affected by the economic stability. If economy
strikes it may enhance the production to balance the effect. And ultimately it will increases the prices of
the goods leaving customers unhappy behind. If Walmart keep the costs of their products in limits it will
make them incompetent with respect to others in the market. Other brands obviously can raise their
prices and maintain margins comparative to Walmart. As economy can change depending on the
country, company has to get the complete knowledge of economic trend of each country where store
operates. Some stores can have high tax rates to pay depending upon the location.
Social Factors
Despite its international recognition, Walmart is not a popular store in some countries. For example,
Walmart is of American origin and is unable to make a better position in German market. And German’s
least interest in this brand cause this brand over $1 billion revenue loss. It was a huge issue for the
Walmart as it failed to attract the customers there. International brands can only make progress by
leaps and bounce if they know what exactly their customers want. For example to provide healthy
nutrition to health conscious customers. Walmart is now providing healthy diet to these customers
which is obviously a smart move and beneficial for the positive image of the company (Frue, 2021).
Technological factors
To stand on a better place in the market, Walmart has started using robotics and automation. This
addition can help minimizing time by fulfilling orders and increasing production by keeping stores clean
at the same time. Having automation is a modern, digital and much needed transformation for a big
giant like Walmart. Robots can help in routine tasks which can help employees to focus more on selling

without disturbance and distraction. Additionally it also includes the initiation of paid ads to direct
customers, to website, who are using laptops and mobile devices from their search engines.
Legal factors
Legal factors include obeying the laws prescribed by the country where store is operating. Most
common regulations are employment regulations, labor laws, data protection rules and regulations,
health and safety of job. In spite of following these rules, Walmart could not make it in California where
company was agree to pay $65 million to 1000 employees who said that the company has not provided
any seating arrangements to them (Frue, 2021). Many companies of this much fame will definitely be
willing to pay instead of going to court.
Environmental Factors
Walmart received a strong negative reaction by a large number of people on improperly disposing the
pesticide and dangerous fertilizers in sewage pipes. When caught, Walmart started project Gigaton that
was about to stop a gigaton of emissions from spreading out in next 10 years (Frue, 2021). Several other
companies like Walmart have made the exact friendly promises.
Conclusion
To conclude this situational analysis, Walmart is one of the most competent and prosperous stores in
the history. It has expanded rapidly with an outlet in almost every next country. Walmart must have a
keen eye on its strengths in order to attain the maximum opportunities in the market. Company’s
strengths depends highly on the international organizational size, supply chain. Better efficiency of
supply chain can help aggressive expansion in international market. The threats and weaknesses should
be of secondary importance. The company can make its human resource management standards and
quality standards better to enhance its performance. As the company has expanded rapidly it must stay
up to date with legal and political regulations. Otherwise any casualty can cause the business to shut.
Walmart must focus on providing the right product to right customers because by failing to focus on
right product company will lose required profits.

Bibliography
Stock.walmart.com. 2021. Walmart Investor Relations - Investors - Financial Information - Unit Counts &
Square Footage. [online] Available at: <https://stock.walmart.com/investors/financial-information/unit-
counts-and-square-footage/default.aspx> [Accessed 16 April 2021].
GRANT, M., 2021. How SWOT (Strength, Weakness, Opportunity, and Threat) Analysis Works. [online]
Investopedia. Available at: <https://www.investopedia.com/terms/s/swot.asp> [Accessed 16 April 2021].
SMITHSON, N., 2021. Walmart SWOT Analysis & Recommendations - Panmore Institute. [online]
Panmore Institute. Available at: <http://panmore.com/walmart-swot-analysis-recommendations-case-
study> [Accessed 16 April 2021].
Nibusinessinfo.co.uk. 2021. PESTLE analysis example | nibusinessinfo.co.uk. [online] Available at:
<https://www.nibusinessinfo.co.uk/content/pestle-analysis-example> [Accessed 17 April 2021].
CIPD. 2021. PESTLE Analysis | Factsheets | CIPD. [online] Available at:
<https://www.cipd.co.uk/knowledge/strategy/organisational-development/pestle-analysis-factsheet#gref>
[Accessed 17 April 2021].
Frue, K., 2021. Walmart PESTLE Analysis. [online] PESTLE Analysis. Available at:
<https://pestleanalysis.com/walmart-pestle-analysis/> [Accessed 17 April 2021].