Environmental
An opportunity for this industry in the environmental sector can be that the new generation is all about going green. This industry can really help out this new idea by selling more "green" environmentally friendly products and maybe even opening an department in their stores for "green" products.
Legal Environments
An opportunity facing this industry will be the generous tax breaks given to monopolies in this economy. Politician and lawmakers are generally very friendly to large corporations, such as the ones in this industry because they supply numerous amounts of jobs to the public.
Political
An opportunity facing this industry is the free trade agreements between countries, for example NAFTA. With globalization becoming bigger and more prominent in every industry, free trade can be a very valuable asset for companies in the wholesale industry.
Sociocultural
An opportunity facing the industry is the consumer need for an easy, cheap, one stop shopping center. This is exactly what the wholesale retail industry is all about; Cheap, convenient shopping for people of all needs. Consumers are cutting back on their spending now more than ever and are starting to value their dollar. Wholesale retailers are where the consumer can get the most bang for their buck.
Technological
An opportunity facing the industry is the up and coming use of new age technology such as smart phones and e-commerce. More and more people are purchasing products over the internet because it is much easier and convenient. There are no lines, no transportation cost and the constantly decreasing shipping costs. Also, there is an opportunity to take advantage of the popularity of Apps on smart phones. This will take online shopping to a whole new level where one click of a button on the I Phone can lead to an entire stores products, services and locations.
Threats:
Economic
A threat is that the American economy is just coming out of a deep recession. Not only America, but every other country is feeling the effects of the recession and having problems of their own as well. The entire world is in a state of fear and consumer spending has slowed substantially.
Legal Environments
A threat to this industry is the employee wage and benefits fight against the retail industry. Employees are constantly grappling for more benefits and higher minimum wages. Furthermore, employees are also unifying their forces and forming class action lawsuits against big companies with more frequency.
Political
A political threat to this industry is the increasing knowledge and concern over the use of sweat shops in third world countries. Politicians are starting to crack down and create laws disabling the use of sweatshops in order to gain popularity in the polls.
Sociocultural and Environmental
A threat to this industry is the social stigma of shopping at wholesale retailers. With the evolution of social networking, consumers are relatively more concerned about their image now more than ever. Places like Walmart seem to have a bad connotation associated with them because of the "low class" people who tend to shop at these retailers.
Technological
A threat is that technology is growing at such a rapid pace that it can make products go obsolete quicker and more frequently. For example, with the perpetual use of Netflix, On demand and internet streaming the electronic department of this industry begins to suffer with the lack of CD/DVD sales.
Industry Analysis
Wal-Mart’s competitive environment is incredibly unique because of the variety of products sold at their store. Wal-Mart's primary competition comes from general merchandise retailers such as Target, warehouse department stores such as Costco's and supermarket retailers such as Shaw's. The sheer size of this industry forces competitors to compete at both a national and international level. There is fierce competition in this industry because of the perpetually changing prices, location and variety. Pricing is one of the main economic factors that drive this industry because the consumers are constantly trying to find the best bargain. The way this industry cuts cost is through economies of scale. Retailers are able to vertically integrate many of the corporations functions, such as purchasing, manufacturing, advertising, and shipping. These monopolistic properties provide these retailers, especially Walmart, with the ability to run other small businesses out of town. "One study found Wal-Mart's entry into a new market has a profound impact on its retail competition. When a Wal-Mart opens in a new market, median sales drop 40% at similar high-volume stores, 17% at and 6% at , according to the June 2009 study by researchers at several universities and led by the Tuck School of Business at ." Wal-Mart offers lower prices, better variety and quality, which is why they are the leading wholesale retailer in the world.
Inside Analysis
Strengths
- Walmart has done an excellent job with their start in globalizing their company. They are the largest retailer in the world with 8,500 stores in 15 countries, using 55 different names. This shows they are adapting to every culture in each country.
- Walmart has an extremely strong brand name. When people walk into a Walmart they know they will be getting a wide variety of products at the cheapest prices.
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Walmart has implemented a more efficient and cost effective way of inventory management. Walmart is starting to use RFID tags on all their products, which provides them with valuable information for each product. These tags tell management how much of each product is in each store, how much is being sold and when it is being sold. This type of inventory tracking system provides an extremely efficient way of organization, which can be viewed as Walmarts core competencies (resources and capabilities that serve as a source of a firm’s competitive advantage over rivals).
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Walmart employees over 2 million people worldwide; making the retail giant the largest private employer in the world.
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Walmart has an outstanding employee training program because they have invested a lot of money in their human resource and development programs. Walmart values having intelligent employees to provide above average customer service because they have to service so many people every day. It is estimated that each week, about 100 million customers, nearly one-third of the U.S. population, visit Walmart's U.S. stores.
Weaknesses
- Walmart received negative attention while battling a class action lawsuit made by 1.5 million women employees claiming unfair treatment. Although the court ruled that the 1.5 million plaintiffs did not have enough in common to file a joint lawsuit with each other, many have filed and won separate lawsuits.
- Walmart contains such a variety and broad selection of items that it doesn't allow them to specialize in unique areas. This leaves rooms for other businesses who specifically focus on one type of product to enter the market.
- Although Walmart is the largest retail giant in the world, the company could still increase their presence in more foreign countries.
Business Plan and Conclusion
The review of the external and internal analysis of Walmart and their industry provides an unique opportunity for strategic planning, or a business plan. Walmarts sustainable comparable advantage comes in the form of having the ability to sell the most products at the cheapest prices. Their suppliers have low power because Walmart is usually one of their biggest accounts so Walmart can stronghold them into keeping prices low. Consumers have little buying power because they will not be able to find these products cheaper anywhere else.
Walmart can take advantage of these strengths and pursue the opportunity to become the world's largest internet retailer. The retail industry is heading towards a world where shoppers spend less and less time inside the store and more and more time shopping online. Walmart generates more than $400 billion in annual revenue, is the sixth-largest Internet retailer, behind Amazon.com Inc, Staples Inc, Apple Inc, Dell Inc and Office Depot Inc, according to industry publication Internet Retailer. With Walmart being the largest retailer in the world they should not be sixth in Internet sales, there is definite room for improvement. The new era way to shop is through e-commerce and Walmart needs to make it a goal of theirs to increase their online sales. A way that this can be achieved is through an improvement in social networking and launching a better App for smart phones. Social networks provide managers with three unique advantages: (1) access to information and knowledge, (2) access to diverse skill sets, and (3) power. Walmart should hire a proven employee who has a great track record with internet sales and/or social networking expertise in business to train and develop a new internet sales force. Walmart has the capability to continue their success as being the largest retail giant in the world by drastically improving their e-commerce.
References
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"Walmart." Wikipedia, the Free Encyclopedia. Web. 20 Jan. 2012. <http://en.wikipedia.org/wiki/Walmart>.
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D'innocenzio, Anne. "Wal-Mart CEO Pushes Plan for Growth - Business - Retail - Msnbc.com." Msnbc.com - Breaking News, Science and Tech News, World News, US News, Local News- Msnbc.com. Web. 20 Jan. 2012. <http://www.msnbc.msn.com/id/43267689/ns/business-retail/t/wal-mart-ceo-pushes-plan-keep-retailer-growing/>.
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"Wal-Mart Names Head of Global ECommerce Business| Reuters." Business & Financial News, Breaking US & International News | Reuters.com. 16 Jan. 2012. Web. 20 Jan. 2012. <http://www.reuters.com/article/2012/01/17/us-walmart-idUSTRE80G01G20120117>.
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"WMT: Summary for Wal-Mart Stores, Inc. Common St- Yahoo! Finance." Yahoo! Finance - Business Finance, Stock Market, Quotes, News. Web. 20 Jan. 2012. <http://finance.yahoo.com/q?s=WMT>.
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Carpenter, Mason, Talya Bauer, and Berrin Erdogan. Principles of Management. [Irvington, N. Y.]: Flatworld Knowledge, 2010. Print.
According to Yahoo Finance as of 1/19/2012 at 4:30