Wal-Mart Inc.: Current Status Analysis

Introduction

Wal-Mart is a public corporation of American origin that operates a chain of considerable, retail stores. It is rated as one of the largest corporations worldwide in terms of its revenue. Wal-Mart was founded in the year 1962 by Sam Walton and was later incorporated into the present Wal-Mart Stores Inclusive in the year 1969. The company was then listed on the Stock Exchange in New York in 1972. Among other supplies, Wal-Mart is known to be the largest low price retailer in grocery, toys, as well as consumables in the United States. In addition, the corporation owns and controls Sam’s Club, a North American company, (Walton, S. Huey, J. 1993).

Wal-Mart is fully operational in the UK, Japan, Mexico, South America, and China among other countries. The corporation has over the years expanded its market share, adopted the latest technology, and even taken measures to create awareness on issues concerning the environment. Wal-Mart records net sales of up to $256 billion currently. There has however been a negative concern regarding health care, the environment, and wages towards the company.

SWOT Analysis

Strengths

Being a very successful chain store, Wal-Mart has very many strengths that have seen it grow and expand over the years despite being in a competitive sector of the economy. Top on the list, Wal-Mart is known to be the leading employer in the USA. With a very aggressive strategy for growth, Wal-Mart is ranked as being the second largest company in net sales worldwide. It is operational in all corners of the world with a specialty in Discount Stores, Sam’s Clubs, neighborhood markets, and SuperCenters.

The outstanding logistics system at Wal-Mart has been its source of competitive advantage. They efficiently ship products from any distribution center and even own a center for distributing online orders.

Through the use of computer programs, the corporation shares sales information with suppliers and hence stocks all the popular items. A corporate website has enabled Wal-Mart to boost its sales volume and conveniently offer online shopping. Other strengths include an aggressive strategy in pricing, strong corporate image, helpful and friendly workforce, knowledge of consumer demand as well as caring for the environment, (Porter, M.E. 1985).

Weaknesses

Wal-Mart apart from its strengths has weaknesses that affect both its image and other parties. The low prices offered by the chain stores have seen it monopolize the retail market raising concerns about the fate of the small retailers. This has seen some ethical shoppers withdraw from Wal-Mart. Its outsized buildings have been accused of being insensitive environmentally as they lead to congestion and traffic pollution.

The employees are offered low wages and poor benefits for healthcare. Wal-Mart is said to discriminate against its female employees as well as violate the labor laws for children. Competition in the market is stiff and Wal-Mart has not been able to penetrate the European market. Wal-Mart has been experiencing deflation in price as they often offer clearance sales to turnover products.

Opportunities

Having become the largest retailer successfully in the USA, Wal-Mart has an opportunity of growing to be the biggest retailer worldwide. The chain stores have a chance to stock a more diverse selection of merchandise hence expanding the stores and products to catch the attention of more customers, (Hunger, J. and Wheelen, T 2003). Wal-Mart has successfully been able to implement Neighborhood Markets and should also consider having diverse store types. The company has already existing resources that can be used to undertake new types of stores in new market segments. Since SuperCenters are known to be more dynamic and higher in growth than supermarkets, Wal-Mart should attempt to expand and increase the already existing SuperCenters.

There is an opportunity for the company to quickly pick up on the issues that have drawn criticism. Wal-Mart has been able to announce a revised plan for health care that will raise employee benefits. In addition, the company is looking into its current labor practices. Wal-Mart is a key player in the retail business and can make decisions that affect society, the environment, and the economy globally. Expansion to developing countries through alliances and licensing are great opportunities for the growth of Wal-Mart Inc. in the future.

Threats

In an attempt to offer low prices, Wal-Mart has resulted in reducing some costs that have consequently reduced profitability. The company has also been facing stiff competition from a rather growing store by the name Dollar General Discount Stores. This competitor is successfully opening up in smaller locations and offering serious discounts. The corporate image of Wal-Mart has been threatened by many accusations and this is highly likely to affect the sales volume, (Grant, R.M. 2005).

There have been notable complaints from customers about long checkout queues and low-quality products. Wal-Mart has lately been expanding into areas that are not easily attainable due to competition, moreover; the international growth may be slow and not have tangible short-term revenue. The two most significant product lines for Wal-Mart that are food and apparel are not fast-growing sectors and this may affect investor interest.

Recommendations

Wal-Mart needs to make use of its strengths to exploit the opportunities in the external environment a well as avoid imminent threats. With sufficient resources at its disposal, Wal-Mart has the potential and ability to maintaining its dominance in the retail sector and raise against its competitors. The company has to improve its corporate image by attending to the issues that are raising concern from the public like child labor, low wages, and health care benefits for employees as well as environmental concerns.

Decision on Wal-Mart Inc.

Wal-Mart is a successful company and the future ahead is bright for the chain of retail stores. The net sales for the company are the second highest in the world and this is an advantage that has enabled the growth and expansion of Wal-Mart as well as the improved quality of the products offered.

Conclusion

From the SWOT analysis, Wal-Mart has had a successful past and the potential of a bright future in the retail sector.

References

Grant, R.M. (2005): Contemporary Strategy Analysis, Blackwell Publishing Ltd., Oxford (U.K.)

Hunger, J. and Wheelen, T (2003): Essentials of Strategic Management. New Jersey: Pearson Education Inc.

Porter, M.E. (1985): Competitive Advantage, the Free Press, New York.

Walton, S. Huey, J. (1993): Sam Walton: Made in America: My Story. New York: Bantam.