Walmart Inc.’s Modified SWOT Analysis
SWOT denotes strengths, weaknesses, opportunities, and threats that all commercial ventures, including Fortune 500 companies, have or frequently face in the industry. In other words, it encompasses internal and external factors, which considerably influence the operational activities of an organization. For instance, Walmart Inc. falls among the top firms in the 2019 Fortune 500 list in the highly competitive sector. The famous organization traces its establishment in 1962 as a small, single-store business enterprise in the US by Sam Walton (Barberá, 2014). Since then, the organization grew, developed, and expanded gradually to different sections, nationally and internationally. Today, the giant retailer operates several affiliates widely spread in approximately twenty-seven countries (Brea-Solis et al., 2012). Generally, Walmart Inc. is a multinational that demonstrates a sustainable competitive advantage in the market and entire industry following its strategic business plans and actions, as shown hereunder.
Internal Factors and the Competitive Advantage
Internal factors usually encompass strengths and weaknesses, which an organization can manipulate to suit its objectives. Walmart Inc. enjoys and capitalizes on some strengths, an internal element, which enables it to grow, develop, and expand gradually to become the current revered market leader in the industry. Indeed, its physical location, an effective and efficient supply chain system, modern technology alongside material and financial resources usually give it a competitive edge in the industry (Barberá, 2014). Its present size gives it sufficient material and financial resources or muscle required to compete favorably and eventually outrival others locally, regionally, and internationally.
Additionally, Many organizations experience multiple disruptions in their supply chain systems, which fundamentally affect operational activities, productivity, and overall performance. Consequently, to counter this, it has an efficient and effective global supply chain system that typically cushions it from various market-specific hazards, thus resilience (Jatmiko et al., 2021). Moreover, being technologically compliant in its various activities and operations enables the multinational to monitor and control products movement from the suppliers to its stores, hence, a competitive edge. Furthermore, the organization has strength because it has a presence in almost all world regions. Therefore, it serves a relatively broader clientele base than its competitors; thus, increased revenues and profits are required for further expansion.
Aside from strengths, weaknesses are a significant internal factor that sometimes hinders organizations’ substantial growth, development, and prosperity, including Walmart Inc., a global retail corporation. It has a corporate culture of low-cost pricing for its retail goods. Therefore, its overreliance on cost leadership as a generic business strategy breeds potential weaknesses that lag its projected growth and development (Shabanova et al., 2015). This generic business strategy significantly minimizes its profit margins because it sells many units or large volumes to generate meager profits, unlike its competitors. In other words, it experiences a competitive disadvantage in the industry compared to its high-end competitors, who typically thrive on quality connotation principles.
External Factors and the Competitive Advantage
External factors are prevailing conditions around a commercial enterprise, which seem beyond its control. They include threats and opportunities, which fundamentally influence the commercial activities of companies in different industries of which the retail industry is inclusive. The growth and development chances for Walmart Inc. typically hinge on improving its strategic business practices and expansion. Marked opportunities for this multinational corporation hinges around expansion, improving human resource practices, alongside product and service quality (Brea-Solis et al., 2012). There is an opportunity for this corporation to venture into the inappropriately exploited or virgin market segments, especially those in densely populated, underdeveloped, and developing world sections. Similarly, improving its human resource practices bordering on employment and other forms of workplace discrimination may enhance staff morale and public confidence for improved growth, development, and market expansion. Additionally, improving the quality of its supplies alongside services may tremendously contribute to its improved revenue base, profitability, and expansion, hence, an opportunity.
Apart from opportunities, threats are a significant external factor affecting Walmart Inc.’s operations. Indeed, stiff competition usually riddles the retail industry worldwide. Hence, stiff competition posed by established retailers, such as amazon, in different market segments proves detrimental to this organization’s overall growth and development. Similarly, prevailing legislation alongside cultural beliefs and practices in different world sections poses a considerable threat to Walmart Inc. Furthermore, harsh cyclic conditions also hamper this corporation’s projected growth and development (Jatmiko et al., 2021). For instance, economic depression from multiple sources, such as infectious disease outbreaks and severe recessions, may negatively influence the firm’s operational activities.
Effective supply chain system
Huge organizational size
Qualified and competent staff
Small profit margins
Improper human resource practices
Improving quality standards
Improving human resource practices
Stiff market competition
Unique sociocultural practices
Legal and technological aspects
In summation, external and internal factors prevailing around a commercial venture may bring success or failure; consequently, the need to have appropriate strategic business decisions to realize corporate objectives. For instance, strategic choices that turn threats into opportunities and weaknesses into strengths are essential to ensure early growth and development. Honestly, Walmart Inc. has remained top in the list of Fortune 500 companies in successive years, hence, success.
Barberá Marcilla, L. (2014). Business analysis for Wal-Mart, a grocery retail chain, and improvement proposals (Doctoral dissertation, Universitat Politècnica de València).
Brea-Solis, H., Casadesus-Masanell, R., & Grifell-Tatje, E. (2012). Business Model Evaluation: Quantifying Walmart’s Sources of Advantage. Harvard Business School
Jatmiko, B., Udin, U. D. I. N., RAHARTI, R., LARAS, T., & ARDHI, K. F. (2021). Strategies for MSMEs to Achieve Sustainable Competitive Advantage: The SWOT Analysis Method. The Journal of Asian Finance, Economics, and Business, 8(3), 505-515.
Shabanova, L. B., Ismagilova, G. N., Salimov, L. N., & Akhmadeev, M. G. (2015). PEST-Analysis and SWOT-Analysis as the Most Important Tools to Strengthen the Competitive Advantages of Commercial Enterprises. Mediterranean Journal of Social Sciences, 6(3), 705