Walmart’s SWOT analysis gives insights on the internal and external forces significant in the company’s strategy development in the retail industry. While these factors vary over time, Walmart’s growth depends on the firm’s ability to capitalize on its strengths. Also, in spite of the company’s weaknesses, its strengths are far more significant considerations. Walmart can use these strengths to exploit its opportunities in the retail market. The firm can also use its strengths to counteract the threats to its business. These are important factors in ensuring Walmart’s continued leadership as the biggest retailer in the world.
This SWOT analysis of Walmart shows that the company can have higher long-term success potential through aggressive global expansion, especially in retail markets in developing countries.
Walmart’s Strengths (Internal Forces)
In this part of the SWOT analysis, Walmart’s strengths are all related to the size of its business. These strengths enable the company to withstand threats despite its weaknesses. Walmart’s strengths for further global growth are:
- Global organizational size
- Global supply chain
- High efficiency of supply chain
Walmart’s global organizational size gives the firm deep pockets to fund growth and expansion. The global supply chain also provides business resilience from market-specific risks. In addition, Walmart’s supply chain has high efficiency because of advanced technologies for monitoring and controlling the movement of products from suppliers to its stores.
Walmart’s Weaknesses (Internal Forces)
Walmart’s weaknesses impose challenges on the firm’s ability to withstand threats also identified in this SWOT analysis. These weaknesses are directly related to the company’s generic strategy. Walmart uses the cost leadership generic strategy, which leads to the following weaknesses:
- Thin profit margins
- Easily copied business model
Thin profit margins are a typical effect of using the cost leadership strategy. Because Walmart minimizes selling prices, it also needs to minimize profit margins and rely more on sales volume. The cost leadership strategy also makes Walmart’s business model easy to copy. The firm does not have significant competitive differentiators, except for its business size.
Opportunities for Walmart (External Forces)
Walmart’s opportunities are mainly about expansion and improving business practices. These opportunities are linked to the global economic situation. Also, the human resources situation in the organization presents issues that are actually opportunities for the firm to improve. In this portion of the SWOT analysis, Walmart’s opportunities are:
- Expansion in developing countries
- Improvement in human resource practices
- Improvement in quality standards
Walmart’s opportunity to expand in developing countries is based on their high-growth economic condition. On the other hand, the opportunities on HR practices directly relate to the criticisms on the company’s employment practices. Walmart’s opportunity to improve quality standards addresses consumers’ concerns on the health effects of using low-cost and sometimes low-quality products.
Threats Facing Walmart (External Forces)
The threats to Walmart’s business are linked to the retail market condition and the changes on consumer perceptions about the products they buy. These factors should compel the company to make some competitive strategic changes. In the context of this SWOT analysis, the threats to Walmart are:
- Aggressive competition
- Healthy lifestyle trend
- Small-scale/individual online selling
The healthy lifestyle trend is a threat and an opportunity. It threatens Walmart’s business because many of the company’s goods are not healthful, organic or natural. It is an opportunity for Walmart to improve its quality standards. However, this factor is more of a threat because the firm currently does not prioritize healthful products in its stores. Aggressive competition is a threat because other large retailers could use aggressive marketing and strategies to capture some of Walmart’s customers. Small-scale or individual online selling is a threat against the company’s retail business. Because of the Internet, small sellers or individuals can bypass Walmart and use their own websites to sell products to online consumers.
Recommendations based on Walmart’s SWOT Analysis
This SWOT analysis shows that Walmart must prioritize using its strengths to exploit opportunities in the global retail market. The company’s weaknesses and threats should be secondary priorities. Walmart can improve its HR management standards and product quality standards to improve firm performance. Also, the company must continue expanding its business to exploit economic opportunities in developing markets. Walmart’s strengths based on its global organizational size, global supply chain, and high efficiency of the supply chain can support aggressive global expansion in foreign markets.
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