Walmart’s remote environment or macro-environment involves factors that determine the company’s success. These factors are best presented through the PESTEL/PESTLE analysis model. As a retail industry leader, Walmart continues to withstand the potential negative effects of threats in the political, economic, sociocultural, technological, ecological and legal (PESTEL/PESTLE) aspects of its business. However, this success requires continued evaluation of the retail industry environment. These PESTEL/PESTLE factors also change over time, thereby imposing challenges for Walmart. These changes may present threats or opportunities. Walmart must exploit the opportunities and protect itself from threats. In using the PESTEL/PESTLE analysis, Walmart leaders and managers can determine which factors to prioritize in strategy development.
The external factors in the remote or macro-environment of Walmart, based on the PESTEL/PESTLE analysis, indicate the need for strategic focus on economic, sociocultural and ecological concerns.
Walmart considers political factors in the retail market, usually pertaining to government policies. In the PESTEL/PESTLE analysis model, politically active interest groups are also significant. The following are the political external factors in Walmart’s remote/macro environment:
- High stability of politics (opportunity)
- Political support for globalization (opportunity)
- Political pressure for higher wages (threat)
The remote/macro-environmental factors show that Walmart must address the threat of higher wages. This is a threat because it goes against the cost minimization essential in Walmart’s cost leadership generic strategy.
Walmart is under significant pressure from economic changes. Any such change directly leads to changes in the company’s revenues. Based on the PESTEL/PESTLE analysis model, the following are the economic external factors in Walmart’s remote/macro environment:
- Stability of major economies (opportunity)
- Continued growth of developing countries (opportunity)
- Decreasing unemployment in the United States (opportunity)
All of these economic factors show that Walmart should exploit opportunities around the world. Emphasis should be on the fast-growing economies of developing countries, which have increasing demand for goods from retail firms like Walmart.
The social or sociocultural factors in the business environment of Walmart influence consumer perception and preferences. In the PESTEL/PESTLE analysis model, the following are the social or sociocultural external factors in Walmart’s remote/macro environment:
- Healthy lifestyle trend (opportunity)
- Cultural diversity trend (opportunity)
- Urban migration (opportunity)
These social/sociocultural factors present opportunities for Walmart. The company can increase its array of healthful products. Walmart can also increase the variety of its products to satisfy various cultural preferences. Moreover, the company can adjust its strategies to exploit increasing consumer demand in cities and surrounding areas.
Walmart needs to address technological trends. In the context of the PESTEL/PESTLE analysis model, technologies affect the retail industry’s competitive landscape. The following are the technological external factors in Walmart’s remote/macro environment:
- Increasing business automation (opportunity)
- Business analytics or big data (opportunity)
- Increasing mobile device usage among consumers (opportunity)
Walmart can increase its investment in all three factors. In exploiting the opportunity in mobile device usage of customers, the company must boost its online presence. Online marketing and online selling increase Walmart’s revenues.
The ecological or environmental factors significant in Walmart’s business pertain to environmental conservation concerns. Environmental conservation is now a popular principle. The following are the ecological external factors in Walmart’s remote/macro environment in the PESTEL/PESTLE analysis model:
- Business sustainability trend (opportunity)
- Environmentally friendly products trend (opportunity)
To attain business sustainability, Walmart must improve operational efficiency. Technological innovation helps improve efficiency in business. Improved policies and standards on products sold at its retail stores can also strengthen Walmart in addressing these ecological factors.
Walmart is subject to the requirements of laws and regulations. Based on the PESTEL/PESTLE analysis model, these external factors usually impose limits on retail firms. The following are the legal external factors in Walmart’s remote/macro environment:
- Food safety regulations (opportunity)
- Employment regulations (opportunity)
- Tax law reform (threat)
Tax reform is a potential threat if it leads to higher tax rates. Walmart must take food safety regulations as an opportunity to improve quality standards. Also, enhancing Walmart’s human resource management practices can exploit opportunities concerning employment regulations.
Recommendations based on the PESTEL/PESTLE Analysis of Walmart Inc.
The PESTEL/PESTLE analysis of Walmart shows that the company has more opportunities than threats in its remote/macro environment. The external factors present significant opportunities. The firm must take a proactive approach to address threats. However, most of Walmart’s efforts must focus on exploiting the opportunities identified in the retail business environment. Based on the PESTEL/PESTLE analysis, Walmart can improve HR management practices, boost investments in technology, enhance quality standards, and expand its business worldwide.
- Brea-Solis, H., Casadesus-Masanell, R., & Grifell-Tatje, E. (2012). Business Model Evaluation: Quantifying Walmart’s Sources of Advantage. Harvard Business School.
- U.S. Department of Labor – Regulations.
- U.S. Department of Labor – Summary of the Major Laws of the Department of Labor.
- U.S. Environmental Protection Agency – Smart Steps to Sustainability 2.0.
- U.S. Food and Drug Administration – Retail Food Protection.
- U.S. International Trade Administration – Policy and Negotiations.
- U.S. National Institute of Standards and Technology – A Guide to Retail Pricing Laws and Regulations.
- Walmart Inc. – Form 10-K.
- Walmart Inc.’s Official E-commerce Website.
- Yuksel, I. (2012). Developing a multi-criteria decision making model for PESTEL analysis. International Journal of Business and Management, 7(24), 52.