Walmart: Internal And External Environment

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Walmart: Internal and External Environment

Contents

Introduction3

General Environment Segments3

Forces of Competition5

Measures to Address Forces Of Competition5

Opportunities and Threats6

Strengths and Weaknesses7

Resources, Capabilities and Core Competencies8

Value Chain9

Conclusion11

References12

Appendices15

Walmart: Internal and External Environment

Introduction

Wal-Mart is recognized as the biggest chain of variety of retail and discount stores in the whole world. Its journey started around half a century earlier when Sam Walton opened the first store in Arkansas, U.S. The company showed tremendous growth and established itself in the national and international retail market. The company employs 2.2 million associates worldwide and serves 200 million customers each week at more than 10,000 stores in 27 countries (Walmart Inc, 2013). The reason behind the exponential development of Wal-Mart lies in their corporate philosophy and the level of adaptation based on the internal and external environment.

General Environment Segments

Wal-Mart has been ranked as the number one company in the Fortune 500 list of the year 2013 (CNN Money, 2013). It has achieved this position because of excellent strategic management. It has worked on both the external and internal environment factors to gain potential benefits and avoid failure. The six external environment factors include the political, demographic, economical, socio-cultural, technical and global trends (Harrison & John, 2012). These factors have an indirect impact on the costs incurred, prices quoted and profitability of Wal-Mart or any other company.

Wal-Mart has always advertised the tagline of providing 'everyday low prices' because their founder, Mr. Sam Walton, always believed in the success of this policy (Walmart Inc, 2013). Practically, it is not a simple task to sell things at prices lower than prevailing in the market. Therefore, the most important external environment factor that influences the performance of Wal-Mart is the economic factor. Wal-Mart needs to get the products at the lowest prices from the vendors in order to charge customers with minimal prices than competitors. The U.S economic recession after the bankruptcy of Lehman brothers has made people more prudent and conscious in spending. According to the retail industry outlook survey (KPMG, 2012); more than 60% of the retail executives believe that the stabilization of the U.S economy will not occur before the end of year 2014. This result indicates that decision makers in the retail sector of U.S realize the importance of the economic factor in the success of their enterprise and that; they are facing hard times in the economic environment of the business. In the last annual report (Wal-Mart,2013), the company accepted that it is facing tough competitions in all the operating countries because of factors like economic circumstances, change in the income level of consumer, inflation and high unemployment levels. Wal-Mart and other retail companies have witnessed problems because of the global economic crises and the surge to give low priced products has become a tough job.

The journey of Wal-Mart started from a town of U.S around fifty years ago and today the company operations have extended to twenty seven countries around the globe. This implicitly means that the company is offering products to a diverse customer ...