Table of Contents
In this paper, we will focus on the Walmart Corporation, which is one of the best multinational retail organizations in the world. This business organization is owned by members of the Walton family who owns more than 49% of share invested in the company. According to business research done by one of the leading universities in New York, it was discovered that Walmart earns more than $260 billion per year. It is a multinational company which has branches in more than 16 countries worldwide, and it is known as the world’s number one grocery retail organization.
2. Strategic Position and Business Model
The strategic position of an organization is the stand of a company considering all the factors that affect its running. According to Johnson and Scholes, the factors include the environment of a business, its capability to achieve set goals, the impact and expectations of the shareholders, and the ethics and cultural beliefs that govern the company. The external environment may include customers, political and social factors, the climate in which the business is located, the economy of a country, and the technology available (Ireland, 2012).
According to financial times, Walmart has records significant profits in the last three months. The latest income statement released by Walmart according department shows that, the company has realized a profit of $15,699,000. This is a significant improvement from the profit the company made last year. On the stock market, Walmart stores have a strong shares being traded in stock exchange. The company has enough capital which enables it to increase its business globally.
The internal environment, on the other hand, involves the resources of the business, its employees, and management. Shareholders of a business are people interested in the business; they are owners, individuals who have invested in it or its followers. Stakeholders may influence the business since they are the major decision-makers. The business must, therefore, ensure it meets their expectations so that they are not disappointed with the company. Every existing company must have ethical values that govern it. These are important, since employees and employers are able to interrelate. The company also gets to know how best to handle its outsiders. A good reputation is hence established.
3.1Evaluation of option
Basing our analysis on the SWOT analysis, we discover that Walmart has strength, weakness, opportunities and threats. From our analysis the best option for Walmart is to open many of its branches worldwide since it enjoys market advantage because of its unique delivery of goods and services. Other options include employing qualified staff, developing new organization structure for effective organization communication. Analysing the strategic position is important since it helps identify factors that affect the company negatively, how the situation can be improved, and if it is impossible to work on them, they should be dropped. Additionally, the company is able to see if it has accomplished its targets or the pathway that should lead to their achievement. Therefore, the business and its followers can forecast its future.
3.2. Justification and recommendation
After analysing the above option such as opening more branches, increase of working capital, employing skilled labour, we can recommend that the use the SWOT analysis tool as guide in implementing the discovered strategy so that it can improve its trading activities. This will be effectively done by, first identifying whether the external environment is conducive if directed in a particular way. This is determined by political, economic, social, and technological factors. In terms of the political aspect, the government has been stable. This has had a positive effect on the company and the overall technology industry, since it is easy to market the products. The economy has also been stable and with its growth, people continue using technology in their daily lives enabling the company to make more profits. The social factor has given the company some benefits, too. With the growing population, everybody is in need of grocery products, and the change in lifestyle has also increased the demand for such products. Technology is fast-growing in the country, hence the need to acquire technological products to be at par with the new technology. This has enabled the organization to make more sales. In conclusion, it is evident that the external environment has influenced the business positively.
Internal analysis basically entails evaluating resources of the company. The employees are properly skilled. This enables their products and services to be of high quality and management to be conducted professionally. The Walmart Corporation has reliable financial resources from its retained earnings. Therefore, it does not give any dividends to the shareholders, which would produce a more positive outcome, (Hillstrom 2011).
The company has also maintained a good relationship with outsiders who include customers and suppliers and the community at large. This has been achieved by upholding strong ethical values and cultural beliefs. Their products are also of high quality and up to customers’ standards. Therefore, it has earned and maintained its reputation as a good company. With its competent and skilled employees, the company has displayed great capability in achieving its goals and targets. Its sales have gone up periodically, leading to increased overall profits.
The Walmart Corporation believes in Johnson and Scholes strategic model which states that organizations should keep reviewing their strategies to be in line with the frequently changing business environment. This enables businesses to fit in the environment even after the changes. The business uses suitability, feasibility, and accessibility criteria in its evaluation which involve analysing the given strategies, choosing the best one, and implementing it.
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In suitability, the business simply makes choices that will not affect the external environment negatively. Pollution, for instance, is discouraged, while recycling of raw materials is encouraged. The best alternatives are provided that help the firm discover and exploit its opportunities and at the same time avoid threats. The strategy clearly shows the strengths and weaknesses of the company and how to improve on them. Feasibility enables the Walmart Corporation to know whether it has enough resources to implement its strategic plan. This includes finances, manpower, raw materials, market accessibility, and machines. Finally, acceptability involves stakeholders agreeing on the strategy chosen and the finances needed being available.
The Walmart Corporation, however, wishes to increase its profits in the future. This may be done by fully implementing Johnson and Scholes model which insists on financial availability. Introducing purchase of shares to the public can be an additional source of income which will increase its financial resources. The organization may also apply Porter’s 5 forces which may help it identify new companies in the industry and reduce the threat by producing different products and increasing its market accessibility.
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The threat of substitute product is another force introduced by Porter. To minimize this, the company may reduce its prices or improve its standards. It is clear that buyers have a lot of bargaining power in this industry due to the increase in technological firms. The company may avoid this threat by producing unique products and providing customers with information on why they should buy their products. Suppliers to the company also have their bargaining power and analysing this would be to their advantage. This may be reduced by acquiring many suppliers. Porter’s forces may also help the company in analysing its ability to handle its competitors. The company could reduce this by introducing new products, increasing their products or services, and improving the quality of their products.
The company could also use Mintzberg’s model for its analysis. Here, the strategy can be used as a plan, plot against competitors, habit, position, and as a perspective. With the strategy as a plan, the Walmart Corporation could come up with goals and how to attain them. Working out ways to stop, disrupt, mislead or interfere with competitors can be used as a plot against them, which is also a strategy. As a habit, a strategy that is used from time to time could form a pattern. This is adopted from some past ways of conducting the business. For a strategy to become continuous, it should be beneficial to the company (Mitchell, 2012).
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In terms of position, the company can identify its position in the market and its environment. It can, therefore, improve its position. Perspective would be the company’s view on different aspects; thus, it influences its decision-making. The management could, for example, view manufacturing new products as a way of increasing sales instead of viewing it as a risky process. Mintzberg’s strategy could, therefore, help the company come up with a realistic business strategy (Viardot 2011).
3.3 Analysis the model on how to realize the best option for the company/analysing recomendation
From the above diagram we are able to analyse the performance of Walmart Corporation in terms of doing its daily business. The company have strengths, weakness, opportunities and threats. This affects how the company perform especially in terms of making profits and accomplishing the set goals. For example the strength show what the company does better than other competitors, this leads to the company benefiting from opportunities available in the market. On the other hand, weakness is very harmful to the company because the company is not in the position of competing with other organization hence leads to organization threats such as lack of market for its products. This explanation will help to internally and externally analyse the performance of Walmart.
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The Walmart Corporation could apply the SWOT analysis, whereby it would identify its strengths, weaknesses (internal factors), opportunities, and threats (external factors). Strengths are areas in which the business is most powerful. Weaknesses are those internal factors that the company cannot handle properly and should improve on. Identifying opportunities would help the business discover areas that can be used to its advantage. Threats are factors likely to pose danger to the business. Though it is helpful in decision-making, the analysis, however, would not be very advisable, since it only outlines the weaknesses and threats instead of identifying an actual plan of how to deal with them. Using this strategy would provide the Walmart Corporation with the ability to determine whether the objectives are achievable.
Finally, the Walmart Corporation may use the value chain analysis whose main aim is to help the organization come up with ways to create great value for their customers. I consider this the most effective tool. The tool is used in a 3-step process which includes activity and value analysis and finally evaluation and planning. In the activity analysis, the company would identify the activities that would interest or satisfy the company. This would include offering after-sale services, advertising their products or improving delivery services. The company could also motivate its workers, ensure they give the best services, and be up-to-date with the latest technology. The value analysis would entail personalizing the activities according to customers. The Walmart Corporation would, therefore, ensure they carried out their activities the way customers would best like, hence listing the value factors and ways to improve value in each activity, (David Barstow 2012).
The evaluation process would then entail implementing the two steps mentioned above. If they are accomplished, the company would be giving its best services to customers. The cheaper, easier, and quicker steps could be implemented first to avoid de-motivating the employees. The challenging ones could come up later. The value chain process would provide a strong relationship between customers and the company.
To sum it up, the Walmart Corporation understands the importance of analysing its strategic position. It is able to come to terms with its performance, hence identifying its best points and what needs to be done in its weak points. By using the other models, the business could set better goals and objectives and find better ways of achieving them.
Benchmarking is another tool that can be used to identify what makes up high and low performance. The business could use this to set good standards and add value to its services. Below is a SWOT analysis chart discussed earlier (Mennen 2010).
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To analyze the SWOT analysis table of the Walmart Corporation, environmental scanning is very important in terms of finding what factors make Walmart more successful in earning more revenue. On the other hand, it is necessary to identify those internal and external factors that hinder the company’s operations to achieve the set goals. For example, Walmart has strength in terms of management capability either within or outside its headquarters. This has made the organization realize its goals because of good management and leadership functions. On the other hand, the organization faces numerous weaknesses internally in terms of workers’ strikes and poor workers’ payment system, which affects the operation of the organization. External analysis may, on other hand, enable the company to find out whether it has a competitive advantage or opportunities outside its operation in terms of a large market, good government policies, and many more. This results in huge profits due to good sales in the external market share. Finally, the company may face threats such as stiff competition from similar organizations, hence reducing its profit (McCabe 2010).
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In conclusion, strategy is a tool that enables many companies to obtain their set goals and objectives. In our paper, we have analysed how Walmart uses corporate strategy to obtain its targeted goals. Walmart is one of the leading multinational retail companies that have earned the USA huge foreign income in terms of better GDP. Through the use of the SWOT analysis, the company is able to identify its strengths, weaknesses, opportunities, and threats either internally or externally in terms of business operation.