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SWOT analysis of Walmart
This is a Walmart Stores Inc. SWOT analysis for 2013. The original analysis can be
found at Walmart SWOT analysis. For more information on how to do SWOT analysis,
please refer to our article.
Company background
Name Wal-Mart Stores Inc.Industries served RetailGeographic areas served WorldwideHeadquarters Bentonville, USCurrent CEO Mike DukeRevenue $ 466.950 billion (2012)Profit $ 15.699 billion (2012)Employees 2.2 million (2012)Main Competitors Costco Wholesale Corporation, Dollar General Corporation, Dollar Tree, Inc.,
Kohl's Corporation, Macy's Inc, Sears Holdings Corporation, Target Corporation
Walmart is a US based multinational retail company that sells general merchandise and groceries. It is the world’s largest
retailer, third biggest public company, largest private employer and one of the most valuable companies in the world.
SWOT
Walmart SWOT analysis 2013
Strengths Weaknesses1. Scale of operations
2. Competence in information systems
3. Wide range of products
4. Cost leadership strategy
5. International operations
1. Labor related lawsuits
2. High employee turnover
3. Little differentiation
4. Negative publicity
Opportunities Threats1. Retail market growth in emerging markets
2. Rising acceptance of own label products
3. Trend toward healthy eating
4. Online shopping growth
1. Increasing competition from brick and mortar and
online competitors
2. Increasing resistance from local communities
3. Rising commodity prices
Strengths
1. Scale of operations. Walmart is the largest retailer in the world with more than $400 billion in revenue and 10,130
stores. It makes Walmart the giant that no other retailer can match. Due to such large scale of operations, the corporate
can exercise strong buyer power on suppliers to reduce the prices. It can also achieve higher economies of scale than
competitors because of its size. Higher economies of scale results in lower prices that are passed to consumers.
2. Competence in information systems. The corporate achieves significant cost savings because of its extensive
information systems that tracks orders, inventory levels, sales and other related information in real time. All this
information can be instantly accessed, analyzed and decisions made at each store. Effective management of supply
chain and logistics is one of the most important factors for Walmart success.
3. Wide range of products. Walmart can offer wider range of products than any other retailer. It sells grocery,
entertainment, health and wellness, apparel and home related products among many other categories and offers both
branded and own label goods. Wide range of products attracts more customers to Walmart stores.
4. Cost leadership strategy. This strategy has helped Walmart to become the low cost leader in the retail market. This
strategy requires selling products ant the lowest price possible and providing a no frill services to achieve higher
economies of scale and attract masses of consumers and that is exactly what the company is doing. It sells products at
much lower prices than competitors do, builds warehouse style superstores that contain extensive range of products but
doesn’t offer much additional benefits or services. All of this result in cost reductions and lower prices for consumers.
5. International operations. Walmart does not rely on sales from US stores only as its competitors do. It has earned
$135 billion in sales in 2013 from its international operations, which grew at a much faster rate than sales in the home
market. Foreign markets open up new opportunities for Walmart’s growth and provide new experience for the company as
it operates quite differently abroad than in the home market.
Weaknesses
1. Labor related lawsuits. Walmart faces labor related lawsuits every year, which costs millions of dollars for the
company. It is criticized for poor work conditions, low wages, unpaid overtime work and female discrimination. In addition
to litigation costs, corporate’s reputation has been damaged and fewer skilled workers are willing to work for it.
2. High employee turnover. Walmart suffers from high employee turnover that increases firm’s costs, as it has to train
new employees more often. The main reason for high employee turnover is low skilled, poorly paid jobs.
3. Little differentiation. Walmart has no differentiation compared to its competitors, which might hurt the company in the
future if commodity prices or average consumer income would increase. In this case, low cost leadership strategy
wouldn’t be as effective as it currently is and Walmart’s main competitive advantage would erode.
4. Negative publicity. The company is often criticized for its questionable practices such as bribery of authorities or poor
work conditions. Negative publicity damages corporate’s reputation.
Opportunities
1. Retail market growth in emerging markets. Retail markets grew by at least 5% on average in emerging markets in
the last year, opening huge opportunities for Walmart’s revenue growth. The company currently operates in Brazil,
Mexico, China and India markets. Walmart should increase its presence in these markets to sustain future growth.
2. Rising acceptance of own label products. The sales of private label products have increased by more than 40%
over the last 10 years. This reveals increasing consumer acceptance of supermarket chain products compared to national
brand products. Walmart has an opportunity to increase the number of private label products sold at its stores and earn
higher profit margins.
3. Trend toward healthy eating. The current trend of eating healthier food has resulted in higher demand for grocery
products. Walmart has an opportunity to expand its grocery stores to earn more income from this trend.
4. Online shopping growth. Online retail sector grew by 4.7% in the US in 2011, reaching $197 billion. Walmart being
the biggest offline retailer has huge opportunities to expand its presence in online retail market. The company can offer
convenience to pick up the goods ordered online in its more than 10,000 stores and can offer even lower prices online
than at the store. As a result, Walmart can reach more customers and increase its revenue.
Threats
1. Increasing competition from brick and mortar and online competitors. Competitors like Target, Costco, Amazon
and Tesco (in UK) are putting huge efforts to eliminate price differences that Walmart enjoys. Except the lower prices,
Walmart doesn’t differ from other low cost retailers and will experience increased competition from them in the future.
2. Increasing resistance from local communities. Walmart superstores have a negative impact on local retailers and
communities. Some of the local retailers are usually forced to close off when Walmart superstore opens in the area. This
affects not only the retailers but their families and the community as a whole.
3. Rising commodity product prices. Rising commodity prices squeeze Walmart’s profit margins and erode its
competitive advantage. As prices go up, the cost difference between the retailers decreases and competition shifts from
price to product and service differentiation.
Sources
1. Walmart (2013). Walmart Corporate. Available at: http://corporate.walmart.com/?povid=P1171-C1093.2766-L4
2. Yglesias,M. at Slate (2013). Is Wal-Mart in Trouble. Available at:
http://www.slate.com/articles/business/moneybox/2013/05/wal_mart_sales_decline_america_s_largest_retailer_is_s
lipping_as_customers.html
3. Business Standard (2013). Walmart lobbying case 'closed'. Available at:
http://www.business-standard.com/article/current-affairs/walmart-lobbying-case-closed-113051700875_1.html
4. Wikipedia (2013). Walmart. Available at: http://en.wikipedia.org/wiki/Walmart