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Custom External Environment Analysis of Wal-Mart Inc. Essay

Wal-Mart stores incorporation was founded by Sam Walton in 1962 as a regional discount store. In October 1969, Wal-Mart became an incorporated business organization. The company’s core business included retail business with a focus on huge customer discounts. Since then, the company’s focus has been on mass market with emphasis on discount selling. Currently, Wal-Mart is among the largest multinational retailer operating in most parts of the world. The company runs a a number of discount supermarkets and warehouses stores in five continents. According to survey carried out by Forbes magazine, the supermarket chain was ranked first among the Forbes Global 2000 list. Wal-Mart further doubles up as the biggest private employer in the world. Currently, Wal-Mart Inc. has over 2 million employees. Although, the company is incorporated, the founding family still owns a controlling number of shares in Wal-Mart. For many years, Wal-Mart managed to overcome competition and emerged as the supermarket of choice. Fulmer (2006) states that the supermarket chain has cut out a niche by offering goods at price considered by many as low. Wal-Mart aggressively purchases in bulky and passes down the benefits to the consumer through huge discounts. This paper will analyze the supermarket’s external environment and give an in-depth view of the company’s operating environment.

Wal-Mart’s Strategic Plan

Since its launch in 1962, Wal-Mart premiere intentions were to retail at low prices. The company outlines growth of business as its main strategy. The supermarket wishes to indulge in businesses that it can grow. According to Grant (2010), Wal-Mart regards enhanced productivity as a pillar to business growth and profitability. This explains why the supermarket has strategically positioned itself with an aim of bolstering its market dominance. Enhanced productivity means being able to procure purchases in time and at reasonable prices. It further means being in a position to supply products to your customers in good time. Wal-Mart has a huge customer base in the United States, where it is estimated to have 40% market dominance.

Managing such a customer base can be extremely troubling for any business. Therefore, Wal-mart has a very elaborate supply chain management system in place to cater for the massive clientele. Procurement is quite critical in retail business because consumers need to get whatever they want in time. The supermarket has an efficient supply chain management system in place to ensure that supplies arrive on time and consumers receive goods on time. The company is deeply focused on meeting customer satisfaction in a manner that no business has done before. This has been achieved mostly through low discounts. Wal-Mart is the cheapest supermarket according to most consumers. It is not clear whether it is a mere customer perception or a fact that the supermarket offers great discounts. However, the company has been known for offering huge discounts to customers since its inception.

Most industry players have tried to match Wal-Mart’s discounts without success. As outlined in the company’s strategic plan, the company’s aim is to supply consumers with goods at affordable prices. That way, the company is able to make enormous sales leading to huge profits.

Marketing Strengths and Weaknesses

Since its launch, Wal-Mart mostly targets the mass market through discount selling. It applies the principle of the fortune at the bottom of the pyramid in its marketing strategy. This is meant to ensure that its products appeal to people with low purchasing power. Wal-Mart appreciates the fact that majority of the citizens in any country belong to the low cadre. Therefore, businesses need to factor that in in their pricing strategies to ensure that they break that niche. The supermarket procures supplies cheaply and passes the benefits to its customers. However, cheap supplies might not always meet consumer expectations. Grant (2010) reckons that highly discounted products may not meet required standards because high standards in a product come at a price. Another factor that needs to be examined clearly is the aspect of low discounts. Wal-Mart, just like any other business organization, is profit-oriented. What this means is that, the supermarket must make profits, no matter the circumstance. It is difficult to estimate the profit that Wal-Mart makes on every product, but available data shows that the supermarket makes phenomenal products every year.

Another marketing strategy that has given Wal-Mart an edge is expansion. The company’s aim is to bolster its market dominance by setting up new branches in different parts of the world. Most businesses have tried to open up branches in other countries without success. Wal-Mart recognizes the importance of cultural, economic and language diversity in business. To overcome these challenges, Wal-Mart prefers to enter new territory either as a franchisor or venture capitalist. Partnering with investors who understand local challenges is considered less risky compared to direct investment. Wal-Mart competitors do not appreciate diversity challenges in their external ventures. That is the reason why they fail in their expansion strategies.

Role of Business Ethics in Gathering Intelligence

Businesses need to obtain critical competitor information in order to gain an in-depth understanding of the business climate. Gathering such facts through ethical means has been a challenge for most businesses. Wal-Mart guards its crucial information jealously. Employees working in sensitive sections are taught on the importance of keeping company information safely. They also take oaths of secrecy before engaging in tasks that might reveal sensitive information. Matters concerning information security are underscored clearly in the company’s code of ethics. Furthermore, Wal-Mart has an in-house, competitive intelligence docket within its administrative functions to make sure that intelligence information is held appropriately. The company has been able to withstand numerous challenges in the retail market because of its ability to carry out appropriate intelligence and act on it accordingly. The supermarket has largely remained stable in the food retail industry. The company hires the service of qualified detectives to check and ascertain that the contents of supplier products meet high quality standards as provided in the law.

Research is critical in determining consumer tests and preferences. The company thus carries out research regularly to ensure that its products meet consumer expectations. Another factor that gives Wal-Mart an edge over its competitors is the question of customer loyalty. The company has been in business for many years. This has enabled it to establish and maintain an excellent rapport with consumers in a manner that no competitor can match. This makes it easy for the company to gather pertinent facts concerning market demands and consumer preferences that are vital in decision-making. Most businesses in the retail industry fail to sustain a health relationship with their clientele. This factor has continued to impact negatively on most businesses in the sense that they fail to gather sufficient intelligence that is imperative in decision-making. Wal-Mart uses its intelligence to understand capabilities, strategies and competitor options. Competitive intelligence involves continued scanning of the industry’s players and the environment in order to decide how to serve customers adequately.

Management and Human Resource

Wal-Mart has the largest number of employees in the world. It is the leading private employer in the world. Managing an organization like Wal-Mart can be challenging because a number of decisions must be taken by different people at the same time. Any slight error in decision-making can lead to massive loses. Therefore, this means that the company must maintain effective communication between the staff and management. In this regard, the company has an effective system in place that facilitates effective communication. An effective system helps the management to appreciate business risks. It improves organizational operational effectiveness, while reducing costs and promoting innovation and efficiency.

The company takes pride in hiring and training its staff to ensure that their service conforms to the company’s mission, vision and strategic plan. The company understands that human resources are the competencies and skills that employees have which are assets to a firm. They are not just limited to the skills that they have but also their ideas and opinions. People do not think alike, and appreciating each idea is one of the first steps towards making the workers feel appreciated, valuable and needed. This, altogether, plays a vital role in fulfilling some of the needs that customers value most. They are very important and a manager’s most challenging task is how to manage them effectively. Greenfield (2006) asserts that most organizations find it difficult to maintain efficient employees, even though they hire the best brains. The management need to understand that employees must be led, hired and fired, motivated, disciplined, inspired and evaluated, all these must be carefully balanced to bring out the best in every individual.

Wal-Mart recognizes that unplanned and unanticipated growth exerts a lot of pressure and extra demands on employees. This problem is not solved even when new people are brought on board. The supermarket takes time to groom and train new employees. Managing people refers to both employees and customers. In effective management, a manager must ensure that maximum effort is employed in hiring quality personnel. Alison and Kretschmer (2007) recommend that a manager should be willing to invest in recruiting through a rigorous process, motivating and retaining the best employees. Wal-Mart has a balanced workforce in all its stores. The company has learned to balance its staff in terms of ethnicity, gender and religious affiliation.

However, Wal-Mart has been accused by rights observers of violating and exploiting employees. The company has a poor remuneration package. According to Greenfield (2006), most of the company’s employees work in dilapidated conditions and for exceptionally long hours. Critics further accuse the supermarket of not having an excellent environmental track record. They countered this by reducing on their green house emissions, introducing energy-saving and efficient ways of energy conservation, such as solar panels and renewable sources of energy like the wind, as well as propagating zero waste in all its discount stores. However, these efforts are minimal compared to what other industry players have done. Most retailers have transformed all their operations to comply with environmental laws in different countries. The company still needs to carry out reforms in most of its stores to make sure that its operations are environmentally friendly.

Conclusion

Wal-Mart is undisputedly the world in the retail industry. The supermarket runs a chain of supermarkets in most parts of the globe. The company has an elaborate marketing strategy that addresses consumer needs and preferences. The company focuses mostly on consumers with low purchasing power. This strategy has been realized through discount selling, a fact that has made the supermarket the choice of many since its inception. The supermarket has remained a head of competition despite many economic challenges. Its revenue has continued to grow making the supermarket rank among the most profitable organizations in the United States.

Code: Sample20

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