SWOT analysis is a business analysis process that gauges the potential of a business in relation to internal and external factors affecting the business. A strategic management team analyses information revealed in the SWOT analysis to maximize profits, minimize losses and predict trends in sales. Therefore, to get more insights into the business operations of Walmart, SWOT analysis of Walmart Company would be an effective tool to gather adequate information.
The SWOT analysis of Walmart Company reveals how Walmart maintains its competitive advantage in the retail industry. As of 2021, Walmart claims a leading position in the international retail industry and provides a strong benchmark on the strategies of operating a retail store. This article dissects the different aspects of the SWOT analysis of Walmart Company to provide an inclusive insight into factors affecting Walmart’s business operations.
Table of Contents
What is the SWOT Analysis of Walmart?
A SWOT analysis of Walmart Company highlights the Strengths, Weaknesses, Opportunities, and Threats of Walmart Inc. The sections below provide an in-depth breakdown of how Walmart manages all internal and external strategic factors affecting the business:
What are the Strengths of Walmart Company?
The Strengths in the SWOT analysis of Walmart Company highlight the interrelationship between the size of the company and the growth in business operations. Walmart’s competitive strengths enable the firm to withstand potential threats despite the store’s weaknesses as a low-cost retailer. Walmart’s strengths include:
- Walmart is considered a legend in retail (household name)
- Walmart has an extensive scale of operations
- Effective business strategy
- Effective and efficient supply chain
- Walmart provides consumers with a wide range of products
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Walmart Strengths Explained
Among the most prevalent strengths of Walmart Company is that Walmart is extensively popular across the United States. The extensive popularity makes it easier for Walmart to take up authority within the retail industry and consecutively penetrate new markets. As of 2021, there are over 4000 Walmart stores spread across 50 states in the US. The company has witnessed millions of consumers visiting the stores for products and services, making the store one of the most recognized retail stores among consumers. As a result, Walmart has been recognized a legend in America’s retail industry and continues to uphold the name by its continuous determination to keep growing.
Walmart has also managed to increase company revenue through an extensive scale of operations. As of 2021, Walmart is reported to have over 60 million different products available to consumers. As a result, the company has gained popularity for displaying a wide range of diverse, unique, and affordable products to consumers. Even so, Walmart continues to grow the number of products, which in turn increases overall sales and revenue.
Walmart’s business strategy is considered as a strength in the SWOT analysis of Walmart Company. Walmart uses the economies of scale business model which is defined by the cost advantages resulting from the increase in production and decrease in prices. With the large scale of operations witnessed at Walmart, the production costs can be divided through all the products and thereby maintaining low prices of items. Moreover, Walmart manages a reliable supply chain system that keeps track of cash flow, quality of products, and customer satisfaction. All these factors have made Walmart one of the leading retail stores in the world.
What are the Weaknesses of Walmart Company?
In the SWOT analysis of Walmart Company, the weaknesses reveal the internal strategic factors that impose challenges on the company’s ability to withstand threats. The weaknesses have a direct relation to the firm’s generic strategy and the implications on the business development, resources, capabilities, and profit margins. Walmart’s weaknesses in the retail industry include the following:
- Cost Leadership Strategy
- Healthcare Situation at Walmart
- Claims of Gender Discrimination
Walmart Weaknesses Explained
Walmart’s cost leadership strategy as a business model has proven to be the firm’s most prevalent weaknesses. The strategy involves a process of setting the lowest cost of operation (translating to the lowest price possible) for each of the related products. As a result, Walmart minimizes the selling prices, which consequently minimizes the profit margins. As much as the cost leadership strategy is considered as one of Walmart’s strengths, the firm has been realizing thin profit margins over the years.
Even though healthcare systems in the whole of the United State is considered as weak, Walmart being the world’s biggest retailer has failed to provide proper healthcare for their employees. Walmart provides its employees with a comprehensive health care plan that requires either weekly or monthly payment that is deducted from the checks. However, the resultant payment from the comprehensive health care plan does not translate to the services in the health care system. The benefits of the plan are so few that an individual can actually pay less and get more benefits if they seek their own health care. As one of the largest retail stores in the world, Walmart needs to implement better health care systems for its working employees.
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Walmart has also previously encountered claims of discrimination that pose as an inadequacy of the firm in the SWOT analysis of the Walmart Company. For instance, in 2001, Walmart faced a joint lawsuit that claims discrimination in relation to bonuses and promotions. The lawsuit was filed by six female workers who were on track to receive salary raises and opportunities to train yet they were not delivered. This case did not only affect the 6 women who filed the complaint but also 1.5 million other women employees who are subjected to gender discrimination in Walmart Company. These factors have proven to adversely affect Walmart’s revenue.
What are the Opportunities of Walmart Company?
In the SWOT analysis of Walmart Company, the opportunities can mainly be focused on expansion and improvement of business practices. the opportunities of Walmart are majorly linked with the global economic situation. In addition to this, the human resource situation at Walmart presents issues that translate to opportunities for growth. The opportunities of Walmart Company include:
- Expansion in foreign and developing markets
- Development in Human Resource practices
- Improvement in quality standards
- Addition of food sections
- Improvements on home delivery
- More collaborations and acquisitions
Walmart Opportunities Explained
Walmart’s popularity across the world provides a good opportunity to venture into several countries and foreign markets. For instance, Walmart could expand operations in some parts of Europe (especially in Central Europe and Russia), the Middle East, some parts of Asia, Australia, and Africa. Even though Walmart has extended beyond the US and stepped foot in the UK, India, and Flipkart, there is still room for expansion in foreign markets. In addition to this, Walmart has the opportunities to grow by improving the human resource practices at the company. For instance, Walmart increased hourly sales for employees during the recent pandemic, a move that attracted most people to work for Walmart. These improvements in HR practices can go a long way in avoiding public controversies and lawsuits.
Walmart also has the opportunity to improve the quality of products that lack quality. While Walmart is widely known for high-quality products at relatively low prices, a few products may lack quality. For instance, low-quality clothes which cause health concerns among consumers can be improved by getting clothing products of better quality. As a result, Walmart will improve the quality of clothes among other products.
Since Walmart does not venture into fresh foods, the firm has the opportunity to establish a grocery store. While at it, Walmart can be a competitor to other stores venturing in fresh foods. Walmart would expand its stores with additional food sections that can handle fresh foods and groceries. In addition to this, Walmart can improve the food section by adding gluten-free options and vegan food selections. Moreover, Walmart can combine the addition of food sections with improvements in home delivery services. Improved home delivery services will increase the convenience of Walmart’s online store.
Walmart also has the opportunity to grow through more collaborations and acquisitions in developed countries. For instance, if the company does not want to open a store in Asia or Europe, it can opt to invest in some of its retail stores. Walmart can also seek collaborations with major retailers like Carrefour and get a chance to penetrate new markets.
What are the Threats of Walmart Company?
The threats in the SWOT analysis of Walmart Company reveal the external strategic factors that limit Walmart’s business operations. The most concerning threats of Walmart include:
- Political controversies
- Imitable Strategy and Business Model
- Bribery investigations
- Increased preference for online shopping
Walmart Threats Explained
Walmart’s biggest threats include political controversies that adversely affect business operations in the company. For instance, Donald Trump supporters in 2018 started a boycott campaign against Walmart during the sale of clothes with the words “Impeach 45” and “Impeach Trump.” When this matter was looked into, it was found that Walmart also sold pro-Trump clothes and was purely trying to make sales. Apart from the political controversies, Walmart has also experienced bribery allegations that warranted internal investigations. Once the New York Times investigated the matter, it was revealed that both lower and top management employees in Mexico were giving out bribes to boost market share.
Other threats to Walmart’s business operations include the easy to imitate strategy and business model. The business model can be taken up by Walmart’s competitors and result in aggressive competition from the competitors. Even though Walmart is still a giant retailer, stores such as Target, TESCO, and Costco have adapted Walmart’s business models and are slowly taking up spaces in the market share. A comparison of prices and quality might hurt Walmart’s sales. Also, the increased preference for online shopping over brick-and-mortar operations can affect Walmart’s revenue.
Competitors of Walmart Company?
Walmart’s competitors include Amazon, Alibaba, IKEA, Costco, eBay, Home Depot, Lowe’s, and Target, among others.
What is the USP of Walmart?
Walmart’s USP refers to the Unique Selling Preposition that makes more consumers prefer Walmart to other stores. So said, Walmart is widely known for offering quality goods at the lowest possible prices. In addition to this, the prices offered at Walmart are available across all stores. Walmart technically prices their products competitively and ensure aggressive bargains with the manufactures that translate benefits to the consumers.
Conclusion
The SWOT analysis of Walmart Company reveals that Walmart has to prioritize its general strengths to exploit the wide range of opportunities in the global retail market. The company needs to improve Human Resource practices in order to provide a conducive working environment for the employees. In addition to this, the company has to implement strategies that curb the effects of the weaknesses and threats as revealed in the SWOT analysis of Walmart Company. This way, Walmart can adequately prepare for long-term developments in retail business operations.
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