Wal-Mart’s Internal Analysis: Weaknesses & Strengths

Executive summary

Wal-Mart was started in 1962 as a retail shop and has expanded through the years following a careful expansion program and sticking to the initial values of customer satisfaction. Over the years, the retail chain has expanded all over the world with more than 7000 stores. In the internal analysis, the company has strength in its large chain that has enabled it to expand due to its large financial base. It has also embraced technology that helps it place orders for its retail outlets. However, the company is faced with a management problem that has led it into constant conflict with the law. It is also weakened by a bad reputation arising from its low wages.

Wal-Mart traces its existence to the 1962 operations of Kmart, Target, and Wal-Mart in Arkansas and Kansas. Over the years the company grew through expansion strategies to acquire the current 7000 stores with more than 1.9 million associates and wholesale clubs across 14 markets.

Wal-Mat Values

When it was started Wal-Mart had acquired some values that have helped it to grow over the year to its current status. The main goal of the supermarket was to give customers what they wanted and what they desired to have. Its goals had to be supported by some realistic objectives which acted as the core values that have guided the company to grow this far. It wanted to give customers what they desired to have but putting in place some values like: –

  1. Providing quality merchandise
  2. Providing goods at the lowest price possible
  3. Guaranteeing customers satisfaction
  4. Providing knowledgeable and friendly services
  5. Letting customers shop t convenient hours with free parking
  6. Guaranteeing a pleasant shopping experience to the customer.

These are the values that have helped Wal-Mart to expand the far it has achieved today. Over the years the company has grown and expanded all over the world through joint ventures. Its focus on the customer has been instrumental in enabling the growth of the chain. It has kept its values for all those years.

Internal analysis

Strengths

Wal-Mart draws a lot of strength in its large operation chain. This has helped the supermarket tap into many markets that would have been difficult for it to enter. Wal-Mart had emerged as the world-leading chain as early as the 1980s and it had also emerged as the leading private employer. This large chain of operation ensures that the supermarket has access to a wide customer base. As such it is able to make large volumes on its commodities. The expansion program has been focused on creating a presence in the whole world while at the same time retain the focus that has enabled the local market to flourish.

With more than 2760 stores and clubs plus about 13 markets outside the United States, Wal-Mart could be accessing more customers than any other chain in the world. It is also estimated that more than 176 million customers visit Wal-Mart every week in the world. This large chain of operation is the supporting structure for the supermarket and one of its strengths in the market. This translates to monetary strength which has enabled the supermarket to compete and influence others in many ways to make way for its expansions. (Bianco et al., 2007)

Wal-Mart uses superior technology in its operation. It was one of the leading supermarkets in the early 90s to embrace information technology and consequently employ it in its operations. It has ensured that it has internet connections with its suppliers such that with a click of a button, it can notify its suppliers about a chain that needs to be replenished with supply. This has ensured that customers always find what they want on the shelves which avoid frustrations and makes the shopping experience.

Wal-Mart has also ensured that it gives quality products to its customers. It has established a department to source supplies all over the world and ensures that they are all to the required standard. This has helped to create customer confidence in the chain and go back to shop there. This has been one way of making it customer to have a wonderful shopping experience. It has also made sure that its customers have received standard services from its shop attendants.

Another strength that has enabled the chain to flourish is the loyalty of customers to the chain. Throughout years of its operation, the supermarket has acquired loyal customers who stick with it even in times of critics like now. They are attracted to it by its goods and service.

Weaknesses

One of the greatest weaknesses that have dodged the company is in its management which has made it come to constant loggerhead with the authority. The management of Wal-Mat has been accused of using the influential position of the chain in the market to find its way in its current expansive program. It has been accused of using its financial strength even to fight the tightening of shipping orders at the port.

With such a large chain, it is faced with the problem of controlling the chain. The large span of control can leave a management gap in some places and that is why it is facing a managerial weakness.

Wal-Mat is also faced with the problem of paying its workers. It has been accused of paying its workers very low wages as compared to other chains which are low returns. It has scored poorly on the welfare of its workers with an estimated 46% of its workers not medically insured with Medicaid or another insurance scheme. With more associates than any other company in the United States, it is argued the majority of them earn below the poverty line.

For example, in 2003, an analysis found out that a cashier in Wal-Mat was earning $7.92 per hour working 29 hours per week. It has been argued that wage increase for its workers will not affect the prices of the commodity in the chain as it is already enjoying sales from its large customer network. This has created a bad reputation for the supermarket chain. In 2006 alone, the chain faced 57 lawsuits which were all on wages.

Again it had been accused of using its financial base to influence the judging on most of these cases. In 2005, it was fined $172 million in California for failing to provide meal breaks to its employees. This has created a bad reputation for the chain and it is argued that unless something is done, this could translate to a downward growth trend for the chain. Damaged reputation due to many court cases that the chain is facing is a weakness in the chain that needs to be addressed. (Bernstein and Bivens, 2006)

It is not over yet for Wal-Mat. It is likely that the chain will roll out more retails outlets but it should keep one point in mind that the reputation it is creating may destroy it soon. While its size of operation threatens its competitors, it would lose nothing by practicing good marketing policies and raising the wages of its workers.

References

Bernstein, J. & Bivens, J. (2006): The Wal-Mart debate: A false choice between prices and wages. EPI Issue Brief, No. 223.

Bianco, A., DerHovanesiaan, M., Young, L & Gogoi, P, (2007): Wal-Mat’s midlife crisis: Declining Growth, Increasing Competition, and not an Easy Fix in Site. Business Week; New York, Issue 4032, page 46.

“Is Wal-Mart Too Powerful?” Business Week, 10/6/03, US Dept of Health and Human Services 2001 Poverty Guidelines.

US Department of Health and Human Services (2001): Poverty Guidelines. Is Wal-Mat Too Powerful? Business Week.

Wal-Mart Facts Sheet. Web.