Walmart Inc.’s Internal and External Environment

Walmart is the largest retail network in the world, and it is the biggest private employer at the same time. Managing such a corporation could be challenging given that this organization operates in a highly competitive environment. Similar to other corporations in different spheres, Walmart has its strengths and weaknesses that either signify its competitive advantages or mark the points for improvement. Thus, it is necessary to examine both the internal and external environment along with its influence on the development of Walmart’s potential through the implementation of appealing strategies or tactics.

Walmart owes its success to a deliberate and comprehensive marketing strategy along with strong brand recognition (Pope & Pope, 2015). Apart from these strengths, its tangible and intangible resources, core capabilities, and competencies positively contribute to the sales growth of Walmart. The company’s tangible resources include the physical stores, financial assets, and technology and such as Walmart Pay or Walmart App (“Our business,” 2019). Intangible resources are Walmart’s innovative programs, such as Store No 8, its reputable brand name, as well as company culture (“Our business,” 2019). Its core competencies are the company’s relevantly used capabilities which are comprised of lower prices and a high level of customer flow.

To take maximum advantage of its strengths, Walmart needs to proceed with the diversification strategy. It means that the company has to offer even a wider range of goods at reasonable prices. Moreover, this organization needs to work on the updates and the implementation of the radio frequency identification (RFID) technology which creates its competitive advantage. Indeed, firms following the “build” strategy tend to put an emphasis on research and development for market share increase (Teeratansirikool, Siengthai, Badir, & Charoenngam, 2013).

When automatic systems are upgraded to up-to-date modern technologies, they are functioning based on the recent innovative approaches. RFID conceals great potential and numerous benefits for all stakeholder groups. Thus, Walmart needs to keep up with technological trends to upgrade its system for the purposes of enhancing control over inventory, procurement, and customer demands.

At the same time, Walmart needs to fix its weaknesses which might negatively influence the company’s reputation or brand image. Employee turnover and the lack of social responsibility towards its workers are some of the biggest problems in Walmart (Pope & Pope, 2015). In this case, the organization needs to focus on the tactics of improving employee engagement and experience. That way, Walmart has great chances to get aligned with the interests of all stakeholder groups and strengthen its reputation as an employer in both domestic and international markets.

While strengths and weaknesses reflect the internal organizational ambiance, there are plenty of external factors that may have an immense impact on the company’s operations. For example, the instances of the general environment, such as sociocultural and international forces, are of particular interest to Walmart. The socio-cultural aspect is related to the entrance of Walmart stores to new areas, which can be either devastating or favorable at some point. If households find the products and services of Walmart useful, then new stores cause an increase in housing prices, but they can also impose negative externalities such as crime, traffic, and increased pollution (Pope & Pope, 2015).

International forces as a part of the general environment also have a significant impact on the corporation and the industry it operates in. Therefore, Walmart needs to conduct thorough research of the market in a target country along with its legal, political, and economic environment before entering it. At the same time, the international forces transfer competition to the global level, which even tightens the rivalry in the industry.

Walmart needs to address competition to stay profitable and increase market share. The two most significant forces of competition Walmart encounters are customer and supplier power. Both of those represent stakeholder groups that tend to influence the strategic planning and management in the company. Those competitive forces may hurt an organization since buyers might force Walmart to reduce prices even more and ask for a better quality of goods, while suppliers may want to charge higher prices for the raw materials or would want to procure supermarkets with more goods just to merchandize a greater amount of products that way (Kabeyi, 2018).

Therefore, Walmart has to apply certain techniques which will help to improve its ability to address those forces effectively. The company should implement programs for customer retention and sign contracts with suppliers to define basic needs for procurement with the obligation not to increase them when there is no such a necessity.

Considering such forces of competition as supplier power and buyer power is crucial while monitoring the activity of competitors and their strategies are also essential because those may conceal potential threats for other industry players. The biggest threat Walmart faces is the price reduction in other supermarket chains such as Target, while the quality of products and services could be much higher there (Pope & Pope, 2015). Meanwhile, the most attractive opportunity is the perspective of online retail network development because it gains more popularity among its target audience.

As Walmart operates in a highly competitive environment both domestically and internationally, it has to take care of many aspects to be the leader in the industry and gain a larger market share. For now, the corporation has a strong brand image and offers the lowest prices, however, it needs to work on the employee retention strategy and enhance social responsibility. Meanwhile, it would be appropriate to take advantage of external opportunities and pay more attention to online platform development. At the same time, Walmart needs to acknowledge that its competitors are also resourceful, so do customers and suppliers, who can also greatly influence strategic decision-making.

References

Kabeyi, M. J. B. (2018). Michael Porter’s five competitive forces and generic strategies, market segmentation strategy and case study of competition in global smartphone manufacturing industry. International Journal of Applied Research, 4(10), 39- 45.

Our business. (2019). Web.

Pope, D. G., & Pope, J. C. (2015). When Walmart comes to town: Always low housing prices? Always? Journal of Urban Economics, 15(87), 1-13.

Teeratansirikool, L., Siengthai, S., Badir, Y., & Charoenngam, C. (2013). Competitive strategies and firm performance: The mediating role of performance measurement. International Journal of Productivity and Performance Management, 62(2),168-184.