Even though Walmart is hugely successful, it is not without its share of problems. In this article, we will conduct a SWOT analysis of Walmart to see where it excels and where it needs improvement.
An Overview of Walmart
Walmart is among the world’s biggest retailers. The company sells almost everything, including groceries, clothing, and musical instruments, to name a few. This makes it everyone’s preferred store. More than 270 million people shop at Walmart on a weekly basis, and many of them do it via the company’s website.
In 1962, Walmart opened its first Arkansas location as a modest discount retailer. In the last 50 years, it has evolved into the world’s largest retailer, with 11,200 locations in 27 countries and an e-commerce website in 10 countries. Currently, Doug McMillon serves as Walmart’s CEO.
In this short article, you are going to learn more about Walmart’s strengths, weaknesses, opportunities, threats (SWOT) and other internal factors that have contributed to the development of the company.
Here is a summary table:
Walmart SWOT Analysis
The strengths of a company show what it does well that gives it an edge over its competitors. These are the things that make the company successful and bring in money. Here are some things that Walmart does well.
Walmart is no doubt one of the world’s most recognizable retail companies. Accounts for millions of people patronizing its stores every day. Walmart’s online shop has more than 60 million products to choose from. Apart from this, the firm is the world’s biggest corporation by sales. According to a report from Forbes Global, the company makes about $524.40 billion a year.
Earlier this year, Walmart bought ASDA (a UK-based store) and Flipkart (a leading Indian e-commerce company). In addition, it has also established a joint venture with Bharti, India’s largest retail chain. The company’s worldwide operations have been a huge success.
According to Walmart’s 2020 report, the company has 11,484 locations and clubs in 27 countries within three business units: Walmart U.S., Sam’s Club, and Walmart International.
There are more than 56 different names for Walmart stores around the world. This has helped the company reach more people and make more money.
Low Prices’ strategy
Walmart’s cheap prices are due to its focus on economies of scale. It has fixed costs for a large number of items. As a result, it’s a great area to do your shopping on a low budget.
Global logistics and supply chain system
Walmart has a strong focus on the distribution and transportation of its products. Information technology (IT) is used to keep track of every product’s quality across all of the company’s locations worldwide.
Human Resource Management (HRM)
Walmart’s most valuable asset is its workforce. It puts a lot of effort and resources into training and supervising its staff. Business Insider says that 1% of the working people in the United States are employed by Walmart.
Resource management that works
When it comes to the management of resources, Walmart is exceptional. This includes information systems as well as marketing of products and services, distribution centres, and a variety of other skills. All of its branches are operating at a high level.
Market dominance over competitors
Walmart has market power over its competitors because it is so big and has a network of stores all over the world.
Effective adoption of e-commerce
Walmart’s revenues soared in 2020’s first and second quarters to record highs. In-store sales were the mainstay of the business. As a result of the recent events, Walmart has seen an uptick in internet shopping even as in-store traffic has dropped. Walmart’s overall sales reached historic levels as strong online and in-store purchases worked in concert.
The things that a company does wrong on the inside are its weaknesses, which its competitors can use to their advantage. These pertain to Walmart and include the following.
Walmart’s profit margin is rather low for a corporation with such high sales and revenue numbers. Even if manufacturing costs are lower at the beginning, the relative profit for each sale made is substantially lower than at other shops because of the cheap pricing offered to consumers.
Walmart’s strong sales and profits are the result of massive economies of scale in their selling system. This may be nice to the customers, but it is not the most lucrative way to do business.
Its business model can be easily duplicated.
Despite its continuous success, Walmart’s business strategy does not stand apart. It caters to a wide range of customers by offering a wide range of goods at competitive prices. Since it sells so many different items, it is easy for other supermarket-style businesses to copy Walmart’s strategy. This may, however, lead to lower prices for customers.
It has a huge disadvantage when competing with high-end stores.
Walmart, on the other hand, prefers to focus on a wide range of products, which means it can’t commit all of its resources to executing one product really well.
Profit margins and consumer trust in items sold by other merchants can be much higher, despite the fact that their products may cost more to produce.
A lot of people have criticized the company because of the way it hires and treats its employees.
For the people the company hires, Walmart is regarded as a low-wage, low-skill business. Many of its retail positions are perceived as paying “minimum wages,” The firm has been criticized for recruiting practices and wage agreements.
For a business, an opportunity is a chance for the future that it can use to its advantage. These don’t come from inside the company but from outside sources. Here are some of the chances for Walmart.
It has the potential to spread throughout the world
Walmart has made headway into a number of international countries, but it has the ability to keep this momentum going and grow into new territories. The corporation can benefit from its reputation as an eco-friendly brand when it enters countries that are less affluent.
It has room to enhance its treatment of workers
Any company’s hiring and firing policies, as well as other areas of human resource management, are frequently the subject of media attention and can result in major public relations disasters. The company has an opportunity to come up with a new management strategy to clear this ill notion about their staffing.
It could increase quality standards for its products
A low price tag does not always imply a high level of quality. Wal-Mart is able to invest in the value of its items even if it has poor profit margins.
It could create strategic alliances with other companies
Success can be greatly aided by working with third-party merchants and other companies. Many different types of suppliers can work with Walmart to develop new revenue streams and sales channels that benefit both sides.
In SWOT analysis, threats represent external factors that are likely to adversely affect a company in the near future. All of the following apply to Walmart.
The main target for rivals is Walmart, the world’s biggest supermarket retailer. One of its main rivals is Target. The quality of Target’s items is superior to those of its immediate rival. Another major competitor is Costco.
With Costco, customers could buy large quantities of products at a discount. The reputations of these firms are also better than Walmart’s when it comes to treating their employees well. Furthermore, both governments have backed both companies. This is a significant threat to Walmart’s business.
Technical issues on the website
Walmart’s website has been the subject of several complaints from people. The website is difficult to navigate and takes a long time to load. People think that Amazon’s website is one of the best in the world because it is fast, easy to use, and well-organized.
Small-scale online e-commerce companies
Numerous small and individual internet-selling businesses have entered the market, all of which provide identical items and services at similar cost rates. It may jeopardize the company’s position in the future.
Anxieties over trade
As of January 2020, Walmart has 438 locations in China, making it one of the largest retail chains in the world. Since it does business all over the world, it is vulnerable to trade wars and tariffs that the US and China might start.
What is a SWOT analysis for Walmart?
The Walmart SWOT analysis demonstrates how the world’s biggest company utilizes its competitive edge to monopolise and develop in the retail industry.
What is Walmart’s key to success?
Walmart’s well-known slogan “Always Low Prices” is one of the most major customer strategies for maintaining market leadership. In terms of revenue, the Fortune Global 500 surpassed Walmart as the world’s largest corporation.
What is Walmart’s biggest issue?
Walmart’s primary issues are related to its product quality and labour force. More than 2 million Walmart workers are subject to the company’s anti-union policies, as well as poor salaries and poor working requirements.
Walmart is the biggest retailer on the planet and a household name in many nations. The company is the best in its field because it focuses on low prices, which has performed very well for it. For a greater understanding of Walmart, you need to look at its strengths, weaknesses, opportunities, and threats (SWOT) analysis.