Research Analyst

Wal-Mart SWOT Analysis

Strengths

* Powerful Brand and strong reputation--with consumers including a reputation for value, convenience offering a wide range of products and services. For example, the company is well-known for its innovation, entailing various industrial developments.

* Core capabilities--successful key business processes. For example, cutting edge merchandising strategies (bundling of goods and services).

* Growth capacity--robust growth and expansion globally (for example its mergers and acquisition capabilities).

* Flat organizational structure.

* Excellent financial management strategy.

* Technological Advantage--encompassing best practices involving its use of information technology to support its international logistics system. For example, RFID and EDI information processing systems. The company can see real-time how individual products are performing country-wide, store-by-store. In addition, its IT methodology maintains an efficient procurement process (Eisinger 2006).

* Leadership and Management--Management is the key to Wal-Mart's business and the company has spawned a wide range of best practices across all managerial functions.

Weaknesses

* A huge span of control--requiring balancing of strategies entailing profits as well as, social and ethical responsibilities, despite its IT advantages. The company prides itself in capitalizing on every cost saving opportunity and being aware and taking notice of intricate details of the business. Rapid growth may hinder the company's competitive advantage as the need to develop real-time cost structures become more and more apparent.

* Home grown management talent--the company will need to continue to practice flexibility when dealing with foreign partnerships. For example, open to diversity in management practices, integration capabilities, and custom sensibilities. Conventional managers along with best practice exchanges will be needed as the company continues to expand globally.

* Experience curve in the global marketplace--Foreign competitors are better able to leverage their experience to their advantage. Wal-Mart's merchandising approach will need to be revised to gain and maintain a competitive advantage over its rivals including a diversified portfolio of store formats, management, and market reach.

* Relationship with suppliers--Wal-Mart aggressive "juggernaut" philosophy may deem unsuccessful as its suppliers become savvy and build relations with competitors.

Opportunities

* Strategic alliances with other global retailers, focusing on specific markets such as India.

* Continue to exploit new markets--exploit interrelationship and diversification. There are tremendous opportunities for future business in expanding consumer markets.

* Continue expanding its current strategy of frugality in its large and super stores.

* Rebuild its human capital strategy offering programs for development and training, management including diversity awareness.

Threats

* Being number one means that you are the target of competition, locally and globally.

* Political problems encountered by the host country.

* Impediments to Relationships with its supplier base, as well as the establishment of merger and acquisition suppliers.

* Intense Price competition wars based on lower manufacturing costs and outsourcing, resulting in price deflation. Repositioning strategies will need to be developed.

Porter's 5 Forces Analysis of the Global Retail Industry

Today's market forces are shaping a global consumer marketplace that will look radically different in 2010, forcing retailers to make profound changes to their practices and business models to survive. Retailers must overcome unique challenges in order to achieve sustainable growth over the next five years. Demographic changes are contributing to shifts in the decision patterns of individual shoppers, which are also growing more complex. Customers are becoming "super shoppers," empowered by the ability to access information where, when and how they want it. The Internet is fast becoming a standard part of the global shopping experience. The challenge for retailers is to harness interactive electronic media to engage the customer in a productive dialog. Driven by escalating expectations from customers and stakeholders, leading retailers are rethinking their business models and searching for ways to become more agile, responsive and efficient (Chu, 2006). Overall, the fundamental challenge for retailers is to become truly customer-centric in strategy and execution.

Meanwhile, competition among retailers has never been tougher. A retailer without a significant competitive advantage doesn't stand a chance in today's marketplace. Superstores are battling each other on every major corner while direct marketers (including catalogs and online sites) are stealing customers from stores. Online selling at deep discounts is even making immense inroads into consumer purchases of automobiles and travel. For example, discount airlines JetBlue and Southwest each sell over 50% of their tickets via their web sites (O'Loughlin 2006).

Direct selling through online retailers, catalog companies and home-shopping television channels continues to increase. Sales via the Internet raised dramatically in 2005, up an estimated 25% to $89 billion thanks to savvy marketing by online giants like Amazon.com, as well as the e-commerce efforts of traditional retailers such as J.C. Penney and Wal-Mart. Likewise, the sale of merchandise via television home-shopping channels racks up several billion dollars in annual sales. Companies engaged in this activity include the Home Shopping Network and QVC, Inc. (O'Loughlin, 2006).

Consequently, based on research at the IBM Institute for Business Value and work with clients worldwide, they identified five key "mega-trends" that are redrawing the rules of competition for retailers:

 customer value drivers fragment; customers become more