The Marketing Environment: Wal-Mart Corporation

The Marketing Environment: Wal-Mart Corporation

The Marketing Environment: Wal-Mart Corporation

Wal-Mart is one of the world's greatest assets to most people. It provides consumer's a place they can go to virtually get anything they need from, car repairs, to groceries, prescription's, even the latest toys and electronics. With all that said, this paper relates to the different forces in business that affects business: competitive, economic, political + legal + regulatory, technological, cultural + social, demographic, and natural forces. Although there are technically seven we are going to focus on competitive, political, technological, and natural forces.

Competitive Force

Wal-Mart is the world's largest retailer and second largest corporation. It is the largest private employer in the United States and Mexico. Wal-Mart is the largest grocery retailer in the United States, with an estimated 20% of the retail grocery and consumables business, and the largest toy seller in the United States, with an estimated 45% of the retail toy business, having surpassed Toys"R" Us in the late 1990s. Wal-Mart has 1,929 stores which as of 2005 sales figures totaled about $155,477,000,000 in sales. Wal-Marts revenue as of 2006 was an estimated $315,654 billion USD, net income $11.231billion USD, and employs more than 1.8 million employees.1

Wal -Marts' major competitors are the Kroger co. #2 in annual sales, Albertsons' Inc. #3, Safeway,Inc. #4, and Costco Wholesale Group #5. Now even though Wal- Mart is leading the way in total sales the #2 and #3 businesses lead in way with total # of stores. The Kroger Co. has 3,302 with Albertsons at 2,476 stores nationwide. Wal-Marts total sales for that year alone was beating its 2nd place competition alone by more than 80 billion dollars. Wal-Marts major competitors in low-end general merchandise department would include Sears Holding Corporation', the slowly diminishing K-Mart chain, and Target whose trying different approaches including building Super Target stores to compete with Super Wal-Marts. With Wal-Mart moving into the grocery business it has put a strain on grocery retailers also including: H-E-B, Kroger, Albertson's, Publix, Giant Eagle, SafeWay, Winn Dixie, Food Lion and Save-A-Lot just to name a few. However with a small number of low-cost product store like Family Dollar and Dollar General, they have proven a match for Wal-Mart successfully competing with them head-to-head for consumer sales. However, like the case in pure competition Wal-Mart has countered those low-cost product stores with a subsection in it store known as "Pennies n-Cents. 2

Political, Legal, and Regulatory Forces

Wal-Mart has come under fire as of late over issues regarding local communities arguing over Wal-Marts planning new store locations. The communities argue that they are concerned about traffic problems, environment problems, public safety, absentee landlordism, poor public relations, low wages and benefits, and predatory pricing (aggressive pricing). However, there are some people in those communities that defend Wal-Mart. They claim consumer choice and claimed economic benefits. With the pace of Wal-Mart building more and more stores every year you might be the one eventually making a decision to be for or against this act.

Many claim arguments towards the opinion that Wal-Mart uses cheap, foreign labor to provide its customers with lower prices. According to the AFL-CIO, "Wal-Mart is the single largest importer of foreign-produced goods in the United States", Wal-Marts biggest trading partners is China which coincidently constitutes about 10% of the total U.S trade deficit with China. In 2004 60% of products sold at Wal-Mart were imported to the U.S from other countries.

Health Care and employee benefits are so big it's even gotten the attention of State Legislators. A judge in Maryland overturned a law in Maryland that required Wal-Mart to provide more health-care coverage for its employees. In 2006 Maryland originally passed a bill requiring all corporations with more than 10,000 employees in the state to spend at least 8% of their payroll on employee benefits, or pay into a state fund for the uninsured. Wal-Mart, which had 170,000 employees in the state of Maryland, was the only company not to follow through with the requirement before the bill passed. That's what lead way to the overturning of the bill on July 7, 2006. District Judge Frederick Motz of the federal supreme court ruled, the law would "hurt Wal-Mart by imposing the administrative burden of tracking benefits in Maryland differently than in other States2. " On April 17th, the company publicly announced changes to its benefits programs plan, which would allow employees to be eligible for health-care benefits a year after being employed, compared to two years previously. Plus, part-timers would be able to add their children to their coverage.3 In August 2006; Wal-Mart made the choice to give out a pay increase of 6% for all new hires at 1,200 US Wal-Mart and Sam's Club locations, but at the same time place a pay cap on veteran workers. Wal-Mart takes claim to the fact that measures are necessary to stay competitive, critic claim the salary caps are primarily an effort to push higher-paid, veteran workers out of the company.2

If Wal-Mart was going to stay in competition it needs to take care of its associates better than what they've done in the past. Associates makes a company run Wal-Mart needs to keep that in mind.

Technological Forces

Wal-Mart will continue to use the age of technology to its advantage. Whether it's coming up with ways to get more accurate ordering numbers through it auto-replenish order system, or get more updated with the Chronos system for its employees. Wal-Mart will continue to find and edge, but not only to better it business through technology, but also to better itself to make more profits from consumers through technology. Wal-Mart has entered into a partnership with six major Hollywood studios to sell digital movies and television shows on its web site, www.walmart.com/videodownloads. The retail chain will partner up with some of the biggest