Assignment 3 Business-Level and Corporate-Level Strategies
Jayzee545
cf_BUS499_week6_Assignment_2_Final.docx1
Figures title: eXTERNAL AND iNTERNAL eNVIRONMENTS 8
Week 6 Assignment 2
Bahjat Saleh
BUS499 Business Administration Capstone
Joseph Keller
05/17/2020
Week 6 Assignment 2
Change is inevitable. If there is anything unchanging and steadfast, it is change itself. Organizations that cannot manage to come up with strategic measures to cope up with the changes taking place in their industries are doomed to fail. The purpose of this task is to discuss Walmart's internal and external environments, a retail company that deals with the distribution of consumer-based products.
General Environment
Businesses are affected by various factors. Collectively, these factors form a global business environment. Every business must find a way to transact and interact with its global climate because it has a direct relationship with the company. The failure or success of any company is dependent on the nature of its interaction with the general business environment (Barroso, Sanguino & Alam, 2017). The global climate imposes various types of restrictions or opportunities for businesses. There is little that a business can do to influence the global environment. Thus, the company must identify with the context in which it operates and devises strategies for handling the forces of its inclusive environment.
Segment 1
As a retail company, Walmart faces several factors that determine the success of the company. The company has managed to withstand several potential threats arising from legal, ecological, technological, sociocultural, economic, and political elements of its business. The success of the business depends on the critical evaluation of these factors. Unfortunately, these factors change depending on time or other circumstances. The changes can present more threats or opportunities for the company (Hitt, Ireland & Hoskisson, 2016). For the company to succeed, it should protect itself from the risks and take advantage of the opportunities and exploit them.
There are two factors from the global environment that have the most significant influence on the performance of Walmart. The first factor is political influence. The company must consider several political factors in the retail market. These factors mostly have to do with government policies. Additionally, the company must deal with substantial pressure from interest groups (Alam, 2017). Notably, the company must battle political issues to do with political stability, political support for globalization, and political pressure to increase the wages and salaries paid to employees.
The second factor from the general environment that the company is currently grappling with is economic factors. Walmart is now under considerable pressure arising from economic changes. Such economic changes affect the revenues of the company. The economic factors that Walmart must deal with include the stability of leading economies, the continued growth of the economics of developing countries, and the decrease in unemployment in the USA. These economic factors mean that the company should look for strategies of exploiting the opportunities in first-world countries and exploiting the opportunities that emerge in developing countries. From a strategic point of view, the company should mostly find ways of using opportunities in fast-growing economies of developing countries that tend to have a high demand for goods that are provided by retail companies (Hitt, Ireland & Hoskisson, 2016).
The political factors of any given country primarily affect the businesses operating therein. Political factors encompass issues such as the foreign policy of the government, philosophy, political stability, military and defense policy, level of bureaucracy, and the government's image both locally and internationally (Barroso, Sanguino & Alam, 2017). For instance, in some countries that Walmart operates in, the governments try to restrict the growth of multinational companies in the market and will do anything within their power to ensure that the business operations of the company are limited. Similarly, government policies allow for licensing that is liberal, the liberal importation or exportation of goods and services, the magnitude of business operations, and the inflow of technology and foreign capital. The stance of the government on matters such as globalization also affects the rate of growth of a company such as Walmart.
There are numerous political issues that Walmart must deal with. For instance, there are countries that the company wishes to invest in, but they are not politically stable. The company would not dare invest in such countries even if there are promising opportunities because the political climate may change and disrupt business operations. For instance, the impeachment of a president may adversely affect the actions of the company. Secondly, some countries dictate the minimum amount of wages that should be paid to workers. The number of revenues that the company gets from some establishments may not be enough to cover the number of payments that the government has set up (Hitt, Ireland & Hoskisson, 2016).
Further, some countries do not have proper or effective intellectual property laws. Due to this, very few entrepreneurs would be willing to invest in Walmart. Finally, some states or countries have unfavorable tax laws that discourage companies such as Walmart from investing there.
Segment 2
The second general environment factor that Walmart must deal with is economic issues. For instance, the company sees new opportunities in developing countries, but they are hesitant to invest in unfavorable government regimes, high taxation rates, foreign exchange rates, and high inflation rates. Even in countries where the company has established itself, it has to deal with factors such as the ghost of gross domestic product, the current stage of the economic cycle, high unemployment rates, the demand by employees for higher wages and salaries, and interest rates (Hitt, Ireland & Hoskisson, 2016). These factors collectively affect the company's ability to take advantage of new investment opportunities and change the aggregate demand of the company.
Five Forces of Competition
Porter's Five Forces framework is a model that investigates and identifies the competitive forces that shape any given industry and shape its strengths and weaknesses. An analysis of the five factors helps an organization to understand the structure of the industry and develop a corporate strategy. The five Porter forces are competition, the probability of new entrants into the market, the power placed in the hands of suppliers, the power of customers, and the threat that the organization faces from substitute products. The most significant Porter's five forces regarding Walmart Inc. are competitive rivals and the power of customers,
Force 1
Rivalry in the retail industry is healthy. Numerous companies of different sizes offer the same products and services that Walmart offers. The rival companies are many in number, and some seem to be more aggressive than Walmart. Thus, Walmart faces stiff competition from rivals in the external environment. According to Porter's five forces model, a considerable number of competitors make the rivalry in the industry too strong to cope with (Barroso, Sanguino & Alam, 2017). Worse still, these competitors are using different approaches from the ones that Walmart has been using. For the company to remain competitive, it must become more aggressive. Over the last few years, the company has shown signs that it is putting deliberate efforts to grow and remain a global leader in the retail industry.
Force 2
The second factor from Porter's five forces model is the power of customers or buyers. Based on the five forces model, the large population of customers makes it difficult for Walmart to impose significant pressure on other retailers. Walmart is currently experiencing challenges due to the large population of buyers, the high diversity of customers, and the small percentage of loyal individual buyers. The senior community and diversity of buyers would be a weak force for Walmart. Worse still, the individual buyers who appear to be fully loyal to the retail company have a small impact on the company's global revenues.
Future Improvements
There are several strategies that Walmart should implement to combat these two forces that appear to be working against its progress. One of these strategies is investing in an online platform that would allow customers to shop from the comfortability of their homes or offices. The company should overhaul its current website and focus more on e-commerce, as opposed to brick-and-mortar establishments. This will ensure that customers get a more personalized service based on their unique shopping behaviors (Alam, 2017). Secondly, Walmart should consider acquiring some of its competitors. This is mainly for the small ones that have not yet received a significant market share. This will strengthen the customer base of the company and reduce rivalry.
Greatest External Threat
Greatest Opportunity
The most significant opportunity for Walmart is that the company is trying to patent an online grocery delivery service like Tinder, the dating app. If the company manages to get this patent, its sales are likely to grow by approximated 23% (Hitt, Ireland & Hoskisson, 2016). This retail giant is also planning to acquire other online retailers. If this plan goes through, the company will manage to grow and bolster its sales as well as market share.
Strengths and Weaknesses
Walmart has many strengths and weaknesses. One of the advantages is that the company is the largest retailer in the world. Its power over competitors and suppliers and the market is unmatched. The other strength of the company is an international presence. Walmart's weaknesses are; poor conditions and treatment of employees, gender discrimination, small profit margins, and its broad span of control (Barroso, Sanguino & Alam, 2017).
Strategy or Tactic
There are several strategies that Walmart is using to ensure that it remains a market leader. One of these strategies is low pricing. The company provides that it sells its products at low prices to attract many customers and achieve a high sales volume. The second strategy is acquiring companies such as Whole Foods (Hitt, Ireland & Hoskisson, 2016). This will help to increase the physical presence of the company and enable it to compete with companies such as Amazon.
Resources, Capabilities, and Core Competencies
Walmart has many resources, capabilities, and core competencies. For instance, the company has an inventory management system that has been set up for high efficiency. Walmart also has a substantial brand value compared to its competitors. Further, the company's organizational size allows it to have durable bargaining power (Alam, 2017). Another useful resource that Walmart has is a large workforce that is motivated and always ready to serve the company's customers with dedication. Finally, Walmart has a vast international supply chain.
Sources
Alam, S. (2017). Financial Analysis of Retail Business Organization: A Case of Wal-Mart Stores, Inc. Inc. (April 4, 2017).
Barroso, A., Sanguino, R., & Alam, S. (2017). Financial Analysis of Retail Business Organization: A Case of Walmart Stores, Inc. Nile Journal of Business and Economics, 3(67), 67-89.
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2016). Strategic management: Concepts and cases: Competitiveness and globalization. Cengage Learning.
