PROJECT PART TWO

10

Walmart, Inc.

Alyssa Parsley

Dr. Murat Arik

Project Part I

Walmart, Inc.

Walmart, Inc., formerly Wal-Mart Stores, Inc., is the biggest retailer in the world in terms of revenue. The organization has been in operation for over six decades, starting with one store and growing to over 10,000 stores and clubs (Walmart, 2022). According to the 2022 financial reports, the company has 10,500 stores globally and various eCommerce websites under forty-six banners (Walmart Form 10K, 2022). The company's substantial growth has been attributed to many factors, including an increase in product offerings, pricing strategies, and others. This paper analyzes Walmart's external environment to establish how these factors impact the company.

History

Walmart, Inc. was started in 1962 by Sam Walton when he opened the first discount store in Rogers, Arkansas. Sam had a strategy of building discount stores with a solid foundation based on pricing strategy. The stores were to have the lowest prices anytime and anywhere. In 1967, the Walton family had twenty-four stores that would increase sales by $12.7 million (Walmart, 2022). The company was incorporated into Wal-Mart Stores, Inc. in 1967. Wal-Mart Stores, Inc. saw incredible growth in the 1970s. It was during this period that the company went national. It became a publicly traded company in 1970, selling at $16.50 per share. When listed on the New York Stock Exchange in 1972, the company had record sales of $78 million.

The 1980s also saw an increase in growth as the company ventured into other activities like combining a supermarket and general merchandise. In 1980 Walmart had over 270 stores and annual sales of $1 billion. The number of employees had also increased to over 21,000. It was during the 1980s when the first Sam club was opened in Midwest Oklahoma. There was a change in the manual cash registers to computerized point-of-sale systems. This ensured accuracy and speed in operations in all their stores. The 1990s saw the company go international, opening its branch in Mexico. This was through a joint venture with Cifra, a Mexican retail company. Sam Walton passed away in 1993, aged seventy-four, and Rob Walton became chairman of the board. During this period, the company had 371,000 employees working in over 1,900 stores and clubs. The international expansion also saw the company purchasing 122 Woolco stores in Canada and opening its first store in China.

The 2000s saw the integration of technology into the business and further growth. This began in 2000 with the company's website Walmart.com which allowed customers to shop online. The company also entered the Japanese market through its investment in Seiyu. The revenue increased to over $400 billion with further expansion in China. The company had over 2.3 million associates globally by 2015, 11,000 stores, and a presence in twenty-seven countries.

Present Condition

The company saw extreme growth over the past three years by being proactive in environmental changes. The present situation at the organization shows that the company remains the biggest retailer in the world in terms of revenue. The revenue of the company in the year 2022 was $573 billion (Walmart Form 10K, 2022). The company remains the largest employer in the world, with 2.3 million associates globally, where 1.7 million are based in the United States, and 0.6 million are outside of the United States. The company can serve approximately 230 million customers through its 10,500 stores globally or various eCommerce websites under forty-six banners in twenty-four countries (Walmart Form 10K, 2022). Walmart has a presence in twenty-three countries, including Canada, Chile, and China, with subsidiaries in Africa, including Tanzania, Kenya, Mozambique, Malawi, and others.

The company continues to provide an omnichannel experience to its customer by integrating its retail stores with eCommerce, services like pick-up and delivery, ship-from-store, and digital fulfillment pharmacy options (Walmart, 2022). There are over 4,600 pick-up locations and over 3,500 same-day delivery locations. The company's current merchandise includes groceries like dry groceries, dairy, snacks, meat produce, deli, frozen foods, baby products, and others (Walmart Form 10K, 2022). The company sells electronics, toys, video games, music, and books. The other merchandise includes hardlines (automotive, sporting goods, and stationary), apparel, health and wellness (over-the-counter-drug and other medical products), and home products like home furnishing.

The Covid-19 pandemic had a major impact on the company's operations in 2020 and 2021. While other companies were closing down because of the pandemic, the company was able to battle its main competitor Amazon by implementing business strategies like changing its operations. Consumers were forced to purchase products online, and Walmart was able to increase its eCommerce business by expanding and updating its online platforms (Luo, 2022). The company promoted online shopping behavior by offering discounts and others to remain competitive. This ensured the company could create a competitive advantage that made it battle its competitors during tough times.

Mission and Objectives

According to Walmart (2022), the mission is “We aim to build a better world — helping people live better and renew the planet while building thriving, resilient communities. For us, this means working to create opportunity, build a more sustainable future, advance diversity, equity, and inclusion and bring communities closer together.” The mission statement describes the company's objective to build a better world. It states how the company will be able to achieve its objective of building a better world.

External Environment Analysis

Competition

The retail business is one of the most competitive businesses in the world. Statista (2022) states that the United States retail industry had a revenue of $4.36 trillion in 2021. The huge revenue shows the magnitude of the industry with many players. Walmart, Inc. is the biggest retailer in the industry based on revenue. The company's revenue has been growing annually for the past several decades. Over the decades, other companies have emerged to compete with the organization. The organization has also diversified into several products and services, increasing the number of competitors.

The company competes with brick-and-mortar commerce and omnichannel retailers. The competitors operate in retail and wholesale grocers, departmental stores, discount stores, supermarkets, hypermarkets, and eCommerce retailers. The competition is frequently evolving, with the competitors also evolving. New businesses keep emerging, with some being well-funded, intensifying competition. Some competitors have specialized in certain areas creating a competitive advantage and intensifying the competition. Two of the biggest competitors are Amazon and Target.

Amazon is Walmart's biggest competitor in eCommerce. Amazon was founded in 1994 and is a global eCommerce powerhouse. The company specializes in eCommerce, making them the biggest eCommerce company globally. Walmart's efforts in eCommerce over the past years have been unable to reach the level of Amazon. Amazon's eCommerce sales have made them the biggest eCommerce company globally. Walmart is playing catch-up when compared to eCommerce. However, during the 2020 pandemic, Walmart saw extreme growth in eCommerce sales as business surged by over 79%.

Target was founded in 1902 in Minneapolis, Minnesota. The company is among the biggest discount retailers in the world. The company operates over 1,800 stores in North America while competing with Walmart online and offline. The past three years have also seen tremendous company growth, as it has grown over 80% since 2020 (Great Speculations, 2021). It is considered an alternative to Walmart, having outperformed Walmart in certain products like computer sales. However, Walmart remains the biggest retailer generating more sales than Target.

Technology Factors

Technology has been a major factor in the growth of Walmart, Inc. The company has been implementing technological interventions in most aspects of its business. It was the first retail company to change from manual cash registers to computerized point-of-sale systems (Banerjee, 2015). The company has, over the years, implemented technological inventions to make them more competitive. One of the biggest technological inventions has been the growth of eCommerce. The company could make the change to e-commerce, thus improving its revenue. Ecommerce has grown over the last two decades, and Walmart has been part of the growth.

The company should be able to address technological trends faster to remain competitive. The company can use new technological interventions to make them more competitive. There are opportunities in big data, mobile device usage, and increased automation. In Big data, the company will be able to analyze consumer trends making them more effective in the market. Big data will also ensure the company s ability to analyze market information before entering new markets. The number of smartphone users has increased globally. The company can leverage technology in various aspects of the business. These will include making payments and eCommerce, where smartphones order goods.

The company has made tremendous steps in automation. It has one of the best inventory systems in the retail industry. Walmart's inventory system ensures the company can monitor its inventory, ensuring the customers never miss their products. This is done by allowing suppliers to access the system and check the inventory level of their products. They can replenish the stocks on time. The company can increase its investments in automation to create a competitive advantage.

The company's expansion in eCommerce faces the threat of cyber-attacks. Cyber-attacks are a threat to the technological advancements of the company. Cyber-attacks target the company's technology and can lead to major financial losses. The threat is through malware attacks, phishing, and password attack. The company should be aware of the cyber-attack threat and initiate measures to protect its information assets.

Economic Factors

The company might be the biggest retailer in the world based on revenue but has to be wary of economic factors. Economic factors can harm the revenue of the company. These factors can also lead to an increase in the revenue of the company. Therefore, the company has to determine the economic factors and their impact on its business. The stability of major economies has created opportunities for the company. The company has made major investments in developed countries with stable economies. Their low-price policy has flourished in these economies. There are more opportunities in developed economies that are stable.

The Covid-19 pandemic allowed the company to change its strategy and increase its revenue (Burbach, 2021). Most of the company's competitors could not survive the pandemic due to the economic situation. Most of them closed businesses, thus creating an opportunity for the company to continue expanding. The company was able to utilize its online platforms to increase its revenue. They could keep selling while most of the other retail companies failed.

The growth of developing countries also offers opportunities for the company. The economies of developing countries in Africa, South America, and Asia have been growing steadily, creating more business opportunities for the company. The company can leverage this growth to increase its presence in these countries. They can open more stores in these countries and ensure their market share increases.

Social Factors

These are the factors that affect consumer preference and perception. These factors can be either opportunities or threats for the company. There is a growing trend internationally about healthy eating. This is driven by the growth of non-communicable diseases, with people changing their food behavior and incorporating healthy eating. This is an opportunity for the company can decide to start selling organic products. They can ensure their food products promote healthy eating, an aspect that will increase revenue.

Cultural diversity can be both an opportunity and a threat for the company. The company has to be able to effectively learn the cultures of new markets. Lack of research on these cultures will lead to failure by the company. Diverse cultures have different habits and behaviors that influence their preferences. Understanding these habits will ensure the company can offer the consumer what they want. The African consumer will not want to have the same preferences as North America.

Conclusion

The external analysis is important for the company as these factors are out of Walmart's control. They should be able to understand these factors as they can affect the long-term performance of Walmart. The factors can be considered long-term business strategies as they affect their presence in the market.

References

Banerjee, D. (2015). Walmart Stores Inc.-A Strategic Analysis.  International Journal in Management & Social Science,  3(12), 202–225.

Burbach, C. (2021). Walmart Strategic Analysis. Honors Theses, University of Nebraska-Lincoln. 382. https://digitalcommons.unl.edu/honorstheses/382

Great Speculations. (2021). Is Target Stock A Better Buy Compared to Walmart Stock? Forbes. Retrieved from https://www.forbes.com/sites/greatspeculations/2021/05/03/is-target-stock-a-better-buy-compared-to-walmart-stock/?sh=57a639e31757

Luo, G. (2021). Research on the Way Walmart Succeeded during the Pandemic. Advances in Economics, Business and Management Research, Volume 652 Proceedings of the 2022 7th International Conference on Social Sciences and Economic Development (ICSSED 2022)

Statista. (2022). Retail Industry Sales in the United States 2002 to 2021. Retrieved from https://www.statista.com/statistics/243448/holiday-retail-industry-sales-in-the-united-states/#:~:text=Total%20retail%20sales%20in%20the,establishments%20in%20the%20United%20States.

Walmart, Inc. (2022). About Us. Retrieved from https://corporate.walmart.com/about

Walmart, Inc. (2022). Purpose. Retrieved from https://corporate.walmart.com/purpose#:~:text=We%20aim%20to%20build%20a,and%20bring%20communities%20closer%20together.

Walmart, Inc. (2022). Form 10K for the Financial Year Ended 2022. https://www.sec.gov/ix?doc=/Archives/edgar/data/104169/000010416922000012/wmt-20220131.htm