Marketing Research Report- WALMART

December 12, 2016

Strategy and Position Analysis for Walmart Stores, Inc.

Strategy refers to a course of action that needs to be followed for the interest of achieving various goals and objectives (Erica, 2011). Organizations usually have various goals that should be met. For this to be achieved, they need a strategy. The definition of strategy fits Wal-Mart and its situation because the company always has a course action in place. Wal-Mart believes that through the implementation of relevant strategies, it can achieve its goals and objectives in the most effective and efficient manner.

Overview of Organization

Wal-Mart Stores, Inc., commonly known as Walmart is an American retail corporation operating a chain of discount department stores, grocery stores and hypermarkets. The company operates in the retail industry. Since its founding by Sam Walton in 1962, the company has grown to become an international brand, currently owning 11,593 stores and clubs spread across more than 28 countries (Hwang, & Park, 2015). The stores are operated under 63 banners. According to the Fortune Global 500 list of 2016, Walmart is the largest company in the world by revenue, which means its growth has been steady and exponential. Additionally, its growth in the retail industry has expanded to a position of 2.2 million workers, which puts the retail giant as the largest private employer globally. By market value, Walmart has grown to become one of the most valuable firms in the world by market value, and topping the list of grocery stores in the United States (Hwang, & Park, 2015).

Description of Product/Service

Now, benefits of the digital world and the lines between the physical shopping experiences are converging to create new retail experience based on excitement, convenience and ease. There exists four trends in the retail industry which is likely to make the future of the industry brighter for Walmart and other companies operating along this line. Firstly, it is important to consider all-inclusive mobile shopping experiences (Pantano, et al. 2014). The emergence of personalized shopping trips and mobile apps are changing retail. The digital personal concierges are used in welcoming shoppers into stores; with some stores using the iBeacon technology to as a form of digital messaging to guide purchases to their favorite goods and services, alerting them of the new deals and discounts (Pantano, et al. 2014). Mobile shopping apps are increasingly improving the area of customer service.

Through tablet devices or mobile, sales representative are able to respond to questions immediately, construct customized shopping experience and pull up buying histories of customers that is profitable for the store and convenient for the customers. The second component of the retail industry making it mature is digital advertisements sent to the passers-by. Soon, retailers will start targeting people with digital messages as they walk by their retail stores (Pantano, et al. 2014). For instance, if a man passes by men’s grooming store stocked with products appealing to him, an in-app or email alert can use his past purchasing habits to notify him of some other products currently being sold. For customers, personalized advertisements of these forms are likely to make the shopping experience more convenient.

Smart shelving and 3-D holograms are making the retail industry more mature than what we have seen in the past (Pantano, et al. 2014). Advanced holograms assist the customers in better visualization of the upcoming products, Retail stores strategically position the eye-catching 3-D renderings in glass windows and at checkout counters to engage the customers at higher levels. For instance, the technology-based intelligent shelving by Intel positions prominent digital displays close to new products to increase awareness amongst the customers. The displays are updated easily to move products efficiently before their sell-by dates. This innovation can help retail stores improve sales and revenue on several products.

Lastly, the improved self-checkout experiences are improving the maturity of the retail industry. When the self-checkout kiosks were introduced by grocery stores, they got it right there. The tactic can continually be used on larger scales in several other retail verticals. For instance the EasyPay self-mobile checkout by Apple is an important innovation that is helping revolutionize the customers’ experiences as they grow in their comfort using contactless payments (Sorace, Pantano, Priporas, & Iazzolino, 2015, November). From these perspectives, the future of the retail industry is not bleak. The brick- and-mortar retail stores are continuing to combine the benefits of the digital and physical world to become mature and hence gain positive response from the loyal customers.

SWOT Analysis

Competitive Analysis

Target Market Segments

Demographic

Wal-Mart doesn’t have a specific category of individuals that they market to, all of the shopping-lovers are always welcome to come ad experience the wonderful experiences at Wal-Mart Stores.

Psychographic

The most suitable strategy that Wal-Mart can apply is ensuring that all products sold are natural (Leshmik, 2011). Wal-Mart has been in a scandal before whereby most of the customers complained that the organization was not selling a hundred percent natural products. If the organization made the same mistake today, it would lose a lot of clients and trust from the stakeholders. The company can ensure that it has produced quality products by making sure that the suppliers observe the standard of goods that the firm wants.

Geographic

The strategy of providing a new service will be applied across all of the organization’s branches in the world.

Behavioral Factors

If the company made sure that all the products sold are natural and chemicals free, customers would flock in its shops and a case of any weaknesses; the customers will not have the time to observe it. On top of that, the company will be ahead of its competitors since it will have won the hearts of many customers.

Positioning Statement

The first case being considered in positioning by the organization are the performance goals. When a business is established, its major purpose is to grow from one level to another. To achieve this, performance goals are usually set and they determine whether or not the business is growing on not depending on their level of achievement. In the next one year, Wal-Mart has three specific goals that should be achieved. The first goal is an improvement in customer service. The company understands that customers are important assets that should be focused on. Improvement of service provision to them is necessary. Better customer service makes the customers feel important to business and they will remain loyal because they like the services provided to them. The second goal is employee satisfaction. In the next one year, the company intends to improve the overall conditions under which employees work. This is intended to boost job satisfaction as well as performance. Better working conditions improve the level of employee satisfaction. The last performance goal in the next one year by Wal-Mart is to ensure that there is a remarkable improvement in terms of sales. To achieve this, the business intends to boost its marketing so that it creates awareness and demand for the different products that it offers. Through this, sales will be more frequent and there will be more revenues realized (Adekola & Sergi, 2012).

One of the goals of Wal-Mart in the next 5 years is the achievement of corporate social responsibility. The business intends to expand its services to the surrounding communities by enabling them to meet their objectives. This will also be achieved through the application of environmentally friendly strategies. The second goal is to build a positive organizational culture. This is intended to boost the overall performance of the business. The last goal for Wal-Mart in the next five years is about brand recognition. The business intends to boost the recognition of its brand across the world especially in the most remote areas in which it is not yet present.

The organization will also continue to use vertical integration over outsourcing for the production of its services. Firstly, vertical integration is cost effective. Because of the eliminated market transaction cost, implementing vertical integration at Walmart will control costs using their own supply and distribution strategies and channels. More importantly, by setting the goods and services directly to the consumers without third party involvement, Walmart is able to minimize the distribution costs and hence increase their profits. Secondly, vertical integration is important for Walmart since it is a weapon against competition and the competitors. Components business can be applied as a competitive weapon (Markusen, & Xie, 2014). Using vertical integration, and according to Porters force of threat of new entrants, high barriers can be set by Walmart for those newly entering the market.

Thirdly, for Walmart, vertical integration is important because of secured supply. With vertical control, Walmart is able to take more control over the supply and distribution. When the company outsources from other firms, several uncertainties come up especially when the outsourcing company is also a competitor. Once Walmart’s supply chain is controlled by itself, it is able to ensure their own sufficient supply. The other strength of vertical integration is its ability to allow for positive differentiation. Positive differentiation can give Walmart access to more process and retail channels, more production inputs and distribution resources (Markusen, & Xie, 2014). However, vertical integration has weaknesses such as: capacity-balancing challenges when Walmart needs to create excess upstream capacity to ensure the downstream operations get sufficient supply; decreased feasibility; can create barriers to market entry; and requires extensive capital used in investment (Markusen, & Xie, 2014). On the other hand, outsourcing according to the pyramid, has some setbacks. Loss of managerial control of the outsourced roles is top of the list. Secondly, Walmart is likely to suffer hidden costs in the implementation of outsourced roles (Markusen, & Xie, 2014). The third challenge is that outsourcing can be a threat to confidentiality and security especially on customer information.

Since the retail market is growing, investment is required in the assets to increase capacity and hence lead to consumption of cash. The four categories of the matrix are: dogs, question marks, stars and cash cows. Dogs have low growth rate and low market share, and hence neither consume nor generate large cash amounts. As of 2013, Walmart business units were in this category. Secondly, question marks grow rapidly and hence large amounts of cash are consumed but since they have low market shares, much cash is not generated. The net cash consumption is therefore larger. Stars on the other hand generate large cash amounts owing to their strong relative market shares, but large amounts of cash are also consumed since the growth rate is high; and therefore the cash in each direction nets out approximately. As of 2013, the strategic position of Walmart was that of cash cows (Palia, De Ryck, & Mak, 2014). Since Walmart has been a leader in the mature retail market, it exhibits a return on assessment that is larger than the market growth rate.

Decision making remains a key pillar of Walmart’s success, not today, but even tomorrow. Therefore, effective changes should be implemented aimed at improving results and efficiency of operations both in the United States and other stores offshore. Making effective decisions require the input of a lot of information on the issue at hand. The management of the organization should involve employees more regularly and deeply in decision making process. Business analytics and technology should also be integrated in the decision making process.

Conclusion

The planning structure should be leaner and effective; and this means incorporating best planning strategies such the teamwork and development. The planning structure is very important for the success of Walmart and hence it should be transparent, invest in knowledge and skills. The planning structure should be more focused on the philosophy of Walmart and the goals or objectives of the organization. The other change is incorporating the industry and environmental analysis of Walmart into the planning structure and conducting a SWOT analysis regularly. Measures of success include: financial viability of Walmart, which can be determined by its profitability; customer satisfaction which is indicated by performance on customer satisfaction surveys; employee satisfaction and the firm’s contribution to the society.

References

Adekola, A. & Sergi, B. (2012). Global Business Management: A Cross-Cultural Perspective. Hampshire: Ashgate Publishing.

Berg, N. (2012). Wal-Mart: Key Insights and Practical Lessons from the World’s Largest Retailer. Philadelphia: Kogan Page Publishers.

Don, S. (2005). The Wal-Mart Way. Nashville, Tennessee: Thomas Nelson Publishers.

Erica, O. (2011). Strategic Planning. Indianapolis: Wiley Publishing.

Fainshmidt, S., Smith, A., & Judge, W. Q. (2016). National Competitiveness and Porter's Diamond Model: The Role of MNE Penetration and Governance Quality. Global Strategy Journal, 6(2), 81-104.

Freeman, E. (2010). Strategic Management: A Stakeholder Approach. Cambridge: Cambridge University Press.

Hwang, M., & Park, S. (2015). The Impact of Walmart Supercenter Conversion on Consumer Shopping Behavior. Management Science, 62(3), 817-828.

Leshmik. (2011). Wal-Mart- Innovation Case Study. Retrieved from http://www.slideshare.net/lekshmik/walmart-innovations-case-study

Markusen, J. R., & Xie, Y. (2014). Outsourcing versus vertical integration: Ethier–Markusen meets the property‐rights approach. International Journal of Economic Theory, 10(1), 75-90.