The United States is home to some of the largest corporations in the world in terms of size and revenue. The success of many companies which have their headquarters in the United States can be attributed to the good business environment in the country, progressive business policies that are enacted by the federal and state governments, as well as a large market base with a high purchasing ability ( Albugar, 2017 ). The good business environment in the United States has made it possible for companies to start as small entities and after a few years grow into big companies dominate the world in their respective industries. One of the companies in the United States which have grown significantly from a struggling business to one of the world's largest corporations is Walmart, Inc. Walmart, which was founded in 1962, started as a single discount store grew to become the largest retailer in the world within the last fifty years. The company has expanded to operate in more than 27 countries across the globe. It is estimated that more than 275 million customers troop into more than 11, 300 stores that are spread across the world to purchase the items that they need (Walmart, n.d). Despite its success, many factors have continuously affected the growth and development of Walmart. The factors that affect international businesses are classified into internal and external factors. Internal factors are those that arise from within the organizations and the organizations have control over them. External factors are those that are found outside the organization, and the organization can not control them. It is therefore important to identify and analyze some of the external factors that have affected Walmart, Inc. since its inception.
Research Methodologies
This research paper employed qualitative research methods to gather the information that was used to shed more light on the topic of discussion. Most of the information used in the paper was sampled from articles and journals written by other researchers and scholars. The use of qualitative research methods was important as it led to the collection of accurate and valid information. The validity and accuracy of the information are guaranteed by the fact that it is almost impossible to change the information contained in sources such as journals and articles.
Delegate your assignment to our experts and they will do the rest.
Literature Review
Kiyak and Pranckeviciute argue that one of the factors that affect the performance of companies is the culture of the countries in which they operate. Culture affects various aspects of businesses such as decision making, marketing, distribution, sales, negotiations, businesses protocols, and the pace of business (2016). The fact that the United States is a multicultural country makes it even more difficult for Walmart to operate effectively in the county. Kiyak and Pranckeviciute (2016) observe that the culture of entrepreneurship is common throughout the United States thus helping Walmart to effectively operate in the country because many entrepreneurs come up with ideas that help the company solve some of its major challenges. Entrepreneurship also works against the company since many other entrepreneurs are venturing into the retail industry thus providing competition to Walmart. With the advancement in technology, most of the new entrants in the retail industry have ventured into e-commerce thus being able to attract and serve many customers at a go. The culture and value of equality that is found in the United States have also improved the way Walmart carries out its business in the United States and all its areas of operation around the world. Walmart has placed equality and fairness among its core values, and it seeks to provide excellent services to all its services without discrimination. The company’s dedication to service quality and efficiency has seen it attract millions of customers across the globe. Its focus on equality and fairness has also been instrumental in attracting the best human resource talent in the United States and other markets that it operates in. Furthermore, Kiyak and Pranckeviciute (2016) note that the culture of the United States has affected the way that Walmart negotiates and enters into contracts with other businesses. The company must first identify the values that are held by the other parties before setting their terms to enable it to achieve its goals during negotiations. The culture that exists in the United States has also forced Walmart to study and identify the local customs and beliefs of the various groups of people that are found in the United States. Understanding the cultures of individual groups of people is instrumental in helping the company to trade in product and services that do not offend or go against the culture of a particular group of people. Such knowledge also helps the company to sell only those products that are deemed appropriate by different cultures and can be sold to people from different backgrounds. It is therefore evident that the culture in the United States continues to affect the way that Walmart does business, both positively and negatively. It is important for the company to be aware of the cultural values held by people in the United States and in other countries where it operates so that it can be able to serve the people better.
Politics is another important external factor that can positively or negatively affect a business. Kozubikova et al. (2019) define political factors as government regulations and policies that positively or negatively affect the operation of a business. Examples of political factors include political stability within a country, employment laws, the protection offered to businesses, discrimination laws among others. The success of Walmart over the years can be attributed to the political climate that exists in the United States. The United States is one of the most politically stable countries in the world, with a progressive constitution which ensures the smooth transfer of power from one regime to another. The clear power transition steps stated in the American constitution has enabled the country to remain peaceful and stable even during periods of power change. Political stability within a country is important to the success of any business as it allows it to carry out operations without any disruptions. Another political factor in the United States that affects the operation of Walmart is the tax and economic policies that are enacted and enforced by the federal and state governments. The United States has some of the most favorable tax policies that seek to protect its businesses and to improve the performance of the economy. For example, the America first policy by President Trump has gone a long way to protect American companies like Walmart by increasing the taxes that are paid by foreign companies to limit their ability to compete with American companies ( Kozubikova et al., 2019 ). The country also provides tax breaks for many companies to encourage performance and positive contribution to the United States economy. Currently, Walmart enjoys stable currency and low-interest rate conditions as well as favorable tax arrangements from the government because it contributes immensely to the positive performance of the American economy. A report released in 2019 reveals that Walmart employs the largest number of employees in the world with around 2.3 million employees working for the company ( Kozubikova et al., 2019 ). The huge number of employees that the company employs makes it necessary for the United States’ government to come up with favorable policies and regulations that will support the further growth and expansion of such companies.
According to Hunt, Watts, and Bryant (2018), Legal systems within companies are critical in ensuring that all the employees and the company itself operate within the legal limits of the country in which they are operating in. For the purposes of reducing the number of conflicts with the law enforcement and legal institutions in the country, Walmart, Inc. developed its legal system to ensure that various challenges are solved within the company before they can be referred to other external agencies. Further, according to Hunt, Watts, and Bryant (2018), the legal system within Walmart makes sure that employees who go against company regulations are punished for their actions. Walmart’s legal system is well defined to ensure that all the employees that are affected by it can understand the procedure of getting justice or reporting an injustice within the organization. The human resource department in the company is at the forefront of ensuring that the legal system achieves its intended objectives. Walmart’s human resource division allows employees to raise any concerns or grievances that they have regarding their duties. The human resource department is then tasked with carrying out investigations to establish whether or not the concerns raised by the employees need further action. If the investigations point to a certain person or groups of people within the organization, then punitive measures will be implemented against them. For example, an employee that has been found guilty of violating the company’s policies can be suspended or forced to go on compulsory leave pending investigations. Walmart’s legal system improves how the company does business since it ensures that every employee works within the company's policies and regulations thus guaranteeing an improved quality of service and employee productivity. The legal system also ensures that the company resolves most of its internal disputes without involving other external bodies such as law enforcement.
According to Bucko, Kakalejčík, and Ferencová (2018), the performance of the United States economy has contributed to the growth and expansion of Walmart. An analysis of the country’s gross domestic product reveals that the United States’ economy is healthy. Amadeo states that the Gross Domestic Product is a key indicator of an economy's performance as it measures the production output of a country. It is expected that the GDP of the United States will stay between 2 to 3 percent of the appropriate range. The forecast for GDP growth is also an indicator that Walmart will also improve in terms of its performance and revenue collected. The rate of inflation in the United States will be 1.8% in 2019, and it is expected to rise to 2% in 2020 to 2021. Inflation rates are indicative of the rise in the prices of basic commodities (2019). The rise in inflation will negatively affect the revenues of Walmart as high inflation rates reduce the purchasing power of most Americans limiting their ability to buying the products sold in Walmart stores. The reduced number of sales affects the company’s total revenues. From the effects of the economic performance on Walmart, it is important for the United States authorities to ensure that the economy maintains an upwards trajectory to support local companies ( Bucko, Kakalejčík, & Ferencová, 2018).
As a company in the retail industry, Walmart is not heavily affected by the terrain in the United States. Ekpenyong, Umoren, and Ntiedo ; however, note that there are specific ways that the company is affected by the terrain that is found in the United States. The desert terrain that is found in some parts of the United States affects the shopping pattern of some of the company’s customers. For example, due to the hot climate found in some areas, most of the people find it difficult to shop during the day time. They prefer late evenings or early mornings (2010). It is therefore important for Walmart to study such shopping patterns and come up with ways that they can use to improve the shopping experience of the customers. The weather also determines the type of products that will move out of the shelves at a faster rate compared to others. For example, winter periods will prompt many American consumers to buy products that are helpful during the winter period such as heavy clothing. Walmart ensures that they can maintain their normal operations during such periods by putting other products on offer so that they can attract customers to purchase them ( Ekpenyong, Umoren & Ntiedo , 2010). Even though most people hold the belief that the retail industry is not heavily affected by the terrain of an area, companies must make sure that they observe customer behavior so that they can to maintain their sales and revenues.
Like any other business, Walmart, Inc. faces both domestic and foreign competition which affects the way that it carries out business. Some of the major competitors to Walmart include Amazon, Alibaba, Home Depot, Costco, and eBay ( Albugar, 2017 ). Most of the companies that compete against Walmart are internet based, meaning that they sell most of their products and services over the internet. Online retail shopping has forced Walmart to change its strategies to maintain its competitive advantage. The advantages of online retail shopping are evident in the way Amazon, which is the biggest competitor to Walmart grew to one of the largest corporations in the world within a few years. The company started in 1994 and has rapidly expanded to achieve a sales value of $136 billion since its inception. To cope up with the fierce competition, Walmart has started to venture into the online space by providing specialized services to some of its customer segments via the internet ( Durbhakula, & Kim, 2011) . The company also opened an online store similar to that of Amazon to make it easier for its customers to purchase its products. Venturing into online retail shopping has boosted the revenues of Walmart thus enabling it to maintain its competitive advantage.
Findings
Walmart serves as a perfect example that can be used to demonstrate some of the external factors that affect businesses. As one of the largest retail companies in the world, the company is also heavily affected by some of the external factors in the United States. One of the external factors that affect Walmart, Inc. is the culture that exists in the United States ( Hunt et al., 2018) . Since the United States is a multicultural country, Walmart, Inc. must make sure that it pays attention to how it carries out its business in the country and to whether or not it is in accordance with the major culture in the country. Another external factor that affects the operation of Walmart is the politics of the United States. The United States is a politically stable country, one of the underlying factors that can be used to explain the success and rapid growth of Walmart over the years. The United States has a progressive and robust constitution which gives clear guidelines on how the country should be governed and also on what is required during power transitions thus avoiding political conflicts and instability. From the literature review, it is clear that the legal system within Walmart, Inc. also affects the way that the company operates ( Zhou, & Chen, 2011) . The legal system within the company helps it to ensure that its employees do not violate the company’s policies and regulations. It also reduces the conflicts that the company might have with the authorities. Kiyak and Pranckeviciute (2016) also noticed that the economic performance of the United States affects the operation of Walmart. Poor economic performance negatively affects Walmart’s operation while positive economic growth also contributes to the growth of the company.
Discussion and Recommendations
Despite Walmart’s success and growth, it is still affected by the external factors that affect many businesses around the world. The fact that a large corporation like Walmart cannot avoid being impacted by external factors is proof that no company or corporation can have control over the external factors that affect them. Some of the external factors that have been discussed in the paper are the culture of a country, politics, geography of an area, competition, and the legal system. The politics of any country is determined by the institutions of government that are found within the country. In the United States, the performance and the operation of both the federal and state governments determine the political climate in the country. A peaceful political environment greatly contributes to the success of any country as a politically stable country gives businesses the chance to operate without any disruptions. The culture of any country determines the business strategies that are employed by businesses to ensure that they dominate the market and maintain their competitive advantage. Most of the external factors affecting businesses can be dealt with if governments and other institutions are committed to ensuring a conducive environment for carrying out business. It is important to come up with policies that will help local companies to achieve their full potential and also compete favorably among other international companies. To reduce the impact of geographical terrain on the performance of the business, Walmart should ensure that it studies the terrain and how it influences the purchasing behavior of some of its customers ( Hunt et al., 2018) . It is also important for Walmart to study the strategies employed by its main competitors such as Amazon to come up with more efficient measures that can help it maintain its current control over the retail market in the United States and the rest of the world ( Bucko, Kakalejčík, & Ferencová, 2016) .
Conclusion
In summation, despite being the largest retail company in the world, Walmart is still affected by various external factors that are found in the United States like the political climate in the country, the country’s culture, geography, and competition. It is important for international companies to come up with measures that will reduce the impacts of external factors to achieve growth and profitability.
References
Albugar, M. (2017). Impact of Government Policy on International Business . Varazdin: Varazdin Development and Entrepreneurship Agency (VADEA).
Amadeo, K. (2019, March 27). US Economic Outlook for 2019 and Beyond. The Balance , Retrieved from https://www.thebalance.com/us-economic-outlook-3305669
Bucko, J., Kakalejčík, L., & Ferencová, M. (2018). Online shopping: Factors that affect consumer purchasing behavior. Cogent Business & Management, 5 (1) doi:http://dx.doi.org/10.1080/23311975.2018.1535751
Durbhakula, V. V. K., & Kim, D. J. (2011). E-business for nations: A study of national level E-business adoption factors using country characteristics-business-technology-government framework. Journal of Theoretical and Applied Electronic Commerce Research, 6 (3), 1-12.
Ekpenyong, D. B., Umoren, & Ntiedo J. (2010). Political risk and the business environment: An examination of core challenges. Journal of Financial Management & Analysis, 23 (1), 27- 32
Hunt, I., Watts, A., & Bryant, S. K. (2018). Walmart's international expansion: Successes and miscalculations. The Journal of Business Strategy, 39 (2), 22-29. doi:http://dx.doi.org/10.1108/JBS-02-2017-0013
Kiyak, D., & Pranckeviciute, L. (2016). Determining the relationship between the business environment and companies solvency factors in the post-crisis period. Ekonomika, 95 (3), 64-80.
Kozubikova, L., Kotaskova, A., Dvorsky, J., & Kljucnikov, A. (2019). The impact of political factors' perception on the suitability of the international business environment: the case of startups. Economics & Sociology, 12 (1), 61-79,366. doi:http://dx.doi.org/10.14254/2071- 789X.2019/12-1/3
Walmart, Inc. (n.d.). About us. Retrieved from https://corporate.walmart.com/our-story
Zhou, C., & Chen, J. (2011). An empirical analysis of the influence factors of urban retail business partial distribution. Contemporary Logistics, (4), 3-7.
