History
The Wal-Mart Supermarket Company is Global Fortune 500 Corporation that is based in the United States of America. Wal-Mart Company was started in the year 1962. The founder of this company is Sam Walton who began its business in Rogers, Arkansas. This company has a got a rich history right from the time it began operations and its growth journey. Walton had a business before starting Wal-Mart (Krishnaswamy, 2017). His business prior to the start of Wal-Mart was referred to as Walton’s Five and Dime. This particular business was a franchise of Ben Franklin.
After the founding of Wal-Mart Company, Walton embarked on the expansion of the business in the United States of America targeting small towns. Notably, Wal-Mart Supermarket was established on the basis of affordable pricing to attract the budget-sensitive consumers in the market. This company specialized in selling consumer commodities like electronics, clothes, beauty goods, groceries and other domestic products.
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Wal-Mart has been on the consistent growth path since its start. It has been growing and expanding in terms of scope of business, revenues, staff size and net worth. In the year 1968, Wal-Mart expanded its business to reach Oklahoma and Missouri (Pickles, Barrientos & Knorringa, 2016). This company became listed on the New York Stock Exchange signifying its high value within the United States retail industry. Moreover, the company went on to open its other branch of business known as Sam’s Club in the year 1983. The Sam’s Warehouse Club store was started in Nebraska and Indiana (Chatterjee & Chatterjee, 2017). Wal-Mart would then rise monumentally during the 1980s to achieve a revenue level of $25.8 billion. At this same time, the company had attained 1525 stores and with a workforce of 271,000.
It is important to mention that 1992 was the gloomy year for Wal-Mart Supermarket Company. This year, Wal-Mart’s founder Walton died. Additional, his co-founder also died in the year 1995. Despite this great setback, Wal-Mart continued to be regarded as the leader of the retail industry, especially within the United States Market. It even expanded internationally to countries like Canada and others within the American Continent. In Canada, Wal-Mart purchased 122 Woolco stores. Moreover, Wal-Mart opened 3 stores in Argentina and 5 others in Brazil. Therefore, intensive international business activities happened at Wal-Mart during the 1990s. It is the same period in which the company expanded operations to Europe in Germany and Asia within China.
The main expansion strategy applied by Wal-Mart in the global market is acquisition. For instance, Wal-Mart was able to enter the Germany market through acquisition of the 74 units owned by Interspar hypermarket chain together with the 21 stores of Wertkauf chain. In other cases, the strategy applied was joint ventures. This strategy was applied in Korea where it joined with existing companies (Ken, 2014). In the United Kingdom, Wal-Mart entered by purchasing ASDA, which was a large grocery chain within this nation. In places like Japan, Wal-Mart entered by purchasing the stocks in some of the large companies there like Seiyu. Wal-Mart has been broadening its business geographical scope over time and now has operations in over 27 countries across the world with a total of 11,000 stores. The company’s revenue level has also exponentially grown.
SWOT analysis
Strengths
Wal-Mart takes pride in its massive strengths in the retail business. The major strength that this company enjoys now is the status of being the largest retailer in the whole world. Wal-Mart Supermarket is revered as the biggest retailer with large-scale operations that give it important economies of scale. The economies of scale enjoyed by Wal-Mart enable it to significantly cut down on its costs and enhance the net profits earned. Furthermore, this reputation of being the largest retail company in the world has given Wal-Mart the much desired power and leverage over the suppliers, lenders and governments. Its large-scale nature of operations gives it an advantage in any business investment project negotiations. Wal-Mart is also ranked as the largest private employer in the whole world with a total workforce of 2.3 million people. Many people always covet the chance of working for this prestigious company, which again gives the power of bargaining over the employees in terms of the wage rate and benefits. It is important to highlight the fact that Wal-Mart’s revenue level hit $485 billion in the year 2017. Moreover, it lately emerged at the peak of the Global Fortune 500 list. These facts are an attestation to the major strengths enjoyed by the company.
There is also the issue of its wide presence in different countries all over the world. It implies that Wal-Mart has effectively developed a diversified portfolio fort its business. When losses happen in one part of the world, the company can offset them with improved profits from another section of the world. Its international presence cushions it from excessive losses. Moreover, Wal-Mart operates different segments of business. There is the Sam’s Bar in addition to the retail business, which helps it in recouping losses incurred in one segment.
Weaknesses
The first major weakness of Wal-Mart Supermarket is its lack of interest in the recognition of the input of employees. At Wal-Mart, employees are not well-valued and recognized. Moreover, this company keeps on mistreating them. Wal-Mart has turned the goal of cutting down on costs into tool of mistreating employees through minimal salaries and overworking them (Lombardo, 2017). This development and negative attitude towards employees is now breeding a workforce that is not motivated and satisfied with the company’s working conditions. The possible danger of this factor includes poor service to customers and less productivity than expected. When the customers are mistreated by enraged workers, they will start moving away from the company. Currently, Wal-Mart is already facing high turnover of workers.
Another major weakness of Wal-Mart is that it does not follow the differentiation strategy. It means that all goods are treated equally as well as the customers. Lack of differentiation means it becomes weak, particularly in the event other companies apply this strategy of differentiation of prices.
Opportunity
There are many business opportunities for Wal-Mart Supermarket. Firstly, there is the opportunity from the growing web-based business. The company can now tap into the many opportunities offered by the online business sector to increase revenues.
Threat
The main threat to Wal-Mart Supermarket is the emergency of strong rivals such as Target, Costco, Amazon and Tesco. These companies do have the chance of toppling Wal-Mart from being the market leader in the retail industry. There is also the threat of international barriers to its expansion initiatives. Another threat is that of economic crises in some regions, which may end up adversely affecting the performance of this company.
Future of Wal-Mart
Just as the Chief Executive Officer of Wal-Mart acknowledged in the recent past, the future of this company lies in the field of e-commerce. Wal-Mart will in the future have to move its business online into to counter the threat posed by companies such as Amazon. There is much retail business taking place on the internet where companies like Amazon do house deliveries. This trend is set to be the game-changer in the near future. Therefore, Amazon must prepare to heavily invest in the information communications technology as it intensifies its presence on the internet for future success.
References
Chatterjee, S., & Chatterjee, S. (2017). Two efficiency-driven networks on a collision course: ALDI’s innovative grocery business model vs Walmart. Strategy & Leadership , 45 (5), 18-25.
Ken, I. (2014). Profit in the food desert: Walmart stakes its claim. Theory in Action , 7 (4), 13.
Krishnaswamy, S. (2017). Sources of Sustainable competitive Advantage: A Study & Industry Outlook. St. Theresa Journal of Humanities and Social Sciences , 3 (1).
Lombardo, J. (2017). Walmart: Organizational Structure & Organizational Culture. Panmore Institute .
Pickles, J., Barrientos, S., & Knorringa, P. (2016). New end markets, supermarket expansion and shifting social standards. Environment and Planning A , 48 (7), 1284-1301.
