Strategic Planning and Decision Making of Wal-Mart - Case Study Example

Organization History Wal-Mart is the leading company in the retails industry with supply chains in different cities in the world. In fact, its sales exceed those of its closest competitors such as Target and Sears with more than 50%. It was founded Sam Walton in 1962 who ran the “Walton Five and Dime” stores. He focused on expanding the company through opening many chains stores. Mr. Walton had established around 24 stores in Arkansas alone and had reached annual sales of $ 12.6 million. In 1969, it was incorporated in the Wal-Mart stores Inc. The company continued to expand in the following years to its current scope of 8416 stores worldwide. The company mission statement; to save people’s money as a way of uplifting their lives has shaped the company policies. This is because the company has focused on cost reduction in order to ensure price leadership (Kneer 2009). The company targets the medium income earners with an average annual income of $35000. The company has also focused on implementing new technology as a way of keeping it ahead of its competitors and ensuing that it delivers quality products and services to its consumers. Wal-Mart SWOT Analysis Strengths One of the main strengths that Wal-Mart has is that they are able to offer a wide array of goods in one store. Moreover, because of its large scale of economies, the company is able to offer competitive prices which are highly discounted with make them offer the best prices. This makes the company stand out because its rivals may not have the advantage since they may not have the advantage of getting huge discounts from supplier that comes with buying goods in bulk. These discounts are then passed down to the consumers (Kurtz, 2013). The consumers can thus buy different good within a single store at low prices which is quite convenient. Another strength that makes the company outstanding is the fact that the company sells goods with their own brands together with good from other major brands. This makes it possible for the company to reach out to a wider market as it supplies different segment of the market. This is in contrast with her competitors who may focus on selling products form a single brand. The consumers thus have a wide range of substitute products to pick from which is convenient. Weaknesses A major weakness facing this company is that since it is focused on offering goods at low prices, its clients may sometimes question the quality of these products. This is because high prices are often associated with high quality. The company could overcome this problem by consistently ensuring that all its products are of the highest possible quality. It should also provide high value products for people who opt to buy expensive products for prestige (Kneer 2009). Moreover, because of its large size, the company faces a problem of managing the many employees. There may be breakdown in communication and the company has to spend a lot on supervision in order to ensure that efficiency is maintained. To overcome this weakness, the company could keep the communication between the management and subordinate open and this would make it easy for problem to be solved the moment they arise. Besides, the company should develop definite procedures of solving certain recurrent problems among the workers. Opportunities One of the opportunities facing Wal-Mart is online retail sales. This is because internet shopping is rapidly becoming popular all over the world. Since Wal-Mart has expanded its operations to different part of the globe, it could explore this opportunity to ensure that it reaches an even larger market. Most importantly, online marketing has more advantages over the traditional retail method. This can further be used as a strategy of reducing the cost further enabling Wal-Mart to offer further reduced prices reduced prices. It will also enable the company to effectively explore this new emerging market. It is also easy for the company to track its sales records and study the customers’ preferences and this can be used in policy making. It would also keep the company steps ahead of its competitors giving it a further competitive advantage. Another opportunity that the company has is to continue expanding its businesses to other countries which have potential such as China and India. Expanding the company operation to different countries has been a major source of success for the company. This automatically means that the company would continue to grow if it gained more dominance in a larger number of countries. Opening chain stores in more countries would create new markets for the company products. This would result in increase in sales volumes which would generally increase the overall company profitability. It would also strengthen the company brand name by making it available in different parts of the globe. For this to work out for the benefit of the company, it would need to conduct feasibility research considering that the FDI rules and other business environment factors are different in different countries (Kurtz 2013). The management can then use these factors to devise the best way that the company can operate to get maximum profits from the different countries. The company would also need to seek workers with the best management skills and incorporate local workers who have better situation knowledge and can assist in developing sound strategies. Threats Although the company has been quite successful and has had considerable growth since its establishment in 1962, it is faced by some few threats which if not mitigated would be the cause of the company downfall. One of the major threats facing the company is that since the company is a global retailer, it faces the threat of being affected by political problems in different countries. Moreover, it is subject to being affected by changes in government which may come with transformation of policies governing foreign investments (Kurtz 2013). These rules in some cases would make business unprofitable causing considerable losses to the company which may have invested in such a country when the rules were more favorable. In such cases, the company may be forced to close down the stores and develop other strategies of making such stores work which may be a considerably expensive undertaking. An additional threat that the company faces is the threat of its competitors beating it at its own game. Wal-Mart has always focused on price leadership as their principal strategy in creating dominance in the market. However, other companies are now employing the same strategies creating intense price competition. This is based on the fact that the cost of a wide array of consumer goods has fallen as a result of reduced manufacturing prices (Kurtz, 2013). Companies now outsource their operation to low-cost regions in the world which has greatly reduced the manufacturing costs. In order to mitigate this threat, the company would need to employ other strategies of attracting customers other than price leadership (Kneer 2009). This could be through ensuring that their goods are of good quality and offering better services to customers. Summary Wal-Mart has been a leading retailer in the world and in the year 2012 it reported that it had exceeded its earning expectation with $3.63 billion in comparison with the previous year where it made $3.33 billion. Because of its current scope and status, the company has many advantages that put it on the lead making it hard for its rivals to equally compete with it. The company prospects for growth are still strong. Nevertheless, so that the company can continue to grow, it needs to continue responding to the changing business environment and explore the new opportunities that come with changing technology such as online retailing (Kneer 2009). Increasing its expansion to an even larger number of countries would give it further strength as it can reap the profits from some countries even when some may be making losses making it hard for it to collapse. Although price leadership has been its main strategy of straying ahead of competition, Wal-Mart now needs to implement other strategies such as quality services and products. Ethical treatment of workers is also becoming a sensitive issue in the contemporary world. This is because ethical treatment of workers influences the public image of the company which has a direct influence on the company sales. The company should thus put more effort in ensuring that the welfare of its workers is taken into serious considerations. All these would work in ensuring that the company sales volume keep souring and thus the company can be able to maintain its lead position. Reference Kneer, C. (2009). The Wal-Mart Success Story. München: GRIN Verlag. Kurtz, D. L. (2013). Contemporary marketing: David L. Kurtz. Mason, Ohio: South-Western Cengage Learning. Read More