The Analysis of Walmart - Essay Example

?Introduction: Wal-Mart is the largest grocery retailer with more than 8500 stores in 15 countries with 55 different s. In this paper, the analysis of Wal-Mart has been done with the help of different tools such as the IE Matrix, Product Positioning Map etc to identify and understand its current market position. The organizational structure and culture of Wal-Mart is also discussed. Internal External Matrix: The IE matrix is an important strategic tool to analyze the strategic position of the business and develop strategies for future results on the basis of its internal and external factors. It comes under strategic portfolio management. It has the following criteria: Score from the EFE Matrix (score is plotted on y-axis) Score from the IFE Matrix (score is plotted on x-axis) The IE Matrix is divided into three segments namely Grow and Build (High), Hold and Maintain (Medium) and Harvest or Divest (Low). Analysis of Wal-Mart using IE matrix: The Internal factor evaluation score of Wal-Mart is 2.80 and the External factor evaluation score is 3.86. According to these scores, Wal-Mart fits into the category of Grow and Build. The strategies suitable for Wal-Mart are discussed below: Market Penetration: This strategy can be used when a company wants to increase its market share with the help of its current products and services through greater efforts of marketing. This is extremely appropriate for Wal-Mart and can give a competitive edge because of the bankruptcy of K- mart. Wal-Mart should increase its promotional campaigns to capture the attention of its target market and retain the customers of K-mart as well. K-mart is closing hundreds of stores and this is an opportunity for Wal-Mart to control the market. The economies of scale against its rival also give the power to influence the market. The EDLP and rollback campaigns can be integrated in such markets where their share is less and will enable the employees to grow and promote in higher positions with the addition of more products and increased market share. Wal-Mart already enjoys a dominant position and requires a little effort to reach out to a range of customers. Wal-Mart can contact to local television stations and other advertising means to increase its customer base and positive image. The immediate results of this strategy includes increased market share, increased sales and increased customer recognition. This will also increase the competition because competitors will also respond to this strategy. Market Development: Wal-Mart can also enter into new markets by simple introducing its products and services in new geographic areas. This strategy also works with the core values of Wal-Mart. This strategy will provide many potential areas for growth both in local and international market. This is because Wal-Mart holds a strong position in the industry and has the needed capital and human resource to diffuse into the untapped markets. Thus, in order to maintain and expand their reach in all facets of the business Wal-Mart should continue to grow its business in different areas of the world. This will also provide quality of life in those areas where development is required. The costs for the implementation of this strategy are considerably high because it will involve the construction of new buildings and organization of new distribution networks. This is a very important strategy for Wal-Mart because they are currently using this strategy. The main advantage for Wal-Mart is its superior pricing ability which forces out the other local shops and stores. This will surely increase the level of customer satisfaction as well as the increased capital investment. Product Development: This strategy can be used to increase the sales and serve to a diverse range of customers by modifying and improving the quality of existing products or services. This will provide the unique opportunity to compete with higher market sharing places in the other divisions. It is known that Wal-Mart operates in other divisions under its name. Through this strategy, it can launch these divisions in the mainstream market which will help in competing with the largest competitors with proper use of research and development department. This will be the best way to receive the largest return on the each dollar spent and will strengthen the market position. This will increase customer loyalty because consumers will appreciate and respond to the changes in the different products. The customer feedback can be a source of customization and modification of the present products. The most suitable strategy out of these three is the market penetration because it is the easiest and incurs less cost an effort. At the same time the results can be observed immediately. However, in order to expand its business in different markets, Wal-Mart needs to implement the market development strategies. The product development strategies include higher costs to retool and update the equipment. Organizational Chart: The current organizational chart of Wal-Mart is product structured which divides the product lines into different product groups. Each group targets a specific segment of customers and has a separate team to look after the overall operations of the group. For instance the chart has different segments such as Global.com, International, Sams Club, CFO, Corporate & Government etc are the central groups of the organization and different product groups share their services with the control and authority of the central ones. This structure is not recommendable there is not integration between the working groups and there lies no connection which can have a negative impact if one segment doesn’t work well. Proposed Organizational Chart: The current structure of Wal-Mart is not appropriate particularly in the case of expansion in other countries. The coordination and communication between the groups is central to enter new markets because if there is no integration between the organizational departments then this may lead to many issues and can decline the overall performance of Wal-Mart. The functioning areas should have the involvement with the marketing and financing departments to increase the customers. The role of management cannot be overlooked. With the increasing volume of customers, Wal-Mart needs to change its organizational structure to a more geography based structure. Organizational Culture: Wal-Mart enjoys a strong organizational culture which is an important contribution to its success. This attribute has made it a leader in the retail industry and has helped Wal-Mart in building its reputation in the market. The employees of Wal-Mart are known as “Walmartians” which shows that the members of the organization share unique values and a sense of belongingness to their workplace. It has sustained its entrepreneurial spirit with the help of servant leadership style where the employees treat the customers, suppliers and associates with respect. The aim of Wal-Mart is to provide a good living standard to its consumers with low prices and a way to save money as much as they can. The communication within the organization is very open and focuses on the relationship building. At Wal-Mart there is a rule known as Sundown Rule which means that they try to respond to any query or suggestion on the same day before they close the business. This is done by combining the efforts of the workers with the management to provide the best services at all times. The three basic beliefs and values of Wal-Mart are: Respect for the Individual Service to our Customers Striving for Excellence The well being of employees is also taken into account which projects an image of a socially responsible entity. Product Positioning Map: This positioning map is extremely important and helpful in marketing because the position of the company is determined by the consumers. On the positioning map, Wal-Mart is evaluated as follows: Quality = 3.3 and Price = 4.0 If this is compared with the position of K-mart i.e. Quality = 3.3 and Price = 2.8, it can be seen that low prices of Wal-Mart provides the competitive edge and the quality is relatively low. The pricing of Wal-Mart is the key advantage because it helps in targeting a larger segment of the market. It offers thousands of products and has a place in two categories: the discount retailers and departmental stores. Hence, it can be concluded that it is the leader in the low prices which is entrenched in the minds of the customers. This position is effectively defined in the market and has worked well for Wal-Mart. One thing which should be kept in mind is that people are becoming quality sensitive more than price sensitive. Wal-Mart should consider this fact because in order to maintain its position in the market it should come up with different strategies by providing superior value that justifies the competitive pricing. The target for Wal-Mart is 3.8 for Quality and 3.2 for Price which means that the company should improve the quality of products along with the lower prices to maintain their image as well the number of sales. Conclusion: From the above discussion, it is clear that Wal-Mart enjoys a central position in the market but it has some structural and strategic issues that should be re-positioned in order to sustain and expand the market share as well as the positive image attached with this company. The quality of the products is a major problem which can affect its position in the long-run. The organizational structure should result in the integration and collaboration of the working departments to yield better outcomes. Moreover, the culture of the company is a road map to success and Wal-Mart should continue its effort to build its bottom line business with the help of talented individuals. Bibliography Balaji Eknowledge. (2011). Case Analysis on Wal-Mart using the IE Matrix, SWOT Analysis and Other Tools. Retrieved from: http://www.beknowledge.com/archives/article/case-analysis-on-wal-mart-using-the-ie-matrix-swot-analysis-and-other-tools Warner, Melanie. (2006). When Wal-Mart Shops for Groceries, it Gets Whatever it Wants. New York Times. Soderquist.D. (2005). The Wal-Mart way. USA: Thomas Nelson. Case study Inc. (2010). Organizational Culture at Wal-Mart. Retrieved at: http://www.casestudyinc.com/wal-mart-organization-culture Fishman, Charles. (2006). The Wal-Mart Effect. United States of America: Penguin Press. Wal-Mart Website. (2011). Retrieved at: http://www.walmart.com Read More