Walmart - Research Paper Example

?Running Head: WAL-MART Wal-Mart [The of the will appear here] [The of the id will appear here] [The of the will appear here] [The name of the course number will appear here] Background of the company Wal-Mart is one of the biggest retailer stores that have expanded globally to more than 15 countries in the world including UK, China, Japan, Canada, Brazil and Argentina with over 8,500 retail stores. It employs over two million employees and made it to the top of Fortune 500 list for its highest number of sales. The company was founded by Sam Walton in 1962. Sam Walton was previously a J. C Penny employee who bought a store from Ben Franklin stores in Rogers, Arkansas from the Butler Brothers. Walton opened the store on the slogan ‘The Lowest Prices Anytime. Anywhere.’ Walton’s strategy was to drive profits through increased sales therefore he kept the product prices very low. Mission and the Vision Statement The mission statement of Wal-Mart is ‘we save people money so that they get live better lives’ (Wal-Mart 2011 Annual Report, 2012) There is no specific vision statement for Wal-Mart, however the following quote by Wal-Mart serves as an example of the company’s vision: ‘The secret of successful retailing is to give your customers what they want. And really, if you think about it from your point of view as a customer, you want everything: a wide assortment of good-quality merchandise; the lowest possible prices; guaranteed satisfaction with what you buy; friendly, knowledgeable service; convenient hours; free parking; a pleasant shopping experience’ (Walton, 1990) Competitive Advantage of Wal-Mart Wal-Mart has always portrayed itself as the low price provider. It offers its consumers brand products at discounted rates. It is able to enjoy this advantage because it buys its products in bulk quantities and keeps its profit margin quite low. The aim is to increase sales so that profits will be achieved through increased sales. The company has also expanded extensively within and outside the United States. The objective for the company has been to open up big Wal-Mart stores in almost every corner of the country. This would allow people to have better access to these stores. Also these stores offer almost everything; from food items to electronic goods. The expansion strategy for international countries is also quite developed for Wal-Mart. When Wal-Mart enters into a foreign market, it does so by buying out the existing competitor. In this way, Wal-Mart gets several advantages. It is able to kill one competitor and establish a store in a prime location. Also the company benefits from the assets and human resource of the previous store. Government Regulation Industry for Wal-Mart The company is regulation through local laws in which the company operates. Since the company operates in different countries, it has to comply with the respective laws of the country. The company is facing issues with regard to its labor relations. The company does not allow its workers to develop unions. Also these workers are filing lawsuits against the company on the basis of working conditions, benefits offered and discrimination. Regulations affect the company by requiring the company to comply with existing laws and to ensure that the workers are treated fairly (Gereffi and Christian, 2009). SWOTT Analysis Strengths The biggest strength for Wal-Mart is the competitive prices that they offer. The company has presence in over 15 countries in the world and has opened up multiple stores in these countries. This large scale of operation allows the company to gain economies of scale along with developing a strong position against the competitors. The retail industry is all about offering the best prices and the widest range and Wal-Mart is able to do this. This is perhaps the biggest strength for the company. The company also has developed a good IT base. It was the first retail store to adopt the bar code system. Since Wal-Mart is proactive in adopting new technology, it enjoys another competitive edge against its existing customers. Weaknesses Perhaps the biggest weakness for the company is its ongoing relationship with its employees. The employees employed in the company are paid minimum wages and they are not allowed to develop any union. The company has been involved in many lawsuits that employees have filed for unfair employment practices. This has developed a negative perception of the store amongst the public. Also the company does not have a strong differentiation strategy. It operates in quite a similar way as other competitors including CostCo and Sears. Opportunities The opportunities that the company can bank on are the fact that more and more consumers are becoming tech-savvy. Since the company has a strong technological base and a developed internet presence, they can actualize the potential of their online shopping portal. Also the company has a good expansion strategy which allows the company to easily develop a strong position in the emerging markets. Another opportunity for the company is in the global economic position. The global economy is still recovering from the after effects of the 2007 recession which means that consumers have become price conscious. A company such as Wal-Mart that offers the lowest prices has a lot to gain from this attitude of the consumers. Threats Wal-Mart has been facing pressures for local communities that are strongly against the development of giant retail stores. These communities claim that Wal-Mart negatively impacts local trade and does not provide the best opportunities in terms of employment. Also with oil prices increasing, the prices of commodities are increasing in general and this impacts the position of Wal-Mart as a low priced store (Bajek, 2011). Trends for the industry The Company is a leader in the field because of its product offering, its prices and its focus on technology. However, the company needs to seriously focus on their human resource policy because Wal-Mart has been consistently developing an image of a giant that does not care for its own employees. Since word-of-mouth is still the most effective medium of promotion, the company needs to improve relations with its employees as they form the face of the company. Financial Analysis Revenues Trend Line for the Past 2 Years The revenues trend line for Wal-Mart is an inclined line as revenues are increasing. Revenues recorded for 2012 were 469,162 million dollars while those of 2011 where 446,950 million dollars (Bloomberg Business Week, 2013). Net Profit/ Loss for the Past 2 Years The net profit for the company is 2012 was 16,990 million dollars while in 2011, it was 15,699 m Stock Price Trend for the Past Year The figure below shows the stock price trend for the past year: (Yahoo Finance, 2013). References Bajek, D. 2011, The SWOT of Wal-Mart and their Key Competitors: Target, and Costco http://www.davidbajek.com/2011/09/13/the-swot-of-walmart-and-competitors/ Bloomberg Business Week, 2013, Wal-Mart Stores Inc., Retrieved from http://investing.businessweek.com/research/stocks/financials/financials.asp?ticker=WMT Gereffi, G. and Chrisitan, M., 2009, The Impacts of Wal-Mart: The Rise and Consequences of the World's Dominant Retailer, Annual Review of Sociology, Vol. 35: 573-591 WalMart 2011 Annual Report, 2012, Wal-Mart, Retrieved from http://www.walmartstores.com/sites/annualreport/2011/mission.aspx Walton, S. 1990, An Introduction to Wal-Mart.com, Wal-Mart, Retrieved from http://www.walmart.com/cp/An-Introduction-to-Walmart.com/542413 Yahoo Finance, 2013, Wal-Mart Stores Inc. Retrieved from http://finance.yahoo.com/q/bc?s=WMT&t=1y&l=on&z=m&q=l&c=%5EYHOh837 Read More