International Marketing Environment of Walmart - Case Study Example

Intеrnаtiоnаl Маrkеting Envirоnmеnt Anаlysis: Wal-Mart Contents I. Executive summary 2 1.0 Introduction 3 2.0 PESTEL analysis for Wal-Mart Inc. 3 2.1 Political 3 2.2 Economic 4 2.3 Social 4 2.4 Technological 4 2.5 Legal 5 2.6 Cultural 5 3.0 SWOT analysis of Wal-Mart Inc. 5 3.1 Strengths 5 3.2 Weaknesses 6 3.3 Opportunities 6 3.4 Threats 7 4.0 Recommendations and Conclusion 7 5.0 References 9 I. Executive summary Walmart is a global retailer that operates over 8,500 stores across 15 nations. It’s the largest in revenue generation as well as the largest private employer in the world with over 2 million employees. Australia offers a great opportunity for investment by Wal-Mart. The good political will, good technological infrastructure, cultural diversity, a sound culture of consumers as well as environmental factors favor the operations of Wamart. Nevertheless the allegations facing Walmart concerning maltreatment of workers and violation of ethics, competition from other big stores in the U.S, as well as possible political issues may hinder its success. This report seeks to explore the Australian environmental analysis through PESTLC analysis and a Swot analysis to establish the sutiatbilty of investing in Australia. 1.0 Introduction Wal-Mart Stores, Inc. usually branded as Walmart is a U.S based multinational family owned retailer company that operates chains of huge discount department stores and warehouse supplies (Soderquist, 2005). Wal-Mart is the third largest public corporation and the most valuable company in the world as stated in the 2012 Fortune Global 500 list. It is the biggest retailer and employer in the world with more than 2 million employees (Soderquist, 2005). The Walton family holds 48 percent of shares in Walmart. Currently, the company operates in 15 countries with 8,500 stores. The company operates under varying names in the various nations except in the 50 states in the United States and Puerto Rico. Its sales stood at $419 billion in 2010 which is the largest in the globe. 2.0 PESTEL analysis for Wal-Mart Inc. 2.1 Political Australia upholds different and dynamic international trade policy agenda that entails bilateral, regional and international strategies to affluence world barricades to trade. Trade policies in Australia are founded on structural economic variations to develop its competiveness in global trade and enterprises to promote investment rules and transnational trade. According to Rabu (2012), Australia has helpful trade policies with other nations and their trades are in upright, thus it would be feasible for Wal-Mart Inc. to operate in the country. Australia also permits committed pressure from lobby societies due to an open political regime. This is healthy for any business since consumers are adequately cognizant of the factual business condition. Lobby societies will assist a company to think about ethics and CSR (Corporate social responsibility) that it needs to adopt and practice in Australia (Daniels, Radebaugh & Sullivan, 2008). Wal-Mart will thus be required to develop organizational strategies that are useful to the Australian population, the environment besides discouraging unethical practices. Furthermore, Australia is a relatively peaceful nation without conflict or war with other nations. Operating in such an environment will enable Wal-Mart to enjoy high returns. 2.2 Economic Australia is by all means a stable economy. According to Faeth (2010), the GDP (Gross Domestic Product) per person surpasses $44,000. Majority of the Australian population is employed in industry. In addition, Australia produces several products from the farm which will offer supplies to the stores groceries. 2.3 Social Australia is situated in the Oceania continent lying between the Indian Ocean and Southern Pacific Ocean. The population of Australia is approximately 20 million and English is the mode of communication. In addition, religious beliefs in the country are quite diverse. 2.4 Technological Australia being a developed country has good ICT infrastructure. In particular, internet usage is very high in the country. Wal-Mart can enjoy a broad spectrum of technological framework in the country to grow its business. Christian (2008) points out that, businesses in Australia are involved in R & D (Research and Development) and represents 54 percent of the total R & D provision in the country. This can benefit Wal-Mart in getting a clear assessment of the business environment in Australia. 2.5 Legal In Australia there are numerous policies which burden the establishment and operation of business in the country. They involve business name registration which is performed every one or three years, goods and service tax registration, Australia business number registration, registration pay as you go withholding, development approval, business activity statement which is done monthly or quarterly, superannuation guarantee, income tax return, worker compensation among other legal regulations (Restaurant & Catering Association, 2010). These necessities may make it difficult for a business but plans are underway to review them which may benefit Wal-Mart in entering this market. 2.6 Cultural Australia is rich in culture with natives making the largest populace. As noted by Gray, McGaughey and Purcell (2001) the country is also rich in diversity with many immigrants. Operating a business such as Wal-Mart in a culturally diverse environment increases opportunities for the business. 3.0 SWOT analysis of Wal-Mart Inc. 3.1 Strengths Walmart is the largest company and a general store for first moving consumer goods (FMCG) in the world and the biggest private employer in the globe. It enjoys a strong brand name which has seen it maintain its top position for two successive years as noted by the list of Global 500 and Fortune. In the United States, Walmart remains the largest grocery retailer which amounted for 51 percent of its total revenue in the U.S in the year 2009. It operates in 15 countries in Europe, North America as well as Asia Pacific in over 8,500 stores (MBA Posts, 2012). Wal-Mart established ‘Sustainability Index’ in the year 2009 which intends to make information transparent to its clients as well as take responsibility for the origin of its products. Wal-Mart performance is superb and consistent in all aspects. In the 2011 financial year, its income was $15 billion (MBA Posts, 2012). Besides, Wal-Mart is progressively developing new business and retailing concepts as well as expanding its business operations. 3.2 Weaknesses One of the major weaknesses of Wal-Mart is its ill treatment of workers including paying workers below the minimum wage, sexual discrimination, and violation of basic rights. In the U.S the company has realized a drop in its sales for eight consecutive quarters. In addition, Wal-Mart investments in Germany and South Korea has done pretty bad, with the low price strategy and corporate culture specifically its “statement of ethics” failing in Germany (MBA Posts, 2012). In 2006, the retailer was forced to sell out its shops to a local company in Germany after incurring losses. This may challenge its investment in Australia. 3.3 Opportunities Wal-Mart can pursue world markets by extending its operations in various markets such as Africa, Middle East and Asia. The retailer can as well take positive measure to charm a more prosperous population. It also has limitless opportunities to expanding its stores with extensive corridors, wood floor, sushi bar, a sandwich coffee bar with various free amenities and classy expensive wines, electronics and assorted goods. Wal-Mart negotiated with its suppliers in 2011 to observe nutritional value in their supplies by reducing salt and sugar and removing trans-fat in the next 5 years (MBA Posts, 2012). In addition, Wal-Mart undertook price reduction of vegetables and foods with determinations to open stores in regions of low income earners where there are no super stores. In 2011, Wal-Mart also opened a home delivery system whereby consumers are able to order things offered on its website such as household supplies, groceries and toiletries. 3.4 Threats Wal-Mart continues to face criticism on its effect on local communities particularly in small towns. Various studies carried out in the U.S. to establish the effect of Wal-Mart on jobs and local business taxpayers revealed that local business lost their business by half and the local people lost their jobs where Wal-Mart was established. In addition, being a larger retailer, Wal-Mart faces the risk of political issues in the countries that it runs its business. Walmart also faces competition especially from Kmart which fights for market dominance with Wal-Mart. Other competitors include Shopko, Target, and Meijer (MBA Posts, 2012). Due to its unethical practices of violation of workers’ rights and ill treatment of employees, Christian lobbies; environmental groups as well as labor unions across the countries that the company operates continue to pressure Wal-Mart (Aguilar, 2012). The mart has the highest rate of gender discrimination suit involving over 1.5 million of its current and former female workers. 4.0 Recommendations and Conclusion Wal-Mart has a great opportunity in investing in the affluent market of Australia. Being a market leader in first moving consumer goods (FMCG) in the world and having a strong brand name, walmart stands a great chance in the Australian market. Coupled with its integration of technology, and the availability of technological infrastructure in Australia, Wal-Mart will have a better opportunity to grow in Australian cities within a short span. Nevertheless, the endless criticism and the recent revelation of violation of workers’ rights, including mistreatment, denying maternity leave for female employees, requiring employees to have a ticket to visit washrooms, paying below minimum wage, and other unethical practices puts Wal-Mart under international spotlight. These scandals will therefore haunt the giant stores wherever they invest if something is not done. All is not lost though as Wal-Mart can still amend its mistakes and gain acceptance in Australia, considering its fair pricing strategy, variety, technology and elegance that the stores present to its customers. In addition, the realization of nutritional value on its products will help it a great deal in the Australian market where healthy eating is a concern. 5.0 References Aguilar, R. 14 Dec 2012. Walmart's horrific treatment of workers is too big to ignore, retrieved Dec 20, 2012 from http://www.aljazeera.com/indepth/opinion/2012/12/20121213101550661598.html Baker, J.M. (1998), Marketing: managerial foundations. South Melbourne: Macmillan Education Australia. Christian, (2008), Legal aspects of doing business in Asia and the Pacific. Salzburg, Austria: Yorkhill Law Publishing. Daniels, J., Radebaugh, L., & Sullivan, D. (2008), International Business: Environments and Operations (12th ed). Upper Saddle River: Pearson Prentice Hall. Faeth, I. (2010), Foreign direct investment in Australia: determinants and consequences. Melbourne: Melbourne University Custom Book Centre Dept. of Economics, University of Melbourne. Gray, S.J. McGaughey, S.L. and Purcell, W.R. (2001), Asia-Pacific issues in international business. Cheltenham, UK Northampton, MA: Edward Elgar. MBA Posts, 2012. Swot analysis of Wal-Mart retrieved December 20, 2012 from http://mba-posts.blogspot.com/2012/06/swot-analysis-of-walmart.html Rabu, (2012), Analysing Company Expansion into International Markets available http://fiuymi.blogspot.com/2012/08/analysing-company-expansion-into.html [accessed September 10, 2012] Restaurant & Catering Association, (2010), Submission to Annual Review of Regulatory Burdens on Business - Business and Consumer Services available http://www.pc.gov.au/__data/assets/pdf_file/0003/95610/sub008.pdf [Accessed September 10, 2012] Soderquist, D. (2005), The Wal-Mart way the inside story of the success of the world's largest company. Nashville: T. Nelson. Read More