With Walmart’s big success in the retail industry, most people often look into the company’s SWOT analysis to determine the major factors affecting the retailer’s business operations.
So, if you’re after an in-depth SWOT analysis of Walmart’s business, and you need more information about the company’s strengths, weaknesses, opportunities, and threats, read on to see what I learned!
What is Walmart’s Swot Analysis In [currentyear]?
Walmart’s SWOT analysis identifies the company’s strengths in its strategic and efficient business model. The analysis also reveals Walmart’s weaknesses in maintaining thin profit margins, often culminating in low employee wages. Furthermore, it highlights the company’s opportunities in foreign markets and the e-commerce sector amidst threats resulting from aggressive competition in [currentyear].
If you want to learn more information about Walmart’s SWOT analysis, including the company’s strengths, weaknesses, opportunities, and threats, keep reading for more useful facts!
What are Walmart’s Strengths?
In Walmart’s SWOT analysis, the strengths include all internal factors and strategies implemented by the company to improve on its operations and business efficiency.
The internal factors and strategies help the company withstand any challenges within the retail industry.
As a result, Walmart’s strengths go a long way in positioning the company and helping it achieve its long-term goals within the retail industry.
Walmart’s strengths include the following factors:
- Strong brand name and image
- Global expansion strategies
- A wide range of products
- Efficient business strategy
- Efficient supply chain
- Effective resource management
These factors are examined in more detail below:
1. Strong Brand Name and Image
Currently recognized as the largest retailer globally, Walmart has gained itself a strong brand name and image within the domestic and international markets.
The company works hard through research and development to innovate strategies that appeal to domestic and international customers.
With thousands of stores spread across America and other designated locations outside the US, the retail store has drawn millions of customers who contribute highly to the company’s revenue.
Due to the strong brand image and popularity among the masses, Walmart has managed to attract new and existing customers through various means, resulting in a good position within the market.
As such, Walmart has managed to generate a revenue of US $559.151 billion in [currentyear] and has also been listed as the 19th most valuable brand in the world by the Forbes 2000 list.
2. Global Expansion Strategies
Walmart’s strategy of expanding into the new and international market has greatly contributed to the company’s revenue and high position in the retail sector.
The company opened stores in 23 countries outside the US and acquired several international companies such as ASDA in the UK and Flipkart in India.
By growing to newer markets, Walmart diversifies its revenue sources and takes advantage of its strong brand image to penetrate international markets.
Walmart’s international expansion strategy contributes to approximately 21.7% of the total sales.
As a result, Walmart grows the company’s financial capabilities and strengthens its retail leadership position.
3. A Wide Range of Products
Among Walmart’s greatest strengths is that the company offers a wide variety of products across different categories.
With over 75 million products on the shelves, the company displays a wide variety of different, unique, and low-cost products that attract consumers.
Walmart also sells products from national brands as well as white label products that are exclusively available in Walmart stores.
As such, Walmart takes care of customer preferences, making it one of the most reliable retailers in the US.
4. Efficient Business Strategy
Walmart’s business strategy of using a cost leadership strategy has been one of the company’s selling points.
With a great commitment to helping customers save money, Walmart provides an “Every Day Low Cost” guarantee that offers customers a wide variety of products at competitive prices.
As a result, the company attracts more customers to shop at its stores and maintains a favorable market position in the retail industry.
To effectively achieve the cost leadership strategy, Walmart implements several cost-cutting strategies which reduce the company’s purchasing and operational costs.
Subsequently, Walmart transfers cost-cutting benefits to its customers by offering products and services at the lowest possible prices.
Walmart also strategizes to purchase items in high quantities to increase its bargaining power with suppliers and hence offers the products at low prices.
5. Efficient Supply Chain
Walmart has been marked as a powerhouse in supply chain management due to the effect of operations in its supply chain.
As such, the efficiency in Walmart’s global supply chain and logistics system forms part of the company’s core competencies.
The company invests massively to create innovations that would ease logistical and operational activities within the supply chain management.
Consequently, Walmart increasingly uses technology to ensure proper care of products, minimization of effort, time, and expenses in the processes of product tracking and inventory management.
To create an efficient supply chain, Walmart always maintains stocked shelves to maximize customer satisfaction.
Moreover, Walmart’s deliveries have also been marked as fast, reliable, and efficient due to high investment in distribution systems.
6. Effective Resource Management
Walmart has an overall resource management team that maintains the company’s success.
Additionally, Walmart efficiently and effectively uses information systems, distribution facilities, as well as skills and capabilities from employees to maximize customer satisfaction.
With a strong reliance on its workforce, Walmart invests in developing and managing an employee team that helps the company achieve its mission and vision.
According to Business Insider, Walmart has greatly invested in creating a workforce that has employed approximately 1% of America’s working population.
What are Walmart’s Weaknesses?
Walmart’s weaknesses include internal forces and factors that challenge the company’s ability to withstand any arising threats within the market.
These weaknesses directly affect the company’s strategies and their implications in business capabilities, development, resources, and profit margins.
Walmart’s weaknesses include the following:
- Thin profit margins
- Treatment of employees and working conditions
- Employee health and safety concerns
- In-store product placement
- Gender discrimination claims
Below, these weaknesses are examined in further detail:
1. Thin Profit Margins
The cost leadership strategy by Walmart generates extremely thin profit margins for the company.
While the company strategizes on setting low costs of products, it ensures low selling prices that result in thin profit margins that would have otherwise increased the company’s net profit.
Other activities to maintain low costs, such as the no-frills shopping experience, require minimal investments in the ambiance for the customers.
As a result, they are adversely affecting the general shopping experience.
2. Treatment of Employees and Working Conditions
The cost-cutting strategies by Walmart have resulted in negative impacts on the employees who have reported poor pay packages.
As a result of the low employee packages, Walmart faces controversies from consumers who divert their shopping options to Walmart competitors.
Most employees at Walmart have also reported frustrations due to higher rates of firing than raises and promotions.
These complaints by employees have led to a high degree of turnover for Walmart, which directly translates to poor service quality.
3. Employee Health and Safety Concerns
Walmart has been reported to disregard employee health and safety concerns. While the healthcare system in the US has been reported as weak, Walmart adds to its employees more frustration by failing to provide proper health care.
The company policy requires monthly or weekly fees of your paycheck for healthcare purposes, yet the general benefits of the program are low.
4. In-Store Product Placement
Among Walmart’s weaknesses is the strategic placement of products along the entrance, corridors, and in some corner sections.
This placement is a technique by Walmart to pressure customers to buy specific items without personal preference.
While the product placements might look like suggestions, Walmart uses this technique to push for the sales of products that generate more profits.
5. Gender Discrimination Claims
Walmart has faced gender discrimination claims following an ongoing lawsuit that depicted Walmart’s discrimination against the female gender.
According to this lawsuit, female employees at Walmart are discriminated against in regards to pay scales, promotions, and training opportunities.
The case represented 1.5 million women associates at Walmart and has been recognized as the biggest workplace discrimination and gender bias case in America.
What are Walmart’s Opportunities?
Walmart’s opportunities comprise both internal and external factors that contribute to expanding and improving its business and operations.
Among Walmart’s opportunities include:
- Expansion into newer markets
- Strategic alliances, partnerships, and acquisitions
- Enhancing human resource practices
- Improving the quality of products
- Expanding its health care service
- Strengthening the e-commerce activities
1. Expansion into Newer Markets
While Walmart serves 24 countries under different banners, there are still opportunities for global expansion.
While the current global expansions and presence are noteworthy, Walmart has the chance to venture into new and foreign markets such as Russia and Central Europe and in most Asian and African countries.
Furthermore, Walmart could take advantage of emerging markets with a lower level of disposable income and discounted retailers and become a cost-leader among other retailers in the market.
2. Strategic Alliances, Partnerships, and Acquisitions
To increase customer base and profitability, Walmart can invest in existing stores in the foreign markets and even acquire some of them.
Walmart can also seek possible collaborations with big retailers such as Carrefour (a French retailer) to venture into newer markets and introduce itself to new countries.
3. Enhancing Human Resource Practices
Since Walmart heavily relies on its workforce, it should innovate strategies for improving its human resource management.
With the several controversial claims, criticisms, and lawsuits arising from Walmart’s human resource practices, Walmart has opportunities to reclaim its image by enhancing the practices.
Walmart recently increased the hourly wage of its employees, a move that would attract more people to work with the store.
If Walmart advances in making more developments in its human resource practices, it could avoid several controversies that affect the business’ market share.
4. Improving the Quality of Products
Although Walmart is known to provide a range and number of items, some of them are reported to have low quality.
For instance, low-quality clothes have raised health concerns among customers who opt not to purchase them.
Thus, Walmart has the opportunity to improve the quality of products and address the health concerns of customers.
5. Expanding its Health Care Service
With recent ventures into the healthcare system, Walmart has the opportunity to exploit America’s healthcare system further.
For instance, Walmart’s recent engagement in providing healthcare services by setting up health centers can present an opportunity for Walmart to become one of the leading health care providers.
6. Strengthening The E-Commerce Activities
While Walmart has ventured into e-commerce, the company is still facing major competition from online retailers like Amazon.
These retailers have advanced features and programs that make them the most preferred option for online shopping.
However, if Walmart strategizes investing in its e-commerce operations, it may gain a huge online customer base following a recent surge in online shopping.
What Are The Threats For Walmart?
Walmart’s threats result from external forces and factors that negatively affect the company’s operations and retail activities.
These factors may compel Walmart to make competitive strategic changes to counteract the effects of these factors.
Walmart’s threats include:
- Aggressive Competition
- Technical issues of the website
- Political controversies
- Bribery investigations
1. Aggressive Competition
As a leading brand in the retail business, Walmart often faces aggressive competition, especially because it’s the primary target for competitors.
The company receives tough competition from Target, a store known for a higher quality of goods, and Costco, which provides goods at wholesale prices.
Additionally, these companies have a good reputation for treating their employees better than Walmart, enhancing the stores’ public reputation.
2. Technical Issues of the Website
Walmart’s new ventures into e-commerce may lose customers due to frequent technical issues on its website.
Customers have reported disorganization in the product listing and the slow loading of the website.
Walmart may lose online customers to fast, efficient, and reliable online retailers like Amazon.
3. Political Controversies
Walmart has faced several political controversies arising from the “Impeach 45 Merchandise,” T-shirts that read, “Rope. Tree. Journalist. Some Assembly Required”.
The “Impeach 45,” merchandise that implies the impeachment of the 45th president of the United States, created rage and disappointment that led to a boycott campaign against Walmart.
Additionally, Walmart has been criticized for selling t-shirts that say “Rope. Tree. Journalist. Some Assembly Required” with claims that the merchandise promoted violence.
The company reacted by removing the merchandise from the websites and stores.
4. Bribery Investigations
Walmart has established internal investigations concerning bribery allegations. According to these allegations, employees in Mexico bribed top officials to increase the company’s market share, and these investigations have expanded to Brazil, China, and India.
Having been charged with criminal violations, Walmart had to pay the Securities and Exchange Commission an amount of $144 million USD.
How Can Walmart Improve?
Walmart can improve its operations by taking advantage of the opportunities presented in new markets, improving its employee working conditions, and addressing controversial claims.
Furthermore, to excel in e-commerce, Walmart needs to invest in the innovation of website features and programs that enhance customers’ online shopping experience.
If you are looking to learn more, you can also check our posts about Walmart’s biggest competitors, what is Walmart, and the Walmart target market.
Conclusion
Walmart’s SWOT analysis highlights major strengths, weaknesses, opportunities, and threats that affect business activities and operations.
