A SWOT analysis looks at the strengths and weaknesses of a company and the opportunities and threats. When used in business it can help a company carve a sustainable niche in the market. A SWOT analysis can be a powerful tool that can assist a company in uncovering opportunities that they can exploit. If a company can comprehend their weaknesses they can then manage and eliminate threats that would otherwise have caught them off guard. By a company looking at themselves and their competitors and using this tool, a company can come up with a strategy that will set them apart from their competitors. Background
Sam Walton had a dream of being able to compete with regional discount stores. He traveled the country in the 1950’s to study discount retailing. While traveling the country he saw that consumers wanted a new kind of store. In 1962 the Walton opened their first Walmart Store in Bentonville Arkansas.
That same year Kmart and Target opened their first stores. Sam Walton’s vision was clearly stated, “If we work together, we’ll lower the cost of living for everyone… we’ll give the world an opportunity to see what it’s like to save and have a better life” (Walmart, Our Purpose, 2012). The statement is the focus of what Walmart is and does. Sam Walton built the company on values and morals guiding them to be one of the world’s most admired companies. Respect is the center of every rule and custom made. Respect is their focus when constructing relationships including their customers, suppliers, and employees.
Walmart has grown from discount stores, to supercenters, to neighborhood markets, to express store, to online shopping. Walmart expanded in 1983 by opening the first Sam’s Club in Oklahoma (Walmart, 2012. About Us, Sam’s Club). Walmart went global in 1991 when a Sam’s Club was opened near Mexico City and lead to the creation of the Walmart International division that includes over 5,300 stores, 740,000 employees, and in 27 countries (Walmart,2012, About Us, International). Strengths
The strength of Walmart is that they have stemmed a devoted customer and employee base. This base is very devoted. They obtained this devotion with good customer service for their customers, excellent pricing for the products they sell and by moving to areas of the country that are often ignored by other retailers. As for their employees they offer hours to accommodate their lifestyles, competitive wages, health insurance and discounts for their purchases. Walmart is the largest employer network in the United States, where ever a person may go they can find at least one person that is employed by the company.
In a single store, Walmart offers a large variety of products at competitive prices if not the best price. Sale prices are offered year round and attract millions of customers. The size of Walmart and having strategic distributions centers located throughout the world enable them to receive large discounts from suppliers by purchasing vast quantities. The money they save enables them to pass this on to their consumers. Walmart manufactures their brand of goods, Faded Glory cloths line, as uses local suppliers and other major brands. Weaknesses
Weaknesses were found in the SWOT analysis of Walmart. For example, in order to keep their pricing down they need to buy in large quantities. This need can lead to their inventory being a bit untrustworthy. This means that you may not always be able to find certain things that you normally buy all the time or perhaps they will have it but you will need to buy a much larger size then you actually need.
To maintain constant low prices the products must be purchased in bulk and this can harm the revenue. Many time products fail in the market and they can be stuck with large amounts of product that will now move slow and take up space in their distribution centers. Another often mentioned weakness is that they tend to keep more part time employees than they do full time.
The part time employees are paid and low wage and are offered no incentives, this leads to large turnover rates. Walmart has had many labor relations issues that include being sued by employees for being gender biased. The company’s top management is held by few women and minorities. They have tried to rectify this problem, but females and minorities getting promoted to manager positions remain issues for the company. The company does not believe or want a labor union; this can give the perception that the company treats employees poorly. The image this may cast can deter a person to apply for employment. Opportunities
The opportunities for the SWOT analysis of Walmart end only where their resourcefulness ends. Walmart needs to focus on the future and develop their insight. The people and other businesses need to know and understand that they are not coming into their community to destroy the local businesses. The American consumer is driven by cost and that is now starting to change. People in America notice the bigger picture and Walmart needs to start endorsing optimistic ideals. When Walmart opens a new store they need to be involved in that community, help them become stronger and better place. People are moving at a fast pace worldwide and by Walmart recognizing this it will enable them to grow by building large and efficient one stop shopping centers.
For those who do not have time to shop in these supercenters, Walmart has the opportunity to increase sales and performance by using technology and maximize internet shopping by providing a friendly website and provide delivery. The world is in a global recession and as the world recovers gives Walmart an opportunity because the demand for consumer products will increase. Consumers will have that discretionary income to spend and looking for low cost products will increase buying power. Threats
One of the largest growing threats to SWOT analysis of Walmart is in our capital and its politics. Currently there is a looming trade war between the U.S. and China that could lead to higher prices and raging tariff charges that could harmfully impact their profits. They have launched a new alliance with China since their arrival in 1996. Walmart has more in common with China than one could believe.
They have an “alignment of goals and polices, organizations structures and ideology” (Shell, 2011). China holds over 20,000 suppliers used by Walmart that provide them with nearly 70% of all goods sold in their stores. China has become critical to the success of Walmart and any trade war between the countries could be detrimental to their entire company.
There is also a push to get Walmart employees to unionize which will have a ripple effect all the way through the company, costing more in labor and not getting anything in return for it. Walmart has been able to shut down any attempts at unionizing, by terminating employees because they do not fit into their values and culture. If the employees were able to bring a union to Walmart wages and benefits could cripple them. Currently Walmart has made their health insurance nearly impossible for many workers to purchase. They have passed the rise in costs on to the full time employees and completely cut out any benefits for part time employees. Stakeholders
Walmart’s stakeholders include: employees, customers, suppliers, stockholders, and the community. The customers have needs meet by having everyday low prices, shelves restocked rapidly, and goods and services available that they need. The employee’s needs are meet by having a wage paid to them, a job in their community to be proud of, and for full time employees a benefit package.
Supplier’s needs are met by Walmart purchasing their products and putting it on their shelves. Stockholder’s needs have been met by the profits the company is continually making, the annual dividend rate on stock continues to rise annually, and the company continuous growth rate. The community’s needs are now met by Walmart becoming a green company, showing involvement in community globally, and bringing in woman and minority businesses into the supply chain. Summary
Walmart’s position as the world largest retailer has set a standard for all others in their industry. The company has strengths and the opportunities that are available will only make them stronger. Walmart’s main strength, the employees, are given tools and empowered to build their consumer relationships and is the reason for the business. The company has threats and weaknesses and some may be difficult to overcome, political and economical obstacles will be a threat to them in the future.