Introduction
One of the largest retail industries in the global market is Wal-Mart Stores Inc. the company is known to be a retail-giant because of its success throughout the years. With the efficient management system as well as its distinctive marketing approaches, the company has been able to operate successful not only in the entire USA but also in the international environment (Hayden et al, 21). In 1962, the company was founded and established by Sam Walton at Rogers, in Arkansas. From then, the business development of Wal-mart has become momentous that within 17 years of operation, the company has been able to top annual sales at $1 billion. In 2002, the retail giant has been regarded as the largest retail store in the globe with a sales record of $218 billion. With its efficient and continuous growth, the company has expanded their target reach to the international level and establishes its first international business at Mexico City in 1991 (Govindarajan & Gupta, 58).
Because of its international expansion, the company grew even more and has been able to have more than 1.3 million associates in the global market who are employed by the industry and are distributed within more than 3,200 stores in the US with their operations at North America, China, Korea, UK, Germany and other countries (Govindarajan &Gupta, 60).
Each of its operation in the international level is being operated in various formats. Generally, Wal-Mart is divided into three main segments which include Wal-Mart Stores, Sam’s Club and International Stores. It is said that the Wal-Mart stores are being subdivided into Supercentres, Discount Stores, and Neighbourhood Markets. On one hand, Sam’s Club, is a market segment that composes of membership warehouse clubs. And its International segment has been conducting retail operation within eight nations. The international division is composed of different formats such as restaurants, retail stores, discount stores, Supercentres and Sam’s club.
It can be said that Wal-Mart has been able to attain tits competitive position because of their marketing approach. However, the company is still not protected with strategic issues which should be given attention. Primarily, the goal of this paper is to analyse the issues faced by Wal-Mart. In addition, this paper will also consider internal and external analysis through the use of SWOT and recommendation for alternative approach to solve the issue.
Strategic Issues
As mentioned, in spite of being the leader in the retailing industry, Wal-Mart is also being challenged with various problems and issues in line with its strategy of cutting their prices. Such issue is said to threaten sales and profits of Wal-Mart, since it is affecting their sales which disables them to meet their target profit. Another issue to be considered is the inability of Wal-Mart management to sustain their competitive edge since cutting the price may compromise the competitive position in line with the consideration of quality factors. Such will have a connotation that the customer loyalty and retention of the company is at large not because of the quality of their products but because of the low price that they are providing. Moreover, other issue is with regards to the inability of Wal-Mart management to give adequate compensation for their employees because of their cost strategy.
Aside from these issues, there are also some long term issues that should be considered and these include the criticisms of the stakeholders internal and external to the industry. Since the strategy of the company is to lower the price of their products, most of their competitors are being affected specifically those in the small business since the company is enjoying high competitive entrants. The advantage of the price of Wal-Mart extends to groceries, specifically in the large footprint format. With this regard, the reputation of the company is also being compromised by these issues. Furthermore, the management approach can also be considered to have an issue.
It is noted that the managers of the company are being dominated by men and such situation leads to promotion problems (Thompson, Strickland & Gamble, 115). Such issue clearly shows the unjust employee treatment of the company as well as discrimination among women. Even if the company has been able to establish promotional policies for the sake of their employees, the inability to implement it fairly makes their policies ineffective. In addition, the lack of effective managerial approaches as well as the lower level employees of the industry is also affecting the overall performance of the company as it widens the gap between the management and lower level employees.
SWOT Analysis
This part of the paper will analyse Wal-Mart through the use of SWOT analysis.
Table 1
SWOT Analysis
| Strengths | Weaknesses |
| Ø The ability of the Wal-Mart to provide lower price for their target market. Ø The ability to focus on their target market by given enough emphasis on their needs from household to personal and commercial needs. Ø The expansion of the company to reach customers in the global market. | Ø One of the weaknesses is the company size/ which restricts them to provide strategic employee management approach Ø The underperformance of their human resource management because of gender inequality issues Ø Weakness in terms of compromising the quality of the products because of lower costs. |
| Opportunities | Threats |
| Ø Enhanced and expanded geographic growth through because of their international expansion and operation. Ø Enhanced customer services by the adoption of new customer focus initiative. Ø Enhanced employee relationship by considering new human resource management approach. | Ø Immense exposure to global economy which could negatively impact the growth of the economy of Wal-Mart Ø Exposing the company to the fluctuations of the currency. Ø Threats over competition because of the quality of the products being offered that heats up competition. |
Recommendation
Because of the issues faced by Wal-Mart the following are the recommended strategy. For the short-term issues, the recommended approach is to have an improvement on the value of their low prices with other differentiation approach through the use of product diversification. Wal-Mart is then recommended to make sure that the company must be able to identify whether the price of their products adheres to the quality and that this will not have negative effect on the reputation of the company. In terms of the long-term approach, Wal-Mart is then suggested to modify their employment policies and regulation and ensure that they are following the new policy to avoid gender discrimination. Based on the SWOT analysis, it is appropriate to recommend the use of a new pricing approach and employee development approach for Wal-Mart, considering that such elements serve as important aspects to influence their growth and progress.
With these kinds of approaches, Wal-Mart can enhance their sales by means of amending its existing products and services provided to the target market. Such approach is being recommended because it has the ability to support Wal-Mart’s potential to enhance their market share and sustain their competitive position and advantage. Since the company has multiple product portfolios, such strategy will affect these. In this regard, it is important that Wal-Mart starts the development of their pricing approach with their prime product lines. Through this, Wal-Mart will be able to have sufficient financial resources to support other related activities for the future. The competitors of Wal-Mart are targeting similar market niches. Nevertheless, by means of this approach, Wal-Mart will have the ability to strengthen the market advantage of each of its product divisions which may result on greater hold for this market niche.
On one hand, Wal-Mart must also consider their employees to be essential assets of the company for sustaining their competitive edge. In this regard, Wal-Mart management is recommended to commit them to solve the issue of discrimination in terms of gender through an enhanced promotional and motivation of employees. According to different theories, the motivation of employees should not only focus on the compensation or financial matters but also includes emotional and skills of the employees. In Wal-Mart’s case, such belief must be implemented in motivating their employees. Female employees should be given equal chances with their male counterparts and the management should value the skills of each of their employee no matter their gender is as long as they can contribute to the growth of the company.
Conclusion
Indeed Wal-mart is a retail giant company with strong position in the global market. However, there are still internal and external factors which can have negative affect on their performance and lead to strategic issues. But if the company would consider changes, the company may be able to eliminate such issues to sustain their competitive edge. From the results of case analysis, Wal-Mart was being left with much alternative and pursues the given recommendation for a strategic change management strategy.
Reference
Govindarajan, V. & Gupta, A. The Quest for Global Dominance: Transforming Global Presence into Global Competitive Advantage. John Wiley & Sons, Inc, 2001
Thompson, A. A., Strickland, A. J., & Gamble, J. E.. Crafting and executing strategy: The quest for competitive advantage (15th ed.). New York: McGraw Hill Irwin, 2007.
Wal-Mart. Wal-Mart Stores, Inc. Retrieved December 9, 2008, from http://walmartstores.com/media/resources/r_2571.pdf
Wal-Mart. (2008). 2006 Annual Report: Building Smiles. Retrieved December 9, 2008, from http://walmartstores.com/Media/Investors/2006_annual_report.pdf
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