The largest retailer in the United States is Walmart. It may be stating the obvious, however it is quite true. Walmart is a Fortune 500 company with a long history of success. Since it was created in 1962, Walmart has had its sights on rapid expansion. In 1991, Walmart opened their first international location in Mexico (Hunt et al., 2018). By the 21st Century, Walmart was the number one retailer in America with the most global locations. The environment of an organization influences their success or failure. Uncertainty, competitive forces, and turbulence can influence the environment. Organizations must be prepared with strategic responses, organizational design, and sustainability measures. In the following report, the general and task environment of Walmart will be examined.
Economy Growing vs. Shrinking Economies
Walmart has been focused on expansion and continued growth. The company has 11,200 stores in 27 different countries (Hunt, Watts & Bryant, 2018). In 2018, the company was the first Fortune 500 to sell 500 billion dollars in goods (Hunt et al., 2018). Walmart also has approximately 2.2 million people working across the globe making it the world’s largest employer. One crazy fact is that if Walmart were a country, it would be one of the richest in the world and would have a GDP of 433.9 billion USD (McGee, 2018). The presence of Walmart in developing or shrinking economies can have a positive influence. The company hires a large population of employees and offers low priced goods to consumers.
In comparison, Amazon has a fast-growing economy and poses a threat to the international success of Walmart. If Walmart was a world economy, it would rank 28th while Amazon would rank 55th based on a GDP of 177 billion (McGee, 2018). Walmart’s plan to continue their international expansion plans will strengthen their GDP and better position the company in the global economy. Whether or not international competitors could pose a potential threat to Walmart’s economy in the future remains to be seen.
Walmart has always been a leader in technology. They were the first to adopt new technologies that streamline organizational processes. In the 1980s, the company converted their cash registers to computerized point-of-sale terminals and launched the largest private satellite communication system. The company has the most sophisticated security systems in their stores and blockchain technology to track produce and retail products. Walmart harnesses technology to improve the customers experience and to speed up shopping. In recent years, the company has introduced online and mobile shopping features and shoppers can scan and pay for their products.
Along with streamlining business operations, the company has developed technology to assist the customer. Smart Life is giant tablet table with a computer designed to help customers navigate different technology and demonstrate digital devices and products (Malinowska, 2016). Call buttons are another technological breakthrough introduced by Walmart. Rather than wandering around the store looking for an associate to ask a question, the customer can press a call button and connect directly to an associate (Malinowska, 2016). The staff wear GPS-enabled devices to receive the call.
Walmart is a retail giant, but the company’s sole focus is not on profits. The company is known for their corporate responsibility. They make efforts to improve the social, economic, and political environment of the communities in which they operate in and have taken steps to reduce their impact to the environment. The Walmart Foundation gives away one billion dollars every year to help sustain and strengthen global communities. They have streamlined their supply chain to reduce waste and have begun to source products from local vendors.
Walmart is a large corporation with political clout. The company has a political agenda and the influence to ensure their political goals are met. Walmart spends billions of dollars in lobbying efforts to influence what candidates are voted into office, and to influence laws that are enacted and would impact the retail industry. Every year, Walmart contributes to the campaigns of political candidates in an effort to garner their favor. Retailers who donate to campaigns shape policymaking and influence the legislative direction of political leaders (Gilens & Page, 2014). The goal is to ensure laws are not made that could impact business operations or result in any trade restrictions affecting the company’s ability to operate in local or international markets. In the legal environment, Walmart influences laws in America and the international marketplace. The company makes sure to follow all national and international laws.
Walmart has a large, loyal customer base. Their target market is middle class to lower class consumers. In one week, 265 million customers will make a purchase at a Walmart store (Hunt et al., 2018). The company does not typically target the top five percent with their low-cost products and convenience. Consumers at Walmart are looking for a good product at a lower price. Customers can shop at brick and mortar locations, or they can purchase products online. Products ordered online can be delivered to the customers’ door in approximately two days, or they can pick the product up at their local store. Their clientele wants the convenience offered by having retail and grocery product in one location at a reasonable price.
Walmart has several competitors in many international markets. Inside the United States, Target, Costco, and Home Depot are major competitors. Meanwhile in China, Walmart’s’ major competitors are Sun Art Retail Group Ltd. and China Resources Enterprise Ltd (Hunt et al., 2018). Walmart has many rivals because they are in many different markets. For example, in the international market and online, Alibaba, Amazon, and Ikea are some of their competitors. Ikea has blocked Walmart from having success in the furniture market while Costco has greater bulk sales than Sam’s Club, which is a subsidiary of Walmart. Despite having many competitors, Walmart still has the most sales of any global retailer and the most brick and mortar locations.
For Walmart, the threat of new entrants is high. Due to the effectiveness and efficiency of online shopping any new entrant can pose a threat. Amazon is a relatively new company that has employed the internet to expand their company across the global market. Similar companies could most certainly appear and threaten Walmart’s success. These retailers offer goods that cannot be found in the mass retail store. Products in the smaller retail stores are of high quality and source their supplies from local vendors or international suppliers. Through creative internet marketing, any company can be a success.
The internet offers businesses a low cost of doing business. They can easily source similar products provided by Walmart and do not need the same financial resources to enter foreign marketplaces using the internet (Hicks et al., 2012). Small retailers do not have the same expenses to operate as Walmart does, and are not required to pay the high taxes either. They do not have to offer benefits nor pay for health insurance. They also are not subject to the same level of regulation. Large retailers pose another threat especially if they throw their hat into the online retail market. Another large competitor like Amazon would certainly cut into Walmart’s profits. Currently Walmart’s biggest online competitor is Amazon, but there is the possibility that another large, online competitor could emerge.
Walmart is a major force in the retail market. New entrants pose a threat, but the company is well-established in the international market. To prevent new entrants from impacting retail sales, the company employs innovative marketing strategies and offers lower prices than most of their competitors. Another way Walmart prevents new entrants from disrupting their business is through sustainability and corporate responsibility. Walmart gains the loyalty of consumers in international markets by building capacities in global markets.
The bargaining power of suppliers is weak when relative to Walmart’s. Walmart has its own supply chain from transportation networks to distributors and warehouses. If Walmart stops using a supplier, it could cause major financial damage to the supplier. The supplier must stay in the good graces of Walmart to keep their business long-term (Greenspan, 2018). However, there is major competition amongst the variety of suppliers all of whom want Walmart’s business. When there is a large population of suppliers, amongst other companies Walmart typically has the most bargaining power. They manage their suppliers by applying corporate responsibility.
Walmart is the largest retailer on the globe. The company has over 11,000 brick and mortar locations and is a major online retailer. The company supports the growth of the markets they enter and has introduced innovative new technologies to streamline their operations. Corporate responsibility is a major goal of the company along with influencing politics through lobbying and donating to the campaigns of political hopefuls. Their target market is focused on the middle- and lower-class consumer and their competitors are Target, Costco, and Home Depot in America and Amazon and Alibaba in the international marketplace. New entrants pose a threat to the company, but through innovative marketing strategies and offering lower prices, Walmart can continue to be a retail leader.