Industrial Analysis Paper Walmart Khanjanben Patel King graduate school
Industrial Analysis Paper
Walmart
Khanjanben Patel
King graduate school, Monroe College
Walmart is a one of the growing franchise business in all over the world and it is running by a team management leadership. It is one of the most growing corporations in USA. It has approximately 2.2 million employees. Walmart is the big name in retail industry environment. It was founded by Sam Walton in 1962 and first store was in Arkansas. Its headquarter is in Bentonville in Arkansas. Doug McMillon is the CEO of the Walmart on Feb1, 2014. Walmart’s stores other than in USA is more than in 6500 locations worldwide like in Canada, Mexico, Asia, Africa, Europe and Latin America. In 2017, company’s global net sales were 481.32 billion U.S dollars. Its gross profit margin worldwide is 24.9%. The company began trading stock as a publicly held company and was listed in New York stock exchange in 1972. By 1975, it was operating in a multitude of states in USA. In 1980, Walmart continued to grow rapidly. By 1987, there were 1198 stores with sales of $15.9 billion US dollars and 200,000 associates worldwide. There are total 11,718 stores worldwide of Walmart. Out of that, 4672 stores are in USA only (Walmart corporations, 2017).
The NAICS code is 452111. 4 & 5 mean company is operating under retail trade center. Under retail sector, Walmart operates as a general merchandise stores.
45: Retail sector
452: General merchandise stores
4521: Department stores (Industry group)
45211: Department stores
Walmart’s management style is very interesting. Walmart follows a supply chain management which leads lower product costs and highly competitive pricing for the customer. The main element of a supply chain contains purchasing, operations, distribution and integration. The fact is that that Walmart is in different countries and always wants to maintain reputation for their store all around the world, so management, leadership and planning may alter. Walmart always wants that its customers can get all products in lowest price that other retail stores like target. This gives company the upper height than other companies, as per customer perspective. By always striving for excellence, the leadership style makes Walmart growing in a positive direction. The key to our success is constantly looking for ideas that can improve ourselves and improve our business. We always strive to lead not just our industry, but also each other to the next level of success (Walmart corporate, 2014). By following good management style, it always focusses on excellence and good reputation. By having good management style, low cost products, high customer satisfaction, Walmart is rapidly growing in retail industry.
Walmart’s operations are divided in four divisions: Walmart US, Walmart international, Sam’s club and global ecommerce. Walmart US is the company’s largest division. In USA, Walmart includes four retail formats like Walmart discount stores, supercenters, Sam’s club and neighborhood markets. In 2017, Walmart operated over 11,000 stores worldwide with 4672 stores only in USA.
Walmart provides low prices to customers which is the most important reason for shopping there. It provides wide range of products to their customers like electronic products, clothing, footwear, pet suppliers, grocery and many more. As the largest retailer in USA, Walmart collects a large number of consumer data every year, which allows company to do operations by forecasting customer’s needs and habits.
Total revenue of Walmart from 2013 to 2017 is mentioned below:
Fiscal year Revenue in billion US dollars
2013
468.65
2014
476.29
2015
485.65
2016
482.13
2017
485.87
– That mean Walmart’s revenue increases about 17.22% in last 5 years from 2013 to 2017.
– Walmart’s top 3 competitors are:
– Amazon.com, Inc.
– Target corporation
– The Kroger.co
Total retail stores as of Jan 31, 2018 is 5358 in USA only:
Walmart supercenters
3561
Walmart discount stores 400
Sam’s club
597
Neighborhood markets 701
Small formats
99
Top 10 states in USA which have more numbers of stores of Walmart, as of January 2018:
Texas 563
Florida 343
California 296
North Carolina
210
Georgia 206
Illinois
197
Ohio 175
Pennsylvania 160
Missouri 154
Tennessee 141
In New York state total number of Walmart stores:
Total retail stores
116
Supercenters
80
Sam’s club
16
Neighborhood markets
2
Discount stores
18
New York City data about Walmart stores:
Brooklyn 48
Queens 43
Manhattan 31
Bronx 27
Staten Island 10
As of Jan 2018, there are total 3561 Walmart supercenters in USA. The biggest supercenter is in Albany, New York which is contained in 2 floors.
Porter’s Five Forces Analysis for Walmart:
-Walmart’s strategic plan is based on company’s responses to the porter’s five forces analysis in the retailing industry environment. Walmart contains leading position in the retail industry. It stands as the biggest retailer supplier in the world. Moreover, the other factors in the retail industry environment puts some issues that must be considered and noticed. Walmart needs to develop some plans that address the issue of bargaining power of buyers and suppliers. Even though, Walmart has achieved success in retail industry, porter’s five forces analysis states that company must keep evolving to ensure long- term entity.
(1) Thereat of new entrants:
-Walmart is facing this problem. New entry of retail firms is easily achieved although in the presence of giant firms like Walmart. Small retail stores can enter in the retail market or industry and compete with other giant firms like Walmart on the basis of customer portfolio, location, special offers, convenience and other many factors. This force is further divided in some factors like, (1) low cost of business
(2) low- moderate capital sources
(3) Moderate cost of brand development.
– It is not easy to develop a new brand. This will put some pressure on large firms like Walmart. However, cost of development of new retail firm and cost of running it are not too much. Thus, new comers can keep running and become potential threats to giant firms like Walmart.
(2) Power of suppliers:
– Walmart faces the weak intensity of the bargaining power of suppliers in retail industry. There are many other suppliers in the retail industry. Large firms like Walmart can affect these suppliers. Based on this situation, Walmart and other retail firms must consider some factors which contributes bargaining power of suppliers. (1) Gigantic population of suppliers (2) hard competition among suppliers (3) high availability of supply. – Large population of suppliers has strong impact on firms like Walmart. On the other hand, high availability of supply makes it hard for suppliers to affect retail firms. So, Walmart and other retailers face the problem of weak force of power of suppliers.
(3) Power of buyers:
– The large population of buyers, makes it hard for retail industry to put more pressure on retail firms. Walmart is also facing this problem. Walmart must consider some factors which is related to power of buyers like large population of buyers, high diversity of buyers, and small size of individual purchases. Large population of customers put more pressure on Walmart and retail industry. So, bargaining power of customers or buyers is weak in Walmart.
(4) Availability of substitutes:
– The availability of substitutes is affecting overall retail industry in a weak intensity. Walmart usually have very few substitutes. Some outside factors are most significant on Walmart, which affect substitution: (1) considerable availability of substitutes (2) low variety of substitutes (3) higher cost of substitutes. – However, the low variety of substitutes makes it difficult for consumers to move away from products available from retailers like Walmart. So, in retail industry availability of substitutes has less force on Walmart.
(5) Competitive rivalry:
– Competitive rivalry is strong enough in the retail industry. There are many other firms of different sizes who is competing in retail industry. Some external factors like (1) more number of firms in the retail market (2) large variety of retail firms (3) more aggressiveness of retail firms is most significant for Walmart in the world of competition. Walmart is facing more numbers of other competitive firms, so Walmart Company must be aggressive to remain competitive.
Summary:
– Walmart must focus on competitive rivalry and threat of new entrants based on porter’s forces analysis of retail industry. These 2 factors have strong impact is on Walmart’s business.
Recommendation:
– In the high competitive world, Walmart must create new plan or strategies that can sustain in the world of competition and it can last for long term. Concerning about competitive rivalry and threat of new entrants, Walmart can invest more in automation process in its supply chain. Focusing on improvement of human resource development can also overcome company’s competitive advantage.
References
Business Pundit. Business Pundit RSS. Retrieved May 5, 2014. From http:// www.businesspundit.com/statson-walmart
Dobbs, M. (2014). Guidelines for applying porter’s five forces framework: a set of industry analysis templates. Competitiveness review, 24(1), 32-45
Organizational culture of Walmart. The Way Things Work Organizations. Retrieved May 4, 2014, from http://mgmt339.wordpress.com/2007/01/30/16/
U.S Department of commerce (2017). Retail trade industry.
Zentes, J., Morschelt, D. ; Schramm-Klein, H. (2007). Strategic retail management.
References
–
–
:
–
–
