Swot 4p Strategy

Wal-Mart

SWOT Analysis

Kara Groff

Table of Contents:

Overview..............................................page 3

Strengths...............................................page 4

Weaknesses............................................page 6

Opportunities.....................................................page 8

Threats.................................................page 10

Recommendations....................................page 12

References............................................page 13

Student: Faculty Member:

Kara Groff Dr. David J. Burns

2015 Cleneay Ave. Xavier University Marketing Department

Norwood, OH 45212 3800 Victory Parkway

(419)-656-1234 Cincinnati, OH 45407

GroffKC@Xavier.edu (513)-745-3956

Burnsd@Xavier.edu

Overview

Wal-Mart was founded in 1962 by Sam Walton when he and his brother James "Bud" Walton opened the first Wal-Mart Discount City in Rogers, Arkansas. Since then, Wal-Mart has grown to be the second largest company in the world. In the United States, the company includes Wal-Mart discount stores, Supercenters, Neighborhood Markets, and Sam's Club warehouse membership clubs. The company also has many international operations. Wal-Mart is considered a variety store which focuses on low prices featuring apparel as well as hard goods, and has been committed to upholding their basic value of customer service.

Advances in technology have contributed a great deal to the growth of Wal-Mart. Highly automated distribution centers were implemented and Wal-Mart was able to drastically cut the costs of shipping and delivery time. Sophisticated computer systems were installed to track inventory which resulted in quicker checkout time and reordering. More recently, wire-less in-store systems have been used to increase customer service. Beginning in the early 1990s, Wal-Mart went to great lengths to increase their market share. They introduced a full line of groceries into their stores, diversified their market by appealing to certain ethnic groups through bilingual advertisements, and took steps to promote the awareness of environmental issues.

Currently, Wal-Mart has net sales of $256.3 billion, which is an 11.6% increase over net sales of the similar period last year ("Wal-Mart Company Profile" 4). Business decisions such as closing stores that were not profitable, and expanding during recessions when consumers were looking to discount stores to save money, have made Wal-Mart's undeniable success all the more obtainable. However, there have been negative feelings towards Wal-Mart as a retailing giant because of issues concerning wages, heath care and the environment.

Strengths

Wal-Mart has an abundance of strengths which is obvious due to its incredible success. Wal-Mart is the largest employer in the United States and the company is one of the few places left for people to get a decent job without a college education. Wal-Mart also has the second largest net sales in the world. This incredible number of sales is due significantly to Wal-Mart's aggressive growth strategy. In 2003 alone they added 425 new stores all over the world. An increase in customer demand for SuperCenters encouraged the company to add 4,000 more. Overall they added 48 million square feet of retail space ("Wal-Mart Company Profile" 6). They can also attribute their large amount of sales to the fact that they have stores all over the world. Their truly global presence is apparent in their operation of "around 1,350 Wal-Mart Discount Stores, 1,700 SuperCenters, 85 Neighborhood Markets and 550 Sam's Clubs in the United States, with numbers continuing to grow...and about 1,300 locations in Canada, Mexico, the UK, Germany, Asia and South America" ("Wal-Mart Company Profile" 5).

One of Wal-Mart's competitive advantages is their remarkable logistics system. They are able to ship merchandise from any of their numerous distribution centers in order to provide the cheapest and most efficient route. They even have their own distribution center for their online orders. The invention of sharing sales data with suppliers through computer programs has allowed Wal-Mart to consistently keep their shelves stocked with popular items. Technology in general is an unbelievable strength that Wal-Mart is able to invest in to improve their company. Having a website has allowed for increased sales all over the world. This not only provides convenience for customers, but with a logistics system like the one Wal-Mart has in place, online orders have become a breeze to fill.

Even though Wal-Mart has been criticized for their low wages, they are actually doing a lot of good for lower income people. They can save a family about $1,000 a year with their low prices ("Wal-Mart Storm" 3). Wal-Mart can beat out many competitors with their aggressive pricing strategy. They have the ability to cut prices on some products, such as toys, by thirty percent in order to stimulate more sales. Wal-Mart has even been able to lure in higher-income customers when they open store in more urban areas. Since Wal-Mart has become the nation's largest food retailer, people from all income levels are shopping there for their necessity items. They have even been working on a more upscale appearance of their stores to attract these customers. The service that Wal-Mart offers to its customers is a great advantage as well. They have a strong image that it is a friendly and helpful place to shop where people are always willing to make your experience a good one. The added incentives are the constant price rollback, as well as the store-within-a-store. A great deal of Wal-Mart's success