Wal-Mart Threats

Threats:

Economic

The cost of producing many consumer products tends to have fallen because of lower manufacturing costs. Manufacturing costs have fallen due to outsourcing to low-cost regions of the World. This has lead to price competition, resulting in price deflation in some ranges. Intense price competition is a threat. A threat is that the economy is very slow right now. There is no way of preventing it and no way to change it. This impacts all businesses and causes profit margins to be reduced as price-cutting ensues to attract more consumers.

Social, cultural, demographic, and environmental

A threat is customer theft. Manufacturers are fighting back against customer theft by embedding paper clip sized antitheft tags, called electronic article surveillance labels, inside products and packaging. Called source tagging, the process offers several major benefits. For one, merchandise tagged on the factory floor during manufacture or packaging lets retail employees spend less time in the storeroom applying labels and more time on the show floor helping customers. Also, high-theft merchandise previously displayed behind glass can now sit out in the open, boosting sales significantly.

Another social, cultural, demographic, and environmental threat is employee theft. Along with antitheft labels there are radio-frequency circuits that are hidden in packages and go unnoticed. The only time they will go off is when the bar code scanner does not deactivate the circuit, which means they stole it. This helps to prevent the two forms of employee theft, which are sweat hearting and sliding. Sweat hearting is when the employee charges the customer less than the actual price and sliding is when the employee covers the barcode at the point of sale.

Political, legal, and governmental

Being a global retailer means that you are exposed to political problems in the countries that you operate in. A threat is the Chinese regulations. China has one of the largest populations in the world; however, the Chinese government does not take kindly to opening their country to foreign establishments. Also, there is rampant corruption among the Chinese, and they have no generally accepted accounting principles.

Technological