Strategic Plan Part 2: Swott Analysis
Twila Clayton
BUS 475
June 6, 2012
James Sternieri

Strategic Plan Part 2: Swot Analysis
Internal Analysis
Wal-Mart’s culture includes a list of values and beliefs based on their management and employee relations. This culture that’s included are an Open Door Policy where management believes open communication critical to understanding and meeting our associates’ and our customers’ needs. Associates can trust and rely on the open door; it's one of the most important parts of our culture. Sundown Rule is a rule that management attempts to answer request by the close of business. Grass Roots Process is a belief that associates’ ideas, suggestions and concerns matter. The 10-foot Rule is a customer service tactic that greets and engages customers that are within 10 feet distance. Servant Leadership is a policy Wal-Mart uses to listen to their partners and associates in an attempt to create morale and teamwork. Teamwork is a big part of their store culture as Sam Walton believes in the power of teamwork to help grow at the pace of modern life. Wal-Mart Cheer is incorporated by all associates by shouting enthusiastically inside the store to show pride in the company. Lastly, Wal-Mart reads associates’ stories to carry out their beliefs and values as well.
Company image
Wal-Mart aims to help customers save money to improve their purchasing power to live better. The company’s marketing efforts are to establish awareness that they are the price leaders in their market. In recent times, the company has focus on becoming involved more in local communities by charity and service.
SWOT ANALYSIS TABLE Strengths * Largest retailer in the world by sales * 50% higher sales than closest competitors * Supplier connections * Large purchasing power * Price Leader * Operational effectiveness * Variety merchandise provider * Successful in economic hardships | Opportunities * Online retail sales * Internationally presence and expansion * Brand expansion * Develop customer shopping experience/satisfaction * Green Initiatives * Acquisitions of successful startups in competitive markets * Digital Market * Commercial Banking | Weaknesses * Monopolistic Business * Management of employees * No detailed mission statement/core competencies * Low wages and benefits * Reaction to changes in market * Different stores in different locations * Low quality products/ Recalls | Threats * Reliance on Chinese imports * Law suits * Global economic conditions * Targeted by small biz as leading retailer * Opposition Groups (Community, Environmental, Political, Unions) |

Strengths - Wal-Mart has become the largest retailer in the US, and perhaps the world. It's huge buying volumes and negotiating style keeps its cost low, which allows them to keep their prices low. People will travel a pretty long distance to shop there. It has invested heavily in software technology to keep tight controls on its operations.
Weaknesses - Small local businesses often can't compete with Wal-Mart, and go out of business, which often alienates the small local business community. Wal-Mart has been sued for unfair labor practices as well. These and other issues tarnish Wal-Mart’s image, especially for those who are directly impacted.
Opportunities - Growing markets outside the US offers a great opportunity to continue its growth. Expansion into other countries and forming partnerships to enter these countries is probably the main opportunity...employing 'more of the same' strategy. Home delivery of orders placed through the internet is a big opportunity. Most stores are on the edge of town and as fuel costs rise people are less likely to want to travel. Creation of Wal-Mart convenience stores are a strong possibility. This overcomes local objections and increased travel costs.
Threats - Being number one in its market, some of Wal-Mart’s proven strategies are being imitated, to various degrees, by other large retailers. This will likely make the market for the "big box" retailers more competitive over time. Although Wal-Mart is huge, competition from similar companies is also likely.
Problem Issues:
Monopolizing Power: Wal-Mart's strategy has been to saturate a geographical area to minimize head to head competition. Now, the majority of Wal-Mart stores face direct competition mostly due to the company's expansion into other areas of the domestic market. Their efforts have sometimes led to bad publicity. It has lead to many community activists trying to keep Wal-Mart out of their communities for the fear that it will make it extremely difficult for small retailer to survive forcing them to close due to the lack of sales.
Legal Issues: Wal-Mart has had several legal issues over the years: arrests of illegal immigrants cleaning stores, dumping hazardous waste, harassment of workers (union), violation of California state law selling guns before waiting period, violating New York’s toy weapon laws, and refusing to stock parental warning stickers. Scott dismissed the bad publicity, but then it started to take a negative toll on the company’s sales growth and expansion plans. (Just to name a few)
Wages and benefits: Wal-Mart is always in the pursuit for low prices, yet they pay their employees substandard wages and insufficient medical benefits. They were also cited for sourcing their products from the Chinese, decreasing the amount of jobs in the United States. Unions, journalists, and activist groups are continuing to put pressure on Wal-Mart to raise its standards.
Product Recalls: frequent product recalls indicate quality control measures. This could damage the perception about Wal-Mart and decrease customers in stores.
Inconsistent in store experience: customers complaining about long lines and the insufficient quality of products offered.
Slow to react: Wal-Mart executives shrugged off bad publicity - instead they concentrated on running the business and expanding the company’s operations into more communities.

Improve relations with local communities: Many communities oppose big box stores in their communities. Because Wal-Mart competes on low-cost, it is hard for many small business owners to stay afloat with merchandise offerings similar to Wal-Mart. Many small business fail within 2 years, this has been dubbed the “Wal-Mart Effect.”
Strengthen employee commitment to an ethical organizational culture: Wal-Mart employs 2.1 million people worldwide. It is difficult to develop a strong commitment when make employees don’t want to make a career of working at Wal-Mart.
Improve wages and benefits: Over the years Wal-Mart has been in the media spot light because of bad labor standards and insufficient medical benefit offering to employees. Only about 50% of Wal-Mart employees sign-up for Wal-Mart offered health-care.
Be proactive in changing Wal-Mart’s corporate image: In recent years Wal-Mart has been a target for bashing because of legal issues and bad public relations. In order to changing Wal-Mart’s top managers need to be on the front-line making it happen. This will help commitment be transferred down to lower levels.

Wal-Mart has been successful and it has promising future, but there is a negative side to success for Wal-Mart. Remaining competitive, in local communities will be a difficult task for Wal-Mart. To be successful

Current Issues and Problems

Wal-Mart has become vulnerable as the price leader and incorporating low quality products within its stores. Competition, notably Target, has increase the quality of products and aims to attract a higher income level, customer. This will allow Target to gain sales with less operating expenses. Wal-Mart has survived the economic downturn in modern times, but may face more challenges as the economy raises consumers’ purchasing power. Luxury goods will be more demanded and the retail giant must quickly react at its large scale operations. Consumers may not trust their products to be high quality and may change the image of Wal-Mart’s brand.
Wal-Mart strives on three generic strategies consisting of Focus Strategy, the Differentiation Strategy and overall cost leadership. Managers strive hard to make their organizations unique, distinctive and identify key success factors that will drive the customers to buy their products. Thus, firm specific resources and capabilities are crucial in explaining the firm's performance. The Resource Based View (RBV) explains competitive heterogeneity based on the premise that close competitors differ in their resources and capabilities in important and durable ways. The company's capability can be found through its functionality, reliable performance, like Wal-Mart superior logistics. Wal-Mart has firm infrastructure, well equipped in human resource with management professionals and technologically too.

CONCLUSION
In order for Wal-Mart to be successful in changing its image in the future, all levels of the organization need to be proactive and involved. Change starts at the top of an organization and funnels down. Without strong commitment up top, employees at lower levels will fail to deliver the right image to customers. Exhibiting a strong culture will improve Wal-Mart’s public image via everyday employees. Making sure that all employees and management throughout the company are trained effectively in D & I (Diversity and Inclusion), compliance, governance and ethics will help decrease unethical choices.

REFERENCE PAGE
Wal-Mart Swot Analysis. Retrieved June 4, 2012 from www.scrib.com
Wal-Mart Swot Analysis. Retrieved June 4, 2012 from www.businesstune-ups.com/swot-analysis-examples.html