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Internal and External Factors Affecting Walmart: SWOT Analysis
Introduction
Walmart is a large company with 1st place in the Fortune 500 list in 2020. It is an international network of large retailer shops, providing many workplaces in the U.S. and worldwide. It is present in more than 20 countries under different names, even though most of its revenue is still made in the United States. It has many big stores in the U.S. and worldwide with high-quality goods. However, it adopts new technologies slowly and has issues with unethical practices with employees, such as low wages and employees security. Thus, the company has both strong sides that allow it to be the market leader and weak ones that may result in its displacement from this position.
A SWOT Analysis
SWOT stands for Strengths, Weaknesses, Opportunities, Threats, which shows the companys internal and external weak and strong sides. Internal are strengths and weaknesses: they show the characteristics of the company that may be changed by careful organization. External ones are opportunities and threats: they represent the business environment in which the company must operate and cannot be changed easily. One may see the results of its application to Walmart in Table 1. Those results will be extensively discussed in the following two sections, where the influence of Walmarts external and internal processes on the company will be analyzed.
Table 1: A SWOT analysis diagram
Internal Factors Evaluation
The company is massive: it has a large presence worldwide, big malls, and significant revenues. Its prices are low compared to other stores, as they save money on operating costs and many families go to Walmart to buy their goods, from food to household products (John, 2019). Their quality is high, as Walmart has a good reputation among its customers (Smith, 2019). The companys revenues are more than $500 billion and continue to grow; it has a significant basis for the further increase of its presence and technological advance (Statista Research Department, 2022). However, there are significant weak sides in the company that may become critical for it.
Three main weaknesses are low technological activity, overreliance on the U.S. market, and unethical practices. While the company is large, it is still present mainly in the U.S., which limits its opportunities. Unethical practices are probably, the most infamous part of Walmart that may make it unstable and break its reputation if it will not stop them. There were cases of bribery, low wages, and worker safety concerns. In the U.S., company workers earn only $12/hour, while they should work many hours per day to feed themselves, and the work conditions are certainly not the best (Sainato, 2021). Walmart tried to bribe politicians to avoid regulation; for example, there was a case in Mexico (Debter, 2019). Thus, Walmart has clear weak sides that may prevent it from maintaining the leadership position
Lastly, the technology question is critical nowadays: in the time of the Internet, robotics, AI, and rapid technological progress in general, one who may utilize it will win. Walmart is clearly weaker in technology adoption than other companies, especially Amazon, which is growing very fast (Morgan, 2021). This young Internet-based company is already No. 2 on the 2020 Fortune 500 list: it uses new technologies extensively and efficiently. In addition, Amazon has a better reputation than Walmart: higher wages, worker safety, and no bribery cases. If there are no changes, Amazon has all opportunities to overplay Walmart and become the market leader by itself.
External Factors Evaluation
Globalization and the progress of technologies are two main external factors that influence Walmarts growth. However, those factors may also prevent its growth, as new competitors are inevitably emerging and try to take away Walmarts leadership position. (Morgan, 2021). The mentioned case of Amazon is a prominent example, and Amazon is already very close to stealing Walmarts leadership position. The world is highly interconnected today, and the company may easily open its branch or subsidiary in other countries, where is a high demand on retail services and new workplaces (Hollensen, 2019). Considering its enormous resources, Walmart would benefit from this opportunity by establishing its presence in virtually all countries (Shen, 2020). Meanwhile, it should be on track with all local laws, which may be entirely different in various parts of the world. Global calamities, both natural and social, such as terrorist attacks, are another risk factor, and the company should be ready to mitigate their possible consequences (Riesenberger et al., 2019). In that way, the companys large size enables it to utilize opportunities more efficiently, making it more susceptible to threats.
Conclusion
Therefore, Walmart has a leadership position in the retail market and possesses extensive resources, creating an opportunity to retain this position. It creates those advantages by organizing efficient logistics, maintaining low operating costs, and establishing the presence in all United States and, then, worldwide. Globalization and the possibilities to enter new markets provide a vast space for the company to grow further. However, the competition is stiff, and new market players emerge, utilizing new technologies and creating better workplaces; Amazon is the most prominent example. Walmart has weak sides in insufficient technology adoption and relatively low working standards, and they may destroy the companys leadership position. When using the opportunities, Walmart should be aware of the possible threats of global calamities and be on track with all international and regional laws. The company has enough resources to solve all mentioned problems, but it is unclear whether Walmart will do this.
References
Debter, L. (2019). Walmart will cough up $282 million to put years-long bribery investigation behind it. Forbes. Web.
Hollensen, S. (2019). Global marketing (8th ed.). Pearson Education Limited.
John, S. (2019). How Walmart keeps its prices so low. Business Insider. Web.
Morgan, B. (2021). Who Wins The Battle Of Walmart Vs. Amazon? Forbes. Web.
Riesenberger, J., Knight, G., & Cavusgil, S. T. (2019). International Business: The New Realities (5th ed.). Pearson Education Limited.
Sainato, M. (2021). You cant pay bills on $12 an hour : Walmart employees left out of raises. The Guardian. Web.
Shen, Q. (2020). The research of Walmart global expansion. Journal of Finance Research, 4(1), 33.
Smith, D. (2019). Target, Walmart are giving customers more of what they want. Mintel. Web.
Statista Research Department. (2022). Walmarts revenue 2006-2021. Statista; Statista. Web.
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