Walmart Business Case Study
This discussion focuses on the pertinence of analysing the environment surrounding a business enterprise, its globalization strategy and outcomes, and its stakeholders. Businesses operate in environments that have significant influences on their performance and productivity. In this regard environmental analysis dwells in the internal and external factors and may focus on the micro or macro aspects.
Walmart is an American-based multinational corporation operating in the retail sector, which is highly competitive, the company has enjoyed huge success since its inception in 1962, and has endeavoured to live up to its founders original vision of helping people save money and lead better lives. It business model is premised on the everyday low prices (EDLP) strategy, which targets the average customer with average purchasing power. From its humble beginnings as a single store in Rogers Arkansas back in 1962, Walmart has growth remarkably into a global retailing chain with over 10,500 stores and clubs in 24 countries, serving about 230 million customers every week through its 179 distribution facilities, 28 of which are in the united states (Walmart Inc., 2022). Its online business (walmat.com) is supported by over 3,500 same-day delivery sites and about 4,600 pickup locations to complement its omni-channel offering (Walmart Inc., 2022). According to its 2022 financial report, Walmart generated revenue of $572.8 billion with the net sales bringing in $567.8 billion, $370 billion of which was generated in the American market (Walmart Inc., 2022). In the United Kingdom, Walmart operates as ASDA following the £6.7-billion acquisition of the UK-based supermarket chain in 1999. This discussion addresses three thematic areas guided by the following questions; a) How does environmental analysis influence Walmart in gaining competitive advantage?, b) What are the advantages and disadvantages of globalization for Walmart and how might they change as a result of the COVID-19 pandemic?, and c) Critically analyse the influence of different types of Walmart stakeholder groups. Employees form part of Walmart stakeholder group. What is the corporate responsibility of Walmart towards employees and how might it be influenced by the COVID-19 pandemic? Consequently, the discussion is structured to address the environmental, globalization, and stakeholder analyses outcomes.
Definition of Environmental Analysis
Environmental analysis is an interrogation of the environmental factors influencing an organization or business. The findings of such analysis unearth the sources of competitive advantage of a corporate entity, such as Walmart. The environment can be internal or external. Usually, while firms may have control over their internal environment they may not control the external one, despite its significant influence of the firm’s operations and performance. Common analytical tools include PESTLE and SWOT analysis tools (Shtal, et al., 2018). Although these analyses delve into the operational environment surrounding Walmart globally, they will emphasise the environment in the United Kingdom, in which Walmart operates as ASDA.
The exit of the United Kingdom from the European Union in the midst of a global pandemic has dealt a significant blow to the retailing industry in the country, which is very likely to influence the operations of Walmart in the British market. Specifically, exit from the EU introduced trade tariffs and excludes the United Kingdom from accessing the larger European market (Feldmann & Morgan, 2021). Consequently, Walmart may experience supply chain and commodity cost issues as the UK imposes import tariffs on consumer goods. Besides, the Covid-19 related restrictions lowered the visits to physical stores, although the online sales were expected to rise.
Macroeconomic and microeconomic indicators have deteriorated since the United Kingdom exited Brexit and the Covid-19 pandemic ensued. The exchange rate of the British pound is volatile and uncertainties are plentiful, challenging Walmart’s negotiations with suppliers (Driffield & Karoglou, 2019). Similarly, the consumers’ spending habits have change since the advent of the pandemic, with more emphasis being placed on essential products, while the demand for nonessential one reduces (Gordon‐Wilson, 2022). Similarly, the pandemic has disrupted supply chain, presenting inventory and stocking challenges, particularly for merchandise sources outside the United Kingdom.
The United Kingdom has an aging population, which influences the tastes and demand for certain commodities. Commodity tastes and demand is also influenced by the increasing diversity in the country, as the proportions of minority groups grow. Consequently the demand for diverse goods that appeal to people from different cultures and backgrounds are a critical consideration for Walmart. Besides, many consumers, particular from the younger generation, are preferring to shop online, increasing the popularity for Walmart’s e-commerce platform (Hari Adi, et al, 2017). This trend has been heightened by the Covid-19 pandemic, which imposed restrictions to movement and frequenting public places to prevent the spread of the deadly virus.
The United Kingdom is technologically advanced as a high developed economy. Therefore, the technological infrastructure is available for supporting online business. Consequently, large supermarket chains like Walmart use diverse digital technologies to improve the consumers shopping experiences. Consequently, the Walmart’s online outlet is supported by the proliferation of digital devices and countrywide penetration of internet services. However, due to the well-developed technological infrastructure, online retailers are competing in providing the most exciting and memorable shopping experiences, that employ artificial intelligence, virtual reality, and augmented reality technologies (Mounikaet al., 2021). Besides, the proliferation of social media in the United Kingdom facilitates marketing initiatives and promotes the interaction with consumers, delivering valuable feedback for improving business conduct.
The United Kingdom market is highly regulated by common law, with a mature legal framework guiding business conduct, competition, consumer protection, and labour practices. Nonetheless, the legal regime promotes a market economy, making the United Kingdom a highly lucrative advanced and modern marketplace. Regulations such as the General Data Protection Regulation (GDPR) are aimed at protecting consumer personal data and privacy, while labour laws protect employees (Chen et al., 2022). Walmart’s physical and online outlets must ensure that they comply with these regulations to avoid expensive litigations and fines.
The United Kingdom’s market is highly conscious of environmental issues. It is increasingly advocating ethical sourcing, organic foods, and environmentally-friendly business practices. Consequently, large chains like Walmart are force to implement policies that protect the environment and promote ethical business practice to continue enjoying their social license to operate in the United Kingdom market. Consequently, Walmart has an elaborate corporate social responsibility framework the promote recycling of packing materials and containers, environmental conservation, and increasing environmental awareness in communities. The United Kingdom has been a testing ground for electric-powered delivery vehicles and Walmart is likely to include in in its transportation change initiatives to reduce greenhouse gas emissions.
Table 1. SWOT analysis of Walmart
|Internal||Strengths Robust and endearing business model and strategyHigh customer loyalty Extensive distribution network globallyDiverse store formatsExcellent marketing campaigns globallyWide product and services rangeHealthy financial position||Weaknesses Heavily reliant on physical stores and human capital, which is detrimental during Covid-19Reputation damage from business malpractice allegations|
|External||Opportunities Consolidate its UK market following Brexit through enhanced agreementsPotential mergers and acquisitionsEntry into emerging marketsExpansion of online presence||Threats Effects of Brexit could complicate the flow of capital, labor, and goods to the company in the United Kingdom Fast changing government policies and regulationsGeopolitical risks in political unstable countries Difficulty in sustaining the low price strategy amid competition and global supply chain disruptions and economic downturns|
Definition of Globalization
Globalization in the organizational perspective is the operations that are conducted beyond domestic boundaries and extend globally. Therefore, a firm is said to have globalized when it ventures into international markets. However, a firm is said to be truly globalized when it has developed advanced international knowledge expertise, including cultural sensitivity and intelligence to promote multicultural workplace environments, deep and diverse market knowledge and intelligence, multiregional and multinational administration and operations (Dabic et al., 2021).
Yip’s globalization framework facilitates the understanding of Walmart’s international strategy. Walmart’s international strategy is significantly influenced by market, cost, government and competitive drivers, as illustrated in table 2 (Benevolo et al., 2020).
Table 2. Globalisation of Walmart using Yips framework
|Market||Walmart has established a global brand renowned for its standardised products and servicesOnline outlets enable Walmart to avail similar products to different international markets|
|Cost||Economies of scale and efficient logistics and distribution networks enable Walmart to deploy its low cost pricing model in its global destinationsLow labour costs supported by process automation support the low price strategyOnline presence enables Walmart to market and sell low priced merchandise in different markets|
|Government||Walmart benefits from the bilateral and multilateral agreements between the United States and other countries where the company has presence, which have reduced trade barriers and tariffs. Currency exchange fluctuations caused by the different monetary policies in different countries undermine Walmart’s international operations|
|Competitive||Walmart leverages its elaborate distribution and logistical networks to maintain its competitive edge globallyIt has acquired large supermarket chains in locations like the UK, bolstering its competitive advantage|
The advantages of globalisation for Walmart include its extensive global networks of suppliers, logistics, and distribution, which enable Walmart to avail merchandise to global markets, while maintaining low prices. Similarly, using technology and having an online outlet have enabled Walmart leverage the globalisation effect of the internet and digital technologies. Walmart has also benefited from the free flow of labour across foreign markets, increasing the cultural intelligence of its workforce. However, Covid-19 has restricted this flow of goods, labour and knowledge significantly since the closure of international borders and airspaces (Farzanegan et al., 2021).
However, globalisation has disadvantaged Walmart in several ways. For instance, it has presented cultural incompatibility issues in markets with a different culture from that of the United States. Similarly, it has forced Walmart to adapt the different market’s preferences, undermining its standardisation strategy and increasing operational costs (Luthans & Doh, 2018). However, the United Kingdom market has not presented these challenges due to its similarity to the American market.
Definition of Stakeholder
Stakeholder are individuals or groups of individuals with interest in the activities and decisions of an organization, and can influence of be influenced by the organization. Their nature is categorized by their interest, influence and level of participation in the organizational operations (Henisz, 2017). Walmart’s key stakeholders include the government agencies, suppliers, community, banks, employees, consumers, management, and investors. Their level of power, interest, and influence are summarized in table 3, while a power interest matrix is plotted in figure 1. These characteristics are classified as high, moderate, or low (McGrath & Whitty, 2017).
Table 3. Stakeholder analysis
Figure 1. Power interest matrix
From this analysis, the Walmart stakeholders with the most influence include the top executives and employees. These two groups interact directly with Walmart and are critical in its operations and performance. Therefore, they are considered the key players in the multinational firm. In this regard, the management and employees can directly influence the success or failure of the company, and therefore should always be always involved in making the major decisions to derive their optimal corporate loyalty, performance and engagement (McGrath & Whitty, 2017). The stakeholders with moderate influence include suppliers, investor, banks, and government agencies. While their decision-making capacity is recognised based on their influence on Walmart’s operations and performance, their needs should be met alongside being informed about the major decisions made at the firm.
The stakeholders groups with least influence in Walmart include trade union and the communities in which the chain has presence and operates. These groups do not interact directly with Walmart. However, they may influence the decisions made and actions taken at the company when they lobby or complain publicly. This is because they can damage the reputation of the firm if not satisfied, which is injurious to the firm because it can undermine its performance and social license to operate (McGrath & Whitty, 2017). Therefore, while they are prioritised lowly at Walmart, they should be kept informed to avert any resistance and rebellion in and outside Walmart.
Walmart claims to prioritize its corporate social responsibility (CSR) though its environmental, social, and governance (ESG) strategy. In this regard, the company’s policy is to promote diversity, inclusion and equity in its workforce as part of its corporate social responsibility (Walmart Inc., 2021). According to its environmental, social, and governance (ESG) report, Walmart is keen and committed to promoting the growth and wellness of its employees as part of its social responsibility. It does this making its workplaces as inclusive as possible. It also offers its employees numerous opportunities for professional development to facilitate career progression through its Walmart Academy , in addition to facilitating the completion of tertiary education without incurring debts (Walmart Inc., 2021). In addition, Walmart remunerates its employees better than its peers in the industry, offering average hourly wage of $15.25, which is twice as much as the minimum wage in the United States, which is pegged at $7.25. Similarly, Walmart has forged value networks, dubbed Shared Value Networks (SVNs) and has established the Walmart Foundation to address issues affecting minority employees and community members to promote a more inclusive society. However, the Covid-19 pandemic has undermined Walmart’s corporate responsibilities. Specifically, the public health protocols for isolation, avoidance of crowds, and social distancing caused Walmart to focus on delivery services, most of which were conducted by low cadre employees comprising mainly of minority community employees (Sulaiman et al. 2020). While Walmart was keen on delivering uninterrupted services to its esteemed customers during the pandemic, its commitment to promote equality and diversity among its employees was undermined, since its minority community employees were most exposed to the virus as they continued working.
Walmart Inc. has enjoyed unprecedented success over the years and grown into a global enterprise. Its operations have continued to grow in the United Kingdom market since it acquired ASDA in 1999. Its operations in the United Kingdom through ASDA have helped Walmart enter and prosper in the UK market without disruptions. In other words Walmart has exported its low price business model into the United Kingdom market without acceptability challenges because ASDA was already well-established in the UK market.
Walmart has maintained its completive edge over its rivals globally because of its economies of scale from standardised merchandise, elaborate global networks, and leveraging technology to automate organisational processes. Similarly, its corporate social responsibility policy has endeared Walmart among prospective talent and in different communities across the world. In addition, its online retail platform has helped Walmart to sustain its business during the Covid-19 pandemic, although it presented challenges to its corporate responsibility to its employees, particularly in promoting inclusion and diversity, which were difficult to maintain. Nonetheless, the low prices strategy and broad inventory will continue propelling Walmart’s global operations to greater heights as the world battles with the economic vagaries of the pandemic in the post Covid era.
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