Wal-Mart is an American multinational company that runs a chain of large discount departmental store and warehouses. According to fortune magazine, the company is the third largest with the highest number of private employment. The company remains a family owned enterprise since about 48% of its stake is controlled by Walton family. Having founded in 1962 and incorporated in 1969, the corporation also trade in New York Stock exchange since 1972. Wal-Mart has over 8000 outlet stores in over 15 countries that operate under its name.
The company’s business strategy is firmly grounded on local procurement. This made the Wal-Mart management to introduce a campaign in 1985 labelled ‘Made in America” that set the company’s commitment to buying American made products. The company promised to offer the lowest prices of all their products and introduced a nationwide slogan that read, ‘Every Day Low Prices”. The stores’ popularity increased in the US and other parts of the world. Such methods of operation facilitated more consumption and optimise their time, thus ending up saving administration and operating costs.
Financial and economic analysis
During the financial year that ended in January 2011, the US segment of the business contributed 62.1% of the total sales of the company. In addition to sale of merchandise, the company is also involved in provision of financial services like money orders, bills of payment, and cashing of checks. The company contributes on economic growth through its expanded business outside the home country. This move provides employment opportunity to many people in all departments. Expansion also enables the government to earn foreign currency thereby maintaining a positive balance of payment. In addition, Wal-Mart promotes export since most of its products are procured from within the United States and supplied to all subsidiaries including those in other countries.
Wal-Mart creates a strong market niche amongst other industrial players by creating an opportunity for developing third party businesses among online retailers. This promotes business exposure through the use of e-commerce and maintaining the rand worth as the world largest store based retailer. Wal-Mart is a massively successful corporation that provide a good example of a strong business. In order to understand its success, we must perform a competitive analysis by looking at its strength, weaknesses, opportunities and threats.
1) Strengths- the company’s strengths are its cost leadership strategy. Wal-Mart is able to provide the public with goods at the lowest price thus achieving a large force of buying power. Consequently, the company enjoys economies of scale that enable it to negotiate with producers and sourcing many manufacturers at low prices.
2) Weaknesses- being a widely spread business, the company offers a range of products that encompass everything including pharmaceuticals, photography and other services. Due to this broad focus, Wal-Mart is unable to excel in a specific area.
3) Opportunities- despite being huge in various markets, there are many other markets that it has not been able to penetrate such as Europe and many regions of Asia and Africa. These markets provide room for expansion and development where no strong corporation is currently doing business.
4) Threats- despite managing to dominate in the retail departmental stores, the real competition may arise due to emergence of more focused businesses. Businesses that specialise on single area are able to satisfy their customers better than Wal-Mart with its broad focus.
Competitive Analysis – Wal-Mart Key Statistics
In the table provided, a detailed competitive analysis has been made in relation to other players in the industry. According to Nasdaq Real Time Price publication of January 2013, Wal-Mart remains the market leader in his retail industry, the table shows the major competitors and the respective 12 key statistics that are most relevant on this financial analysis.