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Company Assessment Overview of Walmart Inc.

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Company Assessment Overview of Walmart Inc.

Walmart Inc., formerly known as Wal-Mart Inc., is a publicly listed company founded in 1962 but was incorporated in 1969 by Sam Walton. The company is American multinational incorporation running a chain of discount retails, hypermarkets, and grocery stores. The incorporation operates from Bentonville, Arkansas, as its headquarters and has 11443 clubs and stores operational in 27 countries in various names. Walmart has since become the largest company in the world by revenue, according to Fortune Global at https://fortune.com/company/walmart/fortune500/ with USD 548 billion.

Structure and Organizational Statements

Walmart employs the use of a hierarchical functional organizational arrangement with two features as function-based and hierarchy. In the hierarchy feature, Walmart uses a vertical chain of authority and commanding. Every worker, excluding the CEO, has a direct superior that ensures every mandate and directive is implemented by the middle-level leadership to the ordinary staff in various stores. Likewise, a function-based definition works in a way every employee falls in some group with functions to fulfill; for example, Walmart has function departments such as human resource management, marketing, and more. Walmart has a mission “to save people money so they can live better,” with its vision being to “be THE destination for customers to save money, no matter how they want to shop.”   (Hicks, Keil, & Spector, 2012).

Walmart’s Competitive Advantage

Walmart Inc. indirectly or directly competes against Amazon Inc., Costco Wholesale, eBay Inc., and more. Thus, the strength of the companies forces them to apply a variety of generic strategies to maintain a competitive advantage (Shabanova, Ismagilova, Salimov & Akhmadeev 2015).  First, the company uses cost leadership to stand out in the competition by achieving low costs. With reduced prices which is a fundamental strategic object for every retail business, the company applies approaches such as minimized spending on human resources, automation, and such like technologies giving the company lower cost on operations and, as a result, can set lower prices. Secondly, Walmart focuses on market penetration to beat the market competition. Historically, the company has reached out to markets where the population was very low due to promotion, service offering, prices; other companies exited such markets as they could not operate anymore (Brea-Solis, Casadesus-Masanell & Grifell-Tatje 2012).

Strength of Walmart’s Competitors

Although Walmart has its strength to apply to subdue the competition aggressively, it also faces the competing companies’ power that can be used to beat or reduce its market share. First, competing companies like Apple, Amazon, and eBay can sell their products at a more considerable profit margin than Walmart. Since the competitors are not low-price oriented, they don’t need to sell volumes to match Walmart’s profits. Second, the models used by Amazon, brick-and-mortar, are complex and are not an easy-to-copy-paste model like Walmart’s cost leadership strategy. The companies, therefore, have the freedom to offer price differentiation; this beats out Walmart’s model, especially to price-insensitive customers (Brea-Solis, Casadesus-Masanell & Grifell-Tatje 2012).

Organizational Challenge

The organization faces the challenge of meeting the customers’ growing demands. The cost leadership strategy has been a significant source of success for the company over the years, enabling it to sell at lower prices than the competitors. With high product turnover and a thin profit margin, Walmart faces the dilemma of dropping the strategy to reduce the high demand while increasing the profit margins and enabling price differentiation to target price-insensitive customers.

 

 

References

Hicks, M. J., Keil, S. R., & Spector, L. C. (2012). Mom-and-pops or big box stores: Some evidence of WalMart impact on retail trade. Economic Development Quarterly, 26(4), 311-320.

Shabanova, L. B., Ismagilova, G. N., Salimov, L. N., & Akhmadeev, M. G. (2015). PEST-Analysis and SWOT-Analysis as the Most Important Tools to Strengthen the Competitive Advantages of Commercial Enterprises. Mediterranean Journal of Social Sciences6(3), 705.

Brea-Solis, H., Casadesus-Masanell, R., & Grifell-Tatje, E. (2012). Business Model Evaluation: Quantifying Walmart’s Sources of Advantage. Harvard Business School.

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