Swot Analysis of Walmart

SWOT Analysis of Walmart

January 29, 2017

SWOT Analysis of Walmart

Introduction

The SWOT analysis measures a company’s strengths, weaknesses, opportunity and its threats.  The goal of this analysis to determine how high or low is the success probability and the probability of occurrence.  In this analysis of Walmart we will determine its competitive advantage in the retail industry through its strengths, weaknesses, opportunities and threats.  

Strengths

Walmart is the largest retailer in the world. They have a strong market power over its suppliers and competitors.  Walmart uses its bargaining power of suppliers to control costs.  Walmart requires all suppliers to keep costs extremely low, even when suppliers are experiencing higher raw material costs.  Such as, Rubbermaid did in the 1990s, which drove Rubbermaid from Walmart shelves.  Resulting in a 30 percent profit reduction and was forced to cut its work force by more than 1000 employees (Barney, 2015).  Even though, Walmart is perceived to have a fundamental integrity with its suppliers.  

Walmart controls a competitive advantage over its competitors through its logistics and supply chain.  Walmart must fully realize this competitive advantage and have the willingness to exploit its resources and capabilities.  Which Walmart does utilize this advantage as it places warehouse within close approximating to its stores in order to keep product on the shelves.  Another advantage is the use of POS system to utilize a just-in-time (JIT) system.  

Weaknesses

Although, Walmart is seen as the largest retailer in the world, it still has weaknesses.  Despite Walmart’s IT advantages and large control of its empire, it could be left weak due to its vast duration of control.  Another weakness is the lack of flexibility.  “Flexibility refers to how costly it is for a firm to alter its strategic and organizational decisions” (Barney, 2015, p. 168).  Walmart has a vast product market; such as, clothing, grocery, or home goods, which could make it difficult for Walmart to change its strategic choices.  Finally, Walmart might be global it lacks presence in relatively few countries worldwide; which could be construed as a weakness by other businesses.  

Opportunities

Walmart can use its opportunities to take over, merge, or form a strategic alliance with other global retailers, allowing them to focus on a specific market.  Currently, Walmart stores only trade in a small presence globally.  Therefore, there is a great opportunity for Walmart to expand its business into additional global markets.  Furthermore, new locations and store types offer Walmart additional opportunities to expand the market through diversification of new types of stores; such as, the Neighborhood Markets.  Additionally, Walmart is still in a strategic position to continue its current strategy of large super centers.