As the newly appointed senior leader for Walmart
I prepared a report for the CEO. In it, I will assess the organization’s overall alignment with its vision, mission, values, and strategy. This report will have detail information involving the analysis of the strategic cascade of the organization and the strength, weaknesses, opportunities, and the threats (SWOT) analysis.
Walmart’s Strategy and Market Position
Walmart has been able to stay competitive in the market by incorporating operational effectiveness and strategy in its business operations. According to Siddiqui, both operational efficiency and strategy are essential factors of a company's success (2015). Operational effectiveness means that the company can carry out its business activities better than its rivals. This means that the company will be able to produce similar products to their competitors but faster and at lower costs (Siddiqui, 2015). The products will also be free from defects when compared to those of its competition. On the other hand, the strategy is the ability to produce the products in different ways. The strategy makes a company unique in the market and thus increases its competitive edge.
Operational Efficiency
Operational efficiency has enabled Walmart to produce at costs that are lower than those of its competitors' (Smithson, 2017). Walmart makes sure that the product design supports mass-production (Smithson, 2017). The company also ensures that the products are designed uniquely to satisfy the needs of its target market. The company's target market consists of the low-income earners in the society (Smithson, 2017). Walmart has different tiers of quality management to satisfy different consumer groups in its market. Its lower level satisfies the minimum expectations of a significant portion of its clients (Smithson, 2017). The middle tier meets the average quality standards expected in the retail industry. The higher level exceeds the required market standards of the retail sector (Smithson, 2017). Walmart only applies the higher tier to a small portion of its output because most of the customers can just afford products from tier one and two.
Strategy
The company also has various strategies that have enabled it to become one of the largest retailers in the world. One of the company’s competitive strategies is price competition (Bhasin, 2013). The company offers lower prices when compared to other retailers. Walmart has been able to provide its customers lower prices because it can operate at lower costs. The company’s bargaining power has enabled it to get supplies at lower costs compared to other businesses in the industry (Smithson, 2017). Secondly, the company enjoys a broad customer base, which allows it to generate high sales within a short duration. Walmart’s supply chain is quite efficient, which enables it to maximize on and minimize costs (Smithson, 2017). The company’s distribution system is also more than capable, which allows it to deliver products to the customers on time. It also minimizes losses and theft and thus saving the company’s assets.
The other strategy that makes Walmart unique from its competitors is its location strategy (Smithson, 2017). The company carries out an analysis of its customers and employees before settling on a specific location. This analysis determines where the store will be located and its design. The company ordinarily positions its stores within or near urban areas. This ensures that the company’s target customers can easily access the products. The design of the outlets is usually dependent on the consumers’ corporate standards. Walmart ensures that the environment at its outlets matches the expectations of the consumers.
Walmart’s SWOT Analysis
Strengths
Brand Name. Walmart is a reputable retailer that has been in existence for more than 70 years (Bhasin, 2013). The company has gained experience in the retail sector which enables it to make informed strategies on how to grow its operations while satisfying its customers at the same time. Walmart has been named as one of the largest retailers by Fortune 500 (Bhasin, 2013). This gives the company an advantage as it has already established itself in the industry. It has defined its market share and should strategize on ways to maintain and improve its position in the market.
International Presence
Walmart has opened more than 11,500 stores in different countries (Bhasin, 2013). International expansion has enabled the company to operate under economies of scale, which has increased its income. By expanding to the global market, Walmart can maintain its leadership in the retail industry. The company has a competitive advantage in the global market as it is almost an international brand; even in countries that it has not ventured into. Walmart should take advantage of this factor by investing in the markets that it has not opened stores. It has potential customers all over the world.
Loyal Customers
Walmart strives to understand and satisfy the needs of its customers. The company knows that most of its customers are low-income earners and that is why it has put in place a pricing strategy that customers can afford (Bhasin, 2013). This has created a good relationship between the company and the customers, who feel that they get value for their money. This gives Walmart an edge in the retail market.
Weaknesses
Thin Profit Margins. Walmart has low-profit margins because it uses the cost leadership strategy (Bhasin, 2013). The company’s profit margins are slim because it sells its products at lower prices than its competition. The company always records higher sales volumes than its rivals that have more significant profit margins. The company should find ways of increasing its profit margins.
High Employee Turnover. Walmart usually hires part-time employees that eventually move to different companies within a short period (Bhasin, 2013). This is because the company limits the employment benefits to its part-time employees. The company spends a lot of time and money training new employees. It should consider hiring more permanent personnel to improve its operations and save more costs as well.
Flexibility. Walmart deals with many products from many sectors ranging from foodstuffs to apparel (Bhasin, 2013). The company is not as flexible as its rivals who handle specified products from particular sectors.
Opportunities
Expand To More Countries. The company has the opportunity of opening stores in various countries. Walmart is a global company, but it only has outlets in a few international markets. It has the chance of establishing strategic alliances with local businesses in various countries.
Improve In Human Resource. The company has the opportunity to change its employment terms and conditions. It should motivate its employees by providing them with better working conditions and extending the benefits to all.
Threats
Competition. Walmart faces both domestic and global competition. There are other significant retailers such as Target that is capable of taking away the company’s customers. The company’s business model is also easy to imitate. Therefore, competitors might use the model to take part of its market share (Bhasin, 2013). The company has to strategize on how to stay ahead of the competition.
Political Risk. The company operates in various countries globally. The possibility of political problems in either of these countries is expected to affect its operations significantly.
Walmart’s Internal Environment
Structure
The company’s hierarchical functional organizational structure enables it to control its extensive network of employees (Lombardo, 2017). Every employee has an immediate supervisor or manager except the company's CEO. The firm is also divided into departments. Each department has defined responsibilities and roles. The employees in each department are led by managers who are also under the supervision of the executive management. The executive management gives directives to the managers regarding the roles and responsibilities of each department (Lombardo, 2017). The managers pass the same information to the employees. This structure enables the management to achieve the company’s cost-cutting strategy as all resources are allocated by the executive management.
Systems
The company’s mission and vision guide the behavior of the employees and management. The company’s vision is to be the best retailer in the hearts and minds of employees while its mission is to save the costs incurred by its clients so they can live better (Walmart, 2018). The work of management is to ensure that the employees follow the company’s objectives, vision, and mission. This makes sure that the company acts in line with its cost leadership strategy.
Culture
The company’s culture is divided into four aspects that include respect for each person, excellent service to clients, aiming for excellence, and integrity (Lombardo, 2017). The company's organizational culture has promoted its corporate strategy. Offering superior services to customers supports Walmart's cost-leadership strategy. The plan is also supported by the company’s culture of aiming for excellence. The employees make sure that all the strategies that the company comes up with are implemented. There are no cultural practices that hinder the company from achieving its strategy.
Walmart’s Ability to Implement Its Strategy: Kouzes and Posner’s Five Practices Framework
Culture and Values
Walmart’s values and cultures are crucial for the implementation of its strategy. The company’s cultures and values require the members of the organization to show respect to each other, to focus on the customers, aim for excellence, and act with integrity (Lombardo, 2017). These values guide the behavior of the employees at Walmart. The leaders behave as role models by behaving following the values and cultures. They share their visions with the employees and motivate them to work towards the achievement of the company’s objectives. This has enabled all the company to implement and maintain its strategy.
Employee Behaviors
The employees uphold the company’s values and cultures. They are innovative and are always looking for ways to make the organization better. According to Lombardo, teamwork enables people in the firm to work towards the same goals (2017). Employees at Walmart work as teams and are also innovative. They challenge the process by coming up with new ways of making the company better. They also encourage each other. The leaders and the employees follow the five practices, and this has enabled them to implement and maintain the strategy. The company should ensure that the employee turnover is reduced by hiring permanent workers. This will further support its strategy.
Leadership
Leaders at Walmart must always strive to ensure that they follow the Kouzes and Posner’s five leadership practices. They should guide the employees by telling them what is expected and sharing their visions with them (The Leadership Challenge, 2018). They should also be innovative to come up with the new ideas that will make the organization better. Lastly, they should encourage, motivate, and enable their subordinates to work.
To improve on communication, I will ensure that any information passed down to the employees is clear and concise. I will also ensure that I have set clear and precise principles that will determine how members of the organization treat each other. To challenge the process, I will continuously look for opportunities that will make the company better. Lastly, I will encourage, motivate, and inspire the employees to work towards the achievement of the strategies by ensuring that their welfare is not overlooked. I will have discussions with the employees to ensure that they are encouraged and motivated to work.
Conclusion
Walmart is one of the largest retailers in the world with numerous outlets in different countries. The company has incorporated operational effectiveness and strategies in its operations, which has enabled it to grow. To develop, it should capitalize on its strengths and opportunities and also find a solution for its weaknesses and threats. Its organizational structure, system, and culture have significantly assisted it to achieve its strategy.
References
Bhasin, H. (2013). SWOT analysis of Walmart. Retrieved on 13th February 2018 from https://www.marketing91.com/swot-walmart/
Lombardo, J. (2017). Walmart: Organizational structure & organizational culture. Retrieved on 13th February 2018 from panmore.com/Walmart-organizational-structure-organizational-culture
Siddiqui, S. (2015). Porter, M. E. 1996. What is a strategy? Harvard Business Review (November- December): 61-78. Retrieved on 13th February 2018 from https://www.linkedin.com/pulse/porter-m-e-1996-what-strategy-harvard-business-review-salma-siddiqui
Smithson, N. (2017).Walmart: Operations management ten decisions, productivity. Retrieved on 13th
February 2018 from panmore.com/Walmart-operations-management-10-decisions-areas-productivity-case-study-analysis
The Leadership Challenge. (2018). Leadership model. Retrieved on 13th
February 2018 from www.leadershipchallenge.com/about-section-our-approach.aspx
