Walmart is an American grounded conglomerate retail organization that manages a chain of warehouse and departmental stores. The company's HQs are centered in Bentonville, Arkansas. The corporation was started in 1962 by Sir Sam Walton (Walmart, 2016). Walmart then became an amalgamated entity in 1969. Conferring to Fortune Global 500 magazine, Walmart ranked first in NYSE (Fortune 500, 2015). Currently, the company is owned and directed by Sam Waltons household. They hold fifty percent equity in the corporation. This essay illustrates an overview of Walmart Corporation analyzing its environment, technology, size and structure, and also discusses the impact of external environment factors as an issue affecting the corporation today.
Brief Executive Summary
Today, Walmart has continued to perform exceptionally well, and they have had a positive growth rate in their stocks. The company has an assertive position in United States retail market, and it has a potential for globalization. This is more so to Canadian and European markets. Its success can be accredited to its ability to sell low-priced items to their market. This has enabled them to have a vast number of loyal customers, both locally and internationally. Walmart has been in operation for 54 years. It started as a small retail outlet, and it has grown immensely over the years. Today, it is the leading international corporation with the highest revenue turnover and highest value in NYSE. Its growth over the years has been accredited to various tactics used by the corporation to attain wealth and power, both locally and internationally.
Mission, Vision and Goal Statements, Technology and Size/Structure
The companys mission statement is save peoples money so they can live better. This mission statement is almost synonymous to the corporations slogan that states that save money and live better (Ferguson, 2015). The corporations vision statement is to become the best retailer in the hearts and minds of consumers and employees (Ferguson, 2015). The corporation one primary goal of sustainability. The company aims at selling products that sustain both the public persons resources as well as the environment (Makower, 2015). Technology has played a leading part in the way Walmart performs its functions. Using technology, Walmart has been able to connect to its stores to the leading data warehouses in the world. This has been achieved through the use of enhanced analytics.
Technology has enabled Walmart to create better, faster as well as more efficient programs that support all their functions in offering quality products to their consumers. In terms of size and structure, Walmart has over 11,000 retail outlets around the world. The corporation operates in 27 nations globally. This means that Walmart can advantage from economies of large scale when retailing their products. This has enabled the corporation to reduce their pricing levels on all their products and still make a gigantic profit at the end of each financial year. Walmart stores retail their goods and services at lower prices compared to all other convenient stores in the United States. Their pricing has pushed some of their rivals in the retail market out of business.
Conceptual Issue and Theory Application
The effects of various external environment factors on the performance of Walmart Corporation is a major issue facing the organization. The external environmental factors of an organization are those factors situated outside the corporation that affects its ability to function. Some factors of the external environment can be manipulated by the companys marketing strategies. Nevertheless, others require the corporation to make various internal adjustments. The issue of external environment factors affecting the corporation can well be illustrated by using the PESTEL system of business environment analysis. PESTEL framework can be expanded to denote P for Political, E for economic, S for social, T for technology, L for legal and E for the environment (PESTEL Analysis, 2016). The influences of this factors to Walmart are discussed below.
Various political factors can adversely affect the performance levels of Walmart corporation. This is in terms of sales and profits since various governments can change their rules and regulations at any time. In this context, Walmart is an international corporation with many branches in different states and nations around the world. Changes in political factors in such locations adversely affects the productivity of the corporation in the affected region. For instance, in 2013, Walmart sales volume in the U.S. were lower in 2013 because of a delay in income tax refunds by the government. Also, Walmart is operating in nations such as China, UK, Germany, India, and Canada. If political policies in these nations change, the performance level of the corporation may change.
The economic forces in the Walmarts external environment may raise the prices of products and services offered in the region. Such a change may result in inflation. This affects the performance of the entire corporation, more so with its customers. A change in the economic forces in any of the regions that Walmart has a store affects the performance of its business in that location. There are various factors that influence the changes in the economic factors in a businesss external environment. Such include changes in prices of other items such as fuel prices, inflation, unemployment rate, weak housing market, and increased healthcare and medical insurance costs.
The social factors that affect the performance of a good or a service in a certain region of the world arise because of the social acceptance of those products by the target customers. Since its establishment, Walmart has strived to ensure that all the products they offer are socially accepted by the residents of the locations where it has built its branches. Nevertheless, the social factor of a business environment is still a major problem for the growth of Walmarts international business. In the past, Walmart has been unable to penetrate into some of the markets due to social disapproval of some of its product. For instance, it has been unable to penetrate into Islamic nations in retailing some of its products such as pork and bacon products. This is because the products are not socially accepted in such regions, on religious grounds.
The internet as well as the e-commerce immensely influences the general performance of Walmart. Numerous persons around the world have changed their preferences in the way they buy goods and services from their stores. With the emergence of online stores/markets, many people have resulted into online shopping as their preferred method of shopping. This phenomenon has greatly affected Walmart since it has numerous physical outlets in different parts of the world. As a result, it has been forced to develop various online e-commerce platforms to compete with other leading online retailers in the world. Nevertheless, this is still an issue affecting Walmart as the creation of online markets has not yet been done in some regions where Walmart stores are situated.
These are factors that affect the performance of a business due to the effect of its products or services to the environment. Such effects could be due to pollution of air and water, soil erosion and depletion of the ozone layer among others. In some cases, the national governing bodies for environmental protection may enact some policies prohibiting various products being retailed by a business from being sold in that region. Walmart has strived to create environmentally friendly products since its inception. Nevertheless, emergent laws aimed for environmental protection continuous affected the operations of the business from time to time. For instance, some nations have banned the use of non-biodegradable materials as packaging products used in stores and outlets. Such a ban can immensely affect the operations of Walmart in the chosen region.
Walmart in the past has been subjected to various laws and regulations governing the retail of its products in some markets. Such factors normally impose the retail limits of the business. There are three examples of legal external factors that have faced Walmart over the years. Such include the food safety regulations, tax reform laws as well as employment regulation laws. Tax reforms can adversely affect the business if the threat leads an increment of the tax rates imposed on all items sold by a corporation. A higher tax rate translates into a reduced net income by the affected corporation.
Critique of How the Organization Handles the Effects of the External Environment
Organizations Handling of the External Environment Issues.
Despite its continued growth and good financial performance in the stock exchange market, Walmart has not yet been able to manage the external factors affecting its optimum performance. This can be manifested through the continued reports made by the companys management team over the past decade. Nevertheless, the inability of the corporation to manage the effects of such factors can be attributed to poor management of the corporation by its top officials. This is because these external factors have been recurrent for a long time and arguably, the corporations management team should have devised essential strategies of managing the external environment threats.
Opportunities and Constraints Involved
The growth and development of the ICT sector in numerous nations around the world poses an immense opportunity for numerous businesses to expand their operations in the international market. Such include the develop of e-commerce trade that allows business to make their trades with numerous customers over the internet. Nevertheless, it is evident that Walmart has not yet maximized its scale of operation using the online markets. Since the Corporation has a strong financial base, it should open its online trade to diverse markets such in Africa when most countries are developing nations. This means that they should sell their products to any customer around the world and ship the purchased items for the customers. Nevertheless, the increment in the cases of cyber crimes poses as a major constraint to Walmarts option to diversify via e-commerce.
In conclusion, the issue of external environment factors is a major challenge facing the continued growth and development of Walmart Corporation. Such external factors can be analyzed by using the PESTEL framework of business environment analysis. The term PESTEL is used to abbreviate, political, economic, social, technological, environmental and legal external factors of a business. In order for Walmart to fulfill both its vision and mission statement, it should continue to grow and expand its operations in numerous parts of the world. The pressure of facing an intense global competition can be addressed if the business uses an aggressive growth and expansion strategy in its expansion plans.
Ferguson, E. (2015, August 12). Walmarts Vision, Mission, Generic & Intensive Strategies. Retrieved April 22, 2016, from Panmore Institute: http://panmore.com/walmart-vision-mission-statement-intensive-generic-strategies
Fortune 500. (2015). Walmart . Retrieved April 22, 2016, from Fortune 500: http://fortune.com/fortune500/walmart-1/
Makower, J. (2015, November 17). Walmart sustainability at 10: An assessment. Retrieved April 22, 2016, from Green Biz: https://www.greenbiz.com/article/w...
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