SWOT Analysis: Wal-Mart Inc.
(Walmart Swot Analysis)
A. Internal Environment
Strength Weakness Remark
I. Management Infrastructure + + + Wal-Mart has been able to install and maintain a
management team that is performing superiorly over its entire existence. This is foremost a
consequence of the remarkable leadership abilities of its founder Sam Walton. He is often
described as having been a very charismatic figure. The challenge that lies ahead is to
perpetuate this spirit and not to become an ordinary organization like many of its
competitors servicing top level management more than the customer. For that task it will
need an equally outstanding and humble leader on its own.
1. Corporate Level Management
+ + + The credo of “always low prices” is the corporate mission and is had proved to be
successful. In fulfilling this mission, Wal-Mart always emphasized not to increase margins
but to pass on its benefits and advantages received to its customers in order to offer them
the best price. Because the war over the retail customer is mainly a price war, this should
be the route to success in the future, as well.
2. Business Level Management + + + Wal-Mart operations are split into Wal-Mart Stores,
Sams Clubs and International Wal-Mart. As of mid 2005, the Company had 1,289
Wal-Mart stores, 1,816 Super centers, 555 Sams Club and 92 Neighborhood Markets in the
United States of America. Internationally, the Company operated 11 units in Argentina,
152 in Brazil, 261 in Canada, 47 in China, 89 in Germany, 16 in South Korea, 706 in
Mexico, 54 in Puerto Rico and 291 in Great Britain. These are stocked by 110 distribution
centers around the world.
Wal-Marts success is based on its concentration of a single-business strategy, namely low
prices, service, and “a smile”. This strategy has achieved superior performance over the
last three decades without relying upon diversification in other fields to sustain its growth
and competitive advantages. The inherent risk is that all eggs are put in one basket.
This risk is mitigated by diversifying internationally, which Wal-Mart is now emphasizing.
Thereby it can profit from its strong domestic base. As in the US, Wal-Mart tries to utilize
its superior supply chain management and their superior logistics. With its computer
system Wal-Mart can track how much of one item has been sold on any given day, and if
an item is not selling well, they will ship it out to another store where it might be sold
faster. Contrary to common industry standard and as Wal-Mart has done in the past in the
US, it will, if possible, build the warehouse first, preferably in a free trade zone, and then
group the retail outlets accordingly. Opportunistic buying of merchandise is equally
important to deliver on the right price. Service from when the customer walks in the store
to when he/she leaves rounds up the picture.
All of these strategies are not proprietary, they are even common sense, and may easily be
copied. However, as opposed to many of their competitors Wal-Marts management was
able to actually implement these policies, which principally seems to be the result of a high
morale in its workforce and accordingly good work ethics.
It appears to be essential to hold this spirit up in the future and not to rest on the laurels of
the past. The enormous size of Wal-Mart is believed to its biggest asset as it gives
Wal-Mart leverage over its suppliers and envied economies of scope and scale, however
such economies are not endless and the bigger they are the less they will increase
significantly. The key to success for management is not to be overwhelmed by the
bureaucracy that inevitably comes with any large organization. One may not remember
well but General Motors seemed invincible in the past, too.
3. Functional Level Management + + Wal-Mart refers to its employees as “associates”, and
encourages managers to think of themselves as servants”. Each shift at every store starts
with a store-wide meeting at which managers discuss with hourly “associates” daily sales
figures, company news, and objectives for the day. The Wal-Mart spirit is legendary,
including things like the cheer (“Gimme a W “), however that suits, perhaps, the American
mindset better than, for instance, the European.
Wal-Mart has done only an average job in caring about the details of its foreign operations
lacking a feel for adapting the assortment of its goods to local taste (not acceptable, but
justifiable) and even worse local standards and regulations. The latter should be obligatory
for a global company that sees itself as a local player in each market.
II. Human Resources
1. Recruiting, Staffing, Training + + According to its own mission statement it was
founded on the “belief that open communications and the highest standard of ethics is
necessary to be successful”. This resulted in the “open door” communication policy that
helps management to become aware of and address issues in a timely and effective
manner. Secondly, Wal-Mart has adopted a statement of ethics to guide its employees in
the “continued observance of high ethical standards such as honesty, integrity and
compliance with the law” in the conduct of Wal-Marts business. Extended codes of
conduct apply for senior management, in particular for financial personnel.
In sum, Wal-Mart still possesses the ability to recruit, train and unify its workforce behind
one strong idea, the Wal-Mart way, much the same way a start-up company often does.
This is a unique capability in the industry.
2. General As said before, Wal-Mart refers to each of its employees as “associates,”
