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Alliance with Seventh Generation
Brazil: An Analysis of Wal-Marts Expansion Opportunities
International Market Share
Organizational Chart
Wal-Mart Market Share Analysis
Wal-Mart SWOT Analysis
Wal-Mart SWOT Analysis

An analysis of Wal-Marts strengths, weaknesses, opportunities, and threats, also
known as a SWOT Analysis, is imperative in order to understand Wal-Marts strategy.
Wal-Mart Stores operated retail stores in various formats across the world. In the
United States, the retail formats operated by Wal-Mart include discount stores,
supercenters, neighborhood markets, marketside, and Sams Club. The company is the
largest retailer with unprecedented scale and clout which will enable it to maintain its
market position and continue to gain market share from competitors. However, with
over two million employees, rising labor and healthcare costs will significantly affect
Wal-Marts profitability. (IBIS World) Wal-Mart Stores operates numerous retail
store formats in the following countries: Argentina, Brazil, Canada, Chile, China,
Costa Rica, El Salvador, Guatemala, Honduras, India, Japan, Mexico, Nicaragua,
Puerto Rico, and the UK.
The company recorded revenues of $408,214 million during the financial year ended
January 2010, an increase of 0.9% over 2009. The operating profit of the company
was $23,950 million in 2010, and increase of 5.1% over 2009. The net profit was
$14,335 million in 2010, an increase of 7% over 2009. (IBIS World)
The SWOT analysis provided below will demonstrate the numerous strengths,
weaknesses, opportunities, and threats that Wal-Mart currently recognizes:
Strengths Weaknesses
A market leader with unprecedented
scale gives a competitive
advantage:Largest retailer in the
world. By January 2010, More than
$400 billion in revenue, $24 billion
in operating income, 8,500 stores,
and nearly 1 billion square feet of
space. There is no competitor of
comparable size.
Big box retailing format led to low
penetration into urban areas: The negative
impact on comparable store sales as a result
of opening new stores was approximately
0.6% in 2010 and 1.1% in 2009. Although
the companys management believes that
there are several opportunities to grow in
the metropolitan areas in the US, the
availability of space limits such scope for
Low cost leadership enabling Wal-
Mart to offer products at low price
points: The company offers its
grocery products at prices about 12%
lower than the market. Wal-Mart
constantly flexes its bargaining
muscle to lower prices. This strategy
ensures a steady, recurring stream of
customers for its goods, making
Wal-Mart synonymous with
inexpensive and this keeps constant
pressure on competitors.
Internationalization strategy a
strong foundation for growth as the
US market matures: The company
operates 4,068 units in 14 countries.
Wal-Mart opened its first
international store in Mexico in 1991
and has grown both through
acquisitions and its own innovation.
The company has nine international
store formats. It operates under 55
different banners. Wal-Mart has
reached $100 billion net sales mark
for 2010. In FY2010, Wal-Mart
added more than 500 units, all from
organic growth. International
segment revenue (35% of total) grew
9% on a currency-adjusted basis.
expansion. As the company expands its
large format stores, it is leading to
cannibalization of existing stores.
Litigation affect labor relations adversely
offer products at low price
pointsTargets superior merchandising
capabilities to appeal more to the customers
as the US economy revives: In FY2009, the
company settled 63 wage-and-hour class
action lawsuits. As a result of the
settlement, Wal-Mart recorded a pre-tax
charge of approximately $382 million
during Q42009. As many as 1.5 million
women who have worked at Wal-Marts
US stores anytime since December 26,
1998 will be represented and compensated
in case it is proven.
Targets superior merchandising
capabilities to appeal more to the customers
as the US economy revives: Target still
leads in merchandising and Wal-Marts
product assortment although available at
lower prices might be less appealing to the
customers as the economy recovers and
consumers start spending. Its
merchandising is enabling Target to charge
a premium and increase its margins. Wal-
Mart has geared up efforts to compete with
Target on merchandising.
Opportunities Threats
Out-performance of the retail sectors
in emerging markets: Asias retail
sales are estimated to increase
with China driving the growth.
Chinas retail sales are estimated to
grow at 16% in 2010. Chinas retail
rose 17.9% and stood at CNY2.5052
trillion ($366.9 billion) in January
Two million employees increases
exposure to increasing wages and high
health care costs: The United
Statesgovernment has increased the
minimum wage rate from $6.55 per hour in
2008 to $7.25 an hour in July 2009, causing
increased costs. Rising labors costs,
coupled with a large labor base, threaten
and February of 2010, according to
theNational Bureau of
Statistics(NBS).India is estimated to
make up just 5% of the market but is
growing at 30% a year.
Concentration on grocery and food
will benefit as eating at home, health
and wellness trends continue to
emerge: The economic downturn,
the perception that home-prepared
foods are much healthier- a view
held by 2% of grocery shoppers,
according to an industry study- and
an unmet desire to enjoy affordable,
restaurant-type food at home have
given food marketers the opportunity
to recapture mealtime. With 84% of
food shoppers cooking more at home
in 2009 and 40% planning to do so
more often. Household deli spending
for the year ending September 2009
was up 5% over the last year;
bakery, up 3%; fish meat/seafood, up
4%; and produce, up 3%. Sales of
frozen foods are estimated to grow
and are projected to reach $65 billion
by 2013. Also, sales of food carrying
a natural claim reached $20.4 billion
for the year ending April 2009, up
6.6%.
Growth in Internet retailing to serve
larger market: The US market, by
2014 is expected to reach a value of
$13.55 billion, which represents an
increase of almost 75% compared
with levels in 2009, according to
industry reports. Although, the share
of grocery in the total online sales is
estimated to be 2%, the higher
growth market gives Wal-Mart an
Wal-Marts efficiency and performance
since rising costs may grow quicker than
revenue.
Volatility in commodity prices and cost
inflation will pressurize margins: Inflation
and rapid changes in commodity prices
threaten Wal-Marts profit margins and
fierce competition results in Wal-Mart
lowering prices in order to remain
competitive. Deflation, along with a weak
pricing environment and an
increasingProducer Price Index (PPI),
demonstrate the serious threat to profit
margins and the importance of developing
new ways to reduce costs by working with
suppliers and operations. Also, volatility in
commodity prices and rising cost inflation
will affect margins adversely.
Increasing resistance to expansion from
local organizations and authorities: A
market analysis report estimated that for
every new Wal-Mart super enter that opens,
two local supermarkets will close, which is
why Wal-Mart is facing severe resistance
from several groups when it plans to open
new stores. Wal-Marts threat to local
stores and markets has resulted in local
authorities deterring Wal-Marts expansion
plans. It is becoming increasingly difficult
for Wal-Mart to open new stores as the
resistance increases. This is affecting the
new investments and the time to open new
stores for the company
opportunity to reach out to wider
audience and increase customer
base. Walmart.coms traffic
exceeded one billion visits in 2009,
growing more than 15% over the
previous year through Site-to-
Store and home delivery.
It is evident that Wal-Mart is a global low-cost retailer, enabling Wal-Mart to
systematically reduce costs due to its large scale of operations. Also, external
opportunities, such as the economic recession that has been experienced world-wide
gives Wal-Mart countless opportunities to identify new customers who demand low
retail prices in order to maximize their budgets. Utilizing state-of-the-art technology
has allowed Wal-Mart to maximize efficiency while minimize costs, resulting in low
prices for their customers. With the use of such technology, Wal-Mart has been able
to closely monitor grocery prices in order to reduce risks associated with inflation and
rising food prices. This has strategically positioned Wal-Mart to expand its operations
both domestically and internationally. In the coming years, Wal-Mart will continue to
expand abroad due to its international opportunities and time-tested strategies.
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