Title: Three-Year Strategic Plan

Student Name Course: BUS402: Strategic Management & Business Policy Instructor: Martha Klima-Gamble Date: May 5, 2020

Executive Summary

Company Overview: Walmart Inc., an international retail giant, operates vast warehouse stores and discount superstores. Founded in 1962 by Sam Walton, the company’s mission has always been to enhance the quality of life by helping people save money. In 1972, Walmart went public on the New York Stock Exchange (NYSE), raising $78 million in sales from its 51 stores. By 2010, Walmart had expanded into e-commerce by acquiring companies such as Moosejaw and Jet.com. The company offers a wide range of products, including organic foods, electronics, furniture, and more. Despite facing competition from companies like Amazon, Walmart maintains its status as the largest grocery provider by keeping prices low and improving delivery efficiency to ensure customer satisfaction.

Strategic Objectives: This strategic plan outlines Walmart’s goals to further strengthen its competitive edge. The company leverages the 4Ps of marketing (product, price, place, promotion) to enhance operational efficiency and maximize profits. Walmart’s product mix includes both retail and e-commerce services, supported by a pricing strategy that emphasizes everyday low prices (EDLP) to drive high sales volumes. The company’s promotion strategy encompasses sales promotions, advertising, public relations, and personal selling, with an emphasis on maintaining strong relationships with consumers and investors.

Mission Statement

Walmart’s mission is “to save people money so they can live better.” This mission guides the company’s approach to offering low-priced products, thereby enabling customers to lead better lives by saving money.

Situation Analysis

Current Position: Walmart is one of the leading retail stores globally, generating over $300 billion in revenue annually. The company operates both physical and online stores, providing a similar range of products and services. Despite challenges in the macro-environment, Walmart continues to thrive by staying true to its mission of helping people save money. Consumers consistently turn to Walmart for the lowest prices on everyday items.

SWOT Analysis

Strengths:

• Product Variety: Walmart offers a vast range of products, from groceries to electronics, both under its own label and branded options.
• Innovation: The company leads in technological advancements, including the introduction of the Scan and Go app, which enhances customer convenience.
• Economies of Scale: As one of the largest retail companies globally, Walmart benefits from economies of scale, allowing it to offer lower prices to consumers.
• Cost Leadership: Walmart’s low-price strategy makes it the go-to destination for budget-conscious shoppers.
• Supply Chains: Walmart’s efficient supply chains contribute to its competitive advantage, particularly in international markets.

Weaknesses:

• Lack of Product Differentiation: Walmart’s focus on low prices can limit its ability to differentiate products, potentially leading to consumer loss if price becomes less critical.
• High Employee Turnover: Frequent employee turnover increases operational costs due to the need for continuous training.
• Negative Publicity: Walmart has faced criticism over labor practices, including poor working conditions and wage disputes, which harm its reputation.
• Decreasing Sales Margins: The influx of Chinese imports has led to a decline in sales margins in some product categories.
• Labor-Related Lawsuits: The company faces numerous legal challenges related to labor practices, further tarnishing its image.

Opportunities:

• Online Shopping: The COVID-19 pandemic has driven a surge in demand for online shopping, presenting Walmart with an opportunity to expand its e-commerce presence.
• Banking Industry: Walmart could enter the banking sector, leveraging its extensive transaction volume to save on payment processing fees.
• Health Concerns: The growing consumer focus on health offers Walmart an opportunity to stock and promote healthier food options.
• Social Welfare: By investing in renewable energy and reducing greenhouse emissions, Walmart can enhance its social responsibility and appeal to eco-conscious consumers.
• Strategic Alliances: Forming partnerships with other global retailers could help Walmart minimize risks and expand its market reach.

Threats:

• Competition from Amazon: Amazon continues to challenge Walmart’s low-price strategy, posing a significant threat to Walmart’s market share.
• Legal and Political Challenges: Ongoing legal and political issues in various countries could hinder Walmart’s international operations.
• E-Commerce Competition: As more small businesses invest in online retail, Walmart faces increased competition in the digital space.
• Technical Issues: Walmart’s website has been criticized for being slow and disorganized, which could drive customers to competitors like Amazon with better online experiences.

Environmental Scan and Porter’s 5 Forces

Porter’s Five Forces analysis reveals that Walmart operates in a highly competitive retail environment. The company faces intense rivalry from firms like Amazon and Costco. However, Walmart benefits from weak bargaining power among buyers and suppliers, as well as low threats from substitutes and new entrants due to its established market position.

International Performance

Walmart operates in over 27 countries, contributing 24% of its net sales in fiscal 2018. However, cultural differences in regions like Asia pose challenges, as local communities often resist Walmart’s presence. To succeed in these markets, Walmart must adapt to local consumer preferences and cultural norms.

Operational Planning and Financial Performance

Walmart employs approximately 2.2 million people and has a market cap of $345 billion. However, its current ratio has declined, raising concerns about its ability to meet short-term obligations. The company’s operational budget has grown, but so has its debt ratio, which could lead to financial difficulties if not managed properly.

Strategic Goals and Tactics

Walmart needs to invest in technology and human resources to remain competitive. Emphasizing cultural diversity and improving product variety will help Walmart meet the needs of its diverse customer base. Additionally, the company should closely monitor regulatory changes to ensure compliance in all markets.

Conclusion

Walmart remains a global leader in the retail industry, but it must address several key areas to sustain its competitive edge. By focusing on innovation, cultural adaptation, and operational efficiency, Walmart can continue to thrive in an increasingly competitive marketplace.

References

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