Swot Analysis †Wal-Mart

Strengths Best positioned global retail merchant naturalised line of credit intent & philosophy that is understood organization wide sloshed focus on the dodge of make up leadership by fling chance(a) low prices (EDLP) through everyday low costs (EDLC) efficient procurement and logistics system Strong and stable pecuniary work and domineering cash flows for reinvestment in improving operations Weaknesses Significant dependence on the US merchandise to maintain strong sales writ of execution Wal-Marts mass market approach as a retailer creates opportunities for market nichers to tempt specific market segments which may be overlooked. Wal-Marts massive range of products limits its ability to give direct attention to understanding completely its nodes as opposed to its more focussed competitors. FIFO method of history for scrutinize, in the international markets, may non effectively support the strategy of everyday low prices. Opportunities There atomic number 18 o pportunities to expand in countries with acclivitous economies There are overly opportunities to resuscitate produce in the US market Innovations in technology present the opportunity to hike contain the value chain for increased efficiency to drive EDLC.Threats The unstable stinting climate in the USA will continue to negatively extend to on Wal-Marts performance Wal-Mart can lose customers to more foc partd competitors if they (competitors) are able to develop a value proposition greater than the simple offering of everyday low prices. Wal-Marts global delineation exposes the organization to currency risk, political influences, and other uncertainties that can affect its operations. Wal-Marts cost leadership strategy creates intensive price competition which poses a serious risk to profitability if operational costs are not ffectively managed. Wal-Mart is a large retailer that is keenly focused on the business philosophy of saving people money so they can cognize better. T his philosophy drives the organization-wide quest of achieving EDLCs which are leveraged in delivering EDLPs. Based on integrated information, Wal-Mart has a total of 9700 retail units spread across 28 countries, as at August 2011. This represents approximately 985 million square feet of retail infinite from which sales are generated.This broad network of superstores, discount stores, neighbourhood markets, suppliers, and customers are interconnected in a value delivery network fuelled by information technology. In this system, suppliers are able to furrow Wal-Marts muniment levels in real-time to ensure that products are available on time, in the right quantities, best quality, and at the lowest possible price. Simultaneously, Wal-Mart is able to track purchasing patterns, brand preferences, register customer feedback, and capture other link up information for their sales and marketing programme.When it is either put together, Wal-Marts use of information technology empowers it to consistently deliver on its promise of everyday low prices, a reliable supply of its vast range of products, and capture an understanding of its customers and members that it serves over 200 million times per week. This, in turn, drives customer satisfaction and loyalty which is reflected in Wal-Marts strong financial performance compared to other global retailers. For the 2011 financial yr, Wal-Marts sales grew by 3. 4% to US$419b and operating income grew by 6. 4% to US$25b. EPS grew by 12% to US$4. 8 and a total of US$19. 2b was paid reveal to share seeers through dividends or share repurchases. Between the 2009 and 2010 financial years, Wal-Mart has maintained a ROI of 19. 3% falling slightly to 19. 2% in 2011 due in the first place to economical challenges deep down the US market. For comparison, Wal-Marts closest global competitor, intersection point Group, generated a USD homogeneous of approximately $158b in sales for the 2010 financial year (latest full year re sults available). At the close of the second quarter of their 2011 financial year (August 31, 2011), Carrefour experienced a 2. % increase in sales at the USD equivalent of $58. 3b. However, underperformance in France, Greece, and Italy, due to struggling economies, resulted in a 22% step-down in operating income at a USD equivalent of $1. 1b. These results cements Wal-Marts position as the worlds largest and best positioned retailer with respect to sales revenue. On the flip side, Wal-Mart appears to be dependent on its dominance in the US market which showed a flat performance by generating US$260b in sales for the 2011 financial year, compared to US$259b in 2010.Despite expanding during the year to create more retail space, there was bring down customer traffic due to rising unemployment and a 2. 3% reduction in the income of the middle class according to the US Census Bureau. A 1% increase in the poverty rate to 15. 3% also had a negative impact on Wal-Marts performance and hi ghlights the challenges within the US economy. In the international segment, the FIFO approach at inventory management and accounting may not entirely support its ceremonious strategy of everyday low prices as it does not allow for cost savings to be quickly passed on to its customers.It may also roll the true picture of the companys financial performance. Putting it all together, the assessment of Wal-Marts strengths, weaknesses, opportunities, and threats identifies the need for a strategic approach towards achieving its objective of 4-6% growth in sales revenue for the 2012 financial year and beyond. granted its dominance in the US market, the company should strategically move to hold/defend its market position by continuing to leverage IT for EDLCs and EDLPs. fast-growing(a) sales promotions, especially through eCommerce, should be used to improve on the flat sales performance for 2011.Wal-Mart should, however, look to the emerging economies for further growth and expansion a s they show a faster rate of economic recovery and a growing middle class. China, India, Pakistan, Indonesia, and Saudi Arabia are class-conscious in the top five on the market potential king for emerging markets with respect to market growth rates. China, India, Russia, Brazil, and Indonesia are ranked in the top five based on market size. Pending further PESTEL Analysis, these emerging markets could potentially hold the key for Wal-Marts future expansion.