SWOT analysis of Walmart

Published Jan 26, 2021 | Author: PenMyPaper

Strengths
One of the greatest strengths of Wal-Mart is it being the market leader in the global retail industry with a wide scale of operations followed in different parts of the world. The company can take advantage of this strength through further expansion of its business in different other nations of the world where it has not established its business as yet. Another major strength of the company is its low cost leadership in the retail market which helps it to offer various products to the consumers at comparatively lower prices than its competitors.

Weaknesses
Wal-Mart has a big box retailing format wherein it operates its supercenters that requires large space for setting up its stores. This is disadvantageous for the company because it limits its expansion into the urban areas where the availability of space is limited. The company can fix this weakness by changing its retail format and making the stores smaller in size so that they can be opened up in the urban areas. Another issue of Wal-Mart is the adverse effect of litigations on the labor relations. Hence the company needs to solve its labor issues so that it does not lose its skilled employees to the competitors.

Opportunities
One of the major opportunities for Wal-Mart is the outperformance of the retail industrial sector that has been observed in various emerging markets. Wal-Mart already has its presence in many of the emerging nations of the world like Brazil, South Africa and Mexico. It is expected that the consumers in the emerging nations of the world would buy most of the world's goods and products. This would definitely have a positive impact on the revenue growth of Wal-Mart. The important factors behind the growth of retail market in the emerging nations are strong economic growth, expanding population, and increasing disposable income of the consumers. The increasing demand for healthy food items by the consumers worldwide is also an opportunity for Wal-Mart because by concentrating on the sales of healthy grocery items by Wal-Mart would help the company to get them benefited through enhanced profitability in the future years. Internet retailing is also growing which is an added advantage for Wal-Mart which already established its online retailing business segment.

Threats
There has been a surge in labor and healthcare costs in United States in the recent years. It is a potential threat for the company because the company employs a large number of laborers to carry on its business activities and the rising labor costs would ultimately increase the overall costs of the company, thereby affecting its profit margin. Hence the company needs to address this threat through prudential decision making in the recruitment process of its laborers. In addition to this, the recent volatility in the prices of commodities in the market can also have an adverse impact on reducing the profit margin of Wal-Mart.