Walmarts International Business Essay

Total Length: 2139 words ( 7 double-spaced pages)

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Walmart Store Inc. is a worldwide retail company that runs a chain of grocery stores, discount department stores as well as hypermarkets. The corporation was established in the year 1962 by Sam Walton and became incorporated seven years later. Since then, the company has expanded into international business and has over eleven thousand stores is 28 nations around the globe. The company is split into three key segments. These are Walmart International, Walmart United States and Sam's Club. The business undertaken by Walmart as a company encompasses restaurants, superstores, retail stores and also warehouse clubs (Walmart Website, 2016). The company also undertakes e-commerce through its website Walmart.com. The purpose of this paper is to analyse the international business setting of Walmart and the impact of globalization on the organization.
 

Techniques for Environment Analysis and Assessment for their Suitability




Environmental analysis encompasses the practice of ascertaining the internal and external elements, which can influence the performance of an organization. The analysis takes into account examining the level of opportunity or threat such factors might bring about. When a company expands its business into the international realm, it faces a change in the marketplace and is significantly influenced by the new setting. Therefore, the analysis of the setting ought to be undertaken by the organization. The techniques for environmental analysis include PESTLE analysis, Porter's Five Forces, and SWOT analysis (Cadle and Turner, 2010). With respect to the suitability, PESTLE and Porter's Five Forces Analysis are suitable for external environment analysis whereas SWOT analysis is suitable for the examination of the internal environment (Downey, 2007).
Analysis of Micro and Macro Environments of Walmart

PESTLE Analysis




PESTLE Analysis is a technique that delineates the external macro-environment in which a business exists. It is an approach that is significant for comprehending the political, technological, social-cultural and economic environment in which the business operates in.



Political



In terms of political factors, Walmart faces the positive aspect of high stability and also the backing of internationalization and globalization of businesses. The company also faces the pressure of necessitated higher wages as the company pays out low wages owing to its low cost leadership approach (Rowland, 2015).



Economic



Walmart faces pressure from the decreasing economic prospects in the United States prompting more expansion. However, in expanding, the company faces the risk of economic slumps and downturns in different nations such as China and Mexico. However, the continued growth of emergent and developing nations offers more economic prospects for Walmart (Rowland, 2015).



Social



In terms of socio-cultural aspects, the main factors that influence Walmart include the diversity in cultures and consumer preferences. The company has to ensure that it offers products that will make the consumers inclined to buy, with respect to their culture. At the same time, preferences have to be taken into consideration. For instance, in the present, there is a trend for healthier products from consumers (Rowland, 2015).




Technological



The technological aspects that presently influence Walmart encompass the rise in automation of business and also the increasing use of mobile devices by consumers. The advancement in technology also serves up numerous prospects for the company (Rowland,



Legal



Walmart is obliged to adhere to the laws and regulations of the different nations in which its business operations are situated. These encompass employment regulations, food safety standards and regulations as well as tax laws (Rowland,



Environmental



Walmart has to ensure that it retails products that are economic friendly as this is a trend that is growing force. Secondly, in order to attain sustainability, the company has to enhance its operational efficiency. This can be through enhanced policies and standards for the business (Rowland,
 

Porter's Five Forces Analysis




This technique was developed by Michael Porter and it analyses the competitive analysis stance of an organization as it assesses and examines the competitive strong suits and position of a company.



Supplier Power - Low



The retail industry environment faces low bargaining power of suppliers. This is owing to the fact that there are numerous suppliers in this environment and therefore large corporations such as Walmart can certainly have an effect on these suppliers. The high number of suppliers has a strong potential to influence companies like Walmart. On the other hand, there are numerous suppliers competing for the restricted space in retail stores. In addition, the high accessibility of supply makes it challenging for suppliers to influence retail companies. In consequence, Walmart and other retailers experience low bargaining power of suppliers (Greenspan, 2016).



Buyer Power - Low



The retail industry environment faces a low threat of the bargaining power of buyers. To begin with, there is a large population of buyers not only locally but also internationally. Secondly, there is a great diversity of consumers, in terms of preferences, inclinations and also geography. Lastly, the individual purchases made by the numerous consumers are of small sizes, which cannot impact retail companies. Therefore, there is a low bargaining power from buyers (Greenspan, 2016).



Threat of New Entrants - Low



Walmart together with other retailers face a great threat of new entrants into the market. New retail companies can still easily enter the market regardless of major firms such as Walmart and Target. This is owing to different aspects such as locality, convenience and also forte. There is also low cost of doing business with medium costs of capital required for entry. Therefore, there is a high threat of new entry (Greenspan, 2016).



Competitive Rivalry - High



There is intense competition in the retail industry where Walmart operates in. Walmart faces immense competition from companies of varying sizes in this….....

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References


Cadle, J., Paul, D., & Turner, P. (2010). Business analysis techniques: 72 essential tools for success. BCS, The Chartered Institute.

Downey, J. (2007). Strategic Analysis Tools. CIMA.

Forbes. (2014). Challenges Walmart Faces in Mexico and China. Retrieved from: http://www.forbes.com/sites/greatspeculations/2014/04/02/challenges-Walmart-faces-in-mexico-and-china/#3d7cf1d44e48

Geiersbach, N. (2010). The Impact of International Business on the Global Economy. Business Intelligence Journal, 3(2), 119-129.

Greenspan, R. (2016). Walmart: Five Forces Analysis (Porter's Model). Panmore Institute.

Retail Pro. (2012). Walmart faces challenges and successes in global retail game. Retrieved from: http://www.retailpro.com/News/blog/index.php/2012/05/31/Walmart-faces-challenges-and-successes-in-global-retail-game/

Rowland, C. (2015). Walmart PESTEL/PESTLE Analysis & Recommendations. Panmore Institute.

Smithson, N. (2015). Walmart SWOT Analysis & Recommendations. Panmore Institute.

University Alliance. (2013). Walmart Reports on Global Responsibility Efforts. University of San Francisco.

Walmart Website. (2016). About Walmart.com. Retrieved 19 August 2016 from: http://help.Walmart.com/app/answers/detail/a_id/6

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