walmart-swot-analysis

Walmart SWOT Analysis In A Nutshell

From humble beginnings just over 50 years ago, Walmart’s business model. has grown to become the world’s largest retail company. A single small discount store in Arkansas has now expanded to over 11,000 stores in 28 countries. Some reports suggest that the company now makes $1.8 million of profit every hour.

This SWOT analysis will detail how Walmart came to be the retail giant it is. 

Strengths

  1. Affordability – few competitors can match Walmart’s size and scale of operations. This helps the company achieve better economies of scale – or cost savings that result from an increased level of production. These cost-savings are then passed onto the consumer.
  2. Technologically advanced – the measure of success for any retail company is their ability to keep shelves full. Walmart achieves this through the smart use of technology in order tracking, inventory management, and supply chain management.
  3. Market presence – Walmart is the world’s largest company by revenue and the world’s largest private employer with 2.3 million employees. It is also a market leader in the US, recording almost three times as much revenue as fellow giant Amazon in 2018. This gives Walmart unprecedented power over suppliers and competitors.

Weaknesses

  1. Employee lawsuits – Walmart has had to deal with numerous lawsuits concerning employee discrimination, unfair wages, unpaid overtime, and poor benefits. This has come at a significant cost to Walmart’s bottom line and also to their public image as a fair and reputable employer.
  2. Simple business model – most Walmart stores are large warehouses that lack character or ambiance and instead focus on low prices. In other words, the company does not have a significant competitive advantage aside from its sheer size and affordability. This makes their business model easy to replicate and thus vulnerable to competition.
  3. Frequent product recalls – product recalls such as those seen in candle holders and key chains are symptomatic of poor quality control and Walmart’s focus on low-cost, low-profit margin goods.

Opportunities

  1. Higher profit margins – Walmart has an extensive brand portfolio that they can use to increase profit margins with higher ticket items. This increases profitability while still maintaining the low-cost brand image of Walmart supermarkets.
  2. eCommerce – in theory, the rise in popularity of eCommerce and the fact that overhead expenses are lower should work to Walmart’s advantage. It might allow them to solidify their position in the market by passing on those savings to online consumers.
  3. Human resources – Walmart must take steps to improve HR practices around employee work conditions to remain competitive in the labor market.

Threats

  1. Competition – Walmart is not immune to the intense competition found in the retail market. In the US it is competing against several large organizations such as Carrefour, Tesco, and Home Depot. Target sells similar products to Walmart but offers higher quality. The rise of Amazon and its strong position in eCommerce is also a threat to Walmart.
  2. Opposition to expansion – there is growing opposition in some communities to new Walmart stores, fearing that they might drive small operators out of business. This hurts brand image and makes it more difficult for Walmart to expand into new locations.
  3. Rising costs of raw materials and labor – operating expenses continue to rise year on year for Walmart. Although offset somewhat by their privately branded premium products, these largely unavoidable expenses have the potential to impact Walmart’s low-cost supermarkets.

Related Case Studies

walmart-business-model
With over $495 in net sales as of January 2018, and over $4.5 billion coming from Membership and other income. The company operates three primary units that in 2018 comprise Walmart U.S. (approximately 64% of our net sales), Walmart International (about 24% of net sales), and Sam’s Club (approximately 12% of its net sales) a membership-only warehouse clubs and operates in 44 states in the U.S. and in Puerto Rico, as well as eCommerce.  
walmart-vision-statement-mission-statement
Walmart’smission can be summarized as “helping people around the world save money and live better – anytime and anywhere – in retail stores and through eCommerce.” While its vision is to “make every day easier for busy families.” Walmart defines “busy families” as the bull’s eye of its business strategy.
walmart-swot-analysis
From humble beginnings just over 50 years ago, Walmart has grown to become the world’s largest retail company. A single small discount store in Arkansas has now expanded to over 11,000 stores in 28 countries. Some reports suggest that the company now makes $1.8 million of profit every hour.
walmart-organizational-structure
Walmart has a hybrid hierarchical-functional organizational structure, otherwise referred to as a matrix structure that combines multiple approaches. On the one hand, Walmart follows a hierarchical structure, where the current CEO Doug McMillon is the only employee without a direct superior, and directives are sent from top-level management. On the other hand, the function-based structure of Walmart is used to categorize employees according to their particular skills and experience.
walmart-business-model
With over $555 billion in net sales in 2021, the company operates a differentiated Omni business model with three primary units comprising Walmart U.S, Walmart International, and Sam’s Club (approximately 12% of its net sales) a membership-only warehouse clubs. Together with Walmart+, a subscription service including unlimited free shipping, unlimited delivery from its stores, and discounts launched in 2021. 

Read next:

Other case studies:

Other resources:

Scroll to Top
FourWeekMBA
[class^="wpforms-"]
[class^="wpforms-"]