Wal Mart External Environment Analysis Report Management Essay
Customer-intimate firms know that their consumers have lots of needs beyond their requirement for a product. Providing products is also a basic service, service by means of providing bye product that the consumers expect as part of purchase of products. But operational-excellence companies and product-leadership firms are looking something beyond a client's need for product or basic service, the customer-intimate firm understands that a consumer those purchase a product has a vague, underlying problem that they are trying to satisfy. A customer-intimate firm often has the expertise to change the way a client manages the underlying problem. The most common characteristic of customer-intimate companies is that they offer a unique range of superior services, from education to hands on help, so that consumers can get the most out of their products. Supply chain management is a very good management theory; the goal of supply and chain management of is to improve the efficiency and effectiveness of a company's supply chain operations as a whole. The supply chain runs from raw material suppliers, right through all the intermediate processing stages, to the customer at the other.
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S&C Management (supply and chain management) or logistics management mainly focus on reducing the inefficiency at each stage of the supply chain. This will include, for example, the optimization of inventory movements; planning for peak activity periods; and the organization of transport and distribution systems. This process concentrates on right materials, supplies and right personnel in the right place and right time. The adding value of S&C Management on each intermediate chain has given the term value chain. Supply chain or value chain management emphasizes the strategic value-adding and financial role of a company's entire logistics management process. To provide best net value for the consumers S&C Management give more emphasis for the customers and this represents key resources those can be applied to this. And in this conclusion it reveals the fact that customer value can be created by providing them good service of product availability, in time availability, consistent delivery, and easy order placement. The result is that logistical service is becoming recognized as an essential element of customer satisfaction in a growing number of product markets today. The logistics process has several unique characteristics. First, it is comprehensive, extending from the original source of raw materials to the location of the final customer.
The other characteristic is that it applies to both the flows of both product and information, and considers each as essential to the value-creating process. Third is that logistics represents a viable means to satisfy and create value for the external customer of the firm and/or the channel of distribution. The supply chain is an important part of business because it's a process which can transform the raw material in to the finished goods; this product is then sold to clients for the company to gain profit. This report decides the influence of the external and internal factors on the business. After this report company can decide to create more accurate supply chain management which can increase the profit of the company. The report is about Wal-Mart and its Supply chain. In this report PESTLE, SWOT porters five forces and competitors benchmarking theories are use to evaluate company's status. And after that there is background of the wal mart's supply chain and at last market analysis.
Company and supply chain background
Wal-Mart has adopted the innovative approach to management of the people which are characterized bye profit-sharing scheme which is linked to improvement of each store's management and operation, participative culture in which each employee can give their input and they can be encouraged to continuous improvement and decentralization in decision making in product categories to inventory management, purchase and management of the products. For its customers, the essence of Wal-Mart's strategy has consisted of two principles. First, there is the 'We sell for less' policy. Wal-Mart consistently offers products with the lowest prices available in a particular geographical area. The second has consisted of a wide product mix, much more varied than that of any other discount retailer in the USA. If the discount stores are holding on an average about 30,000 items Wal-Mart store may hold more than twice items. Wal-Mart's efficient cost structure rests on several pillars. Wal-Mart has extraordinary logistics system in which it holds the inventories in the large warehouses, and not in the stores. Stores are for selling, not for inventories. So doing this it can do better space management stores space which is more expensive can be used properly for keeping the items for sells only. There is a good communication system between stores warehouses, and suppliers which keeps the company's inventories at minimal level, and also helps in identification of the best-selling products.
Wal-Mart stores are located in areas where the land and rentals are cheaper than in the main urban area in the USA's east or west coast. Wal-Mart's main shopping centers are located in the Midwest. Wal-Mart's marketing costs are lower than those of its close competitors. Furthermore, Wal-Mart's low prices and wider product range mean that the flow of more shoppers to its stores than in other companies. Wal-Mart's initial location in small and medium-sized towns has translated, in practice, into the consolidation of local quasi-monopolies, as some of these towns' populations are so small that there is not space for another discount retailer. Wal-Mart is the largest revenue earning public corporation. It has gained success in almost its all department in different parts of the world. The company is facing criticism by some of the organization that its having extensive foreign product sourcing. It is also criticized for the low rates of health insurance enrolment, resistance to allow the employees to have union representation and sexism practices. The company's supply chain management system or logistics system is concentrated in making sure that their product supplies are stored in factories to reduce space limitations for stores.
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Main customer markets
The market of Wal-Mart is different people who need a discount one the products. This market is the one that needs an alternative shopping experience. And these are customers who expect that every product they need should be available and sold at lower prices. The market segment of the company is divided into two parts one part of the clients are price sensitive while other have brand loyalty. There are specific products for the clients who are price sensitive at lower rates and for the brand conscious clients Wal-Mart has different products. The company is covering almost all segment of the society. The company has specialized prices for the different market segment, this will ensure that the clients will have lesser doubts about taking a look at the company's product and the products that they can afford.
The target market of the company is covering all sectors of the society. They want to provide products to all ages and all gender. The company as much as possible is concentrating on all the requirements of the life. This target market is a larger source of income. This company has different marketing strategies which can satisfy the need of all such markets. The company makes sure that its stores and branches are located in the most profitable places where clients can easily see the store so they will visit the store and buy products. The company also makes sure that they open the branch in the area where the competition is not too heavy.
Wal-Mart's strength is its popularity. Wal-Mart has big brand name and it's known through out the world. The strong brand name is what makes the company, its products and services popular. Furthermore a strength of the company is its ability to make strategic adjustments whenever there is a need for it. They are keeping their strategies flexible and whenever changes in the industry occurs they changes their plans accordingly. Another strength of the company is the supply chain system wherein the company keeps the products in a secure place until it is needed in a certain branch. Lastly a strength Wal-Mart's is its website that is easy to use, attractive, and informative. And this website attracts and encourages the clients to visit the store.
The main weakness of Wal-Mart is the criticism which they are facing. The criticism affects not only the image of the company but also supply chain. Such criticism affects the relations between the suppliers and the company thus its affecting the company's supply chain. Another weakness of Wal-Mart is that people say Wal-Mart is loosing its charm. This means that the company in some way is having problems in their relationships with clients. Lastly a weakness of Wal-Mart is poor sales in clothing segment. The company does not do well in this kind of product due to the company not being known as a reseller of such product.
An opportunity for the company is to find out more ways to give a some different and attractive look and features to their stores and branches. By doing this the company can take competitive advantage over other companies. An opportunity for the company is to improve the features of their website. By doing this it can attract more markets and consumers. The company should also continue to improve its supply chain so that different issues and problems can be resolved at proper time. Wal-Mart can also improve the delivery system to its branch to prevent shortage of products in their branches. Lastly an opportunity for the company is to continue to reach newer areas where it can offer its products and services. This newer areas may be in a country that has recently just improved its economy.
The main threat to the Wal-Mart is the competitors. The competitors like Tesco and others try various strategies to overcome the standing of the company in their industry. The competitors may develop different way to overcome the company and have a better standing in the supply chain. The threat to the company includes the laws in the country they are operating in. Another threat to the company is the tariffs and taxes that the company has in different countries, each countries has its own rate of taxes and tariff that increase the expense of the company. Lastly a threat to the company is the culture of some clients in other countries they operate in. Some people may not like the new culture that is brought by Wal-Mart and its expansion into newer markets.
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Wal-Mart made sure that they were knowing of the political situation of every country they have operated in and the company has made sure that it has a good position with regards to political issues. Wal-Mart is every time ready to face any problems concerning the political sector.
Wal-Mart is economically stable for the past years. Its economical environment is doing well so they can try to improve their products and able to give best to their clients. It is not only the internal economic situation of the company should be taken in consideration but also consider the economy of the country, Wal-Mart checks first the economic status of the country they are operating in before they decide to open the branch in that country.
Wal-Mart makes sure that the products they offer should be accepted by the society where they are operating in. Wal-Mart does not authorize the delivery of some products they know will cause outbursts or complains from different groups in the society. Wal-Mart is maintaining very good relationship with different sectors in the society although some sectors have problems with them. Wal-Mart also participates in social activities that tend to develop a better relationship between them, the clients and the society they are operating in.
Wal-Mart offered new innovations in its technological aspect and introduced new concepts with regards to its industry. Wal-Mart is using advanced cash register and better performing slot machines. Wal-Mart is using better security system. Since technology rapidly changes Wal-Mart keeps updating to up to date technology and keep a eye on the technology how its changes. If other companies use new technologies to provide services, Wal-Mart has a capability to adopt those technologies.
Wal-Mart makes sure that it follows the different laws of a country where they are doing their transaction. The company doesn't want to risk their client's welfare and company image by breaching local and international laws Wal-Mart makes sure that the in the country where they are doing transactions in will have a legal basis and will be sanctioned by local or international legal organizations.
Wal-Mart makes sure that the products they sell are proven to cause very less harm to the environment. Wal-Mart has developed certain regulations on what type of product they will sell in their store. Wal-Mart has also introduced better waste management systems that aim to reduce pollutants and provide a cleaner environment for the future. Wal-Mart makes sure that its waste system is developed to prevent any mistakes from the personnel.
Porter's five forces
Wal-Mart has been around for a quite some time and the company is not much affected by the new competitors and entrants. The influence of potential entrants to the company is not so strong. Any new entrant will not get the clients unless they are able to provide different innovative strategies that can divert Wal-Mart consumers to ward them and they take the position of the Wal-Mart.
Competitive rivalry has less influence on the company as Wal-Mart has very limited competitors and in their industry and because of that they can not give problems to the company because Wal-Mart has already acquired a high percentage of the consumers.
Substitutes are the big threat and it give high influence to company as they can take the client of the branch where they are operating. The substitutes can be in the form of online or actual stores. This kind of business is continuously growing and continuously changing company strategies. The company and its different branches in different locations concentrating on the substitutes and changing their strategies accordingly. They do this by proving better services than substitutes and using the better technologies than substitutes or other company.
Bargaining power of buyers and sellers
The bargaining power of buyers highly influences Wal-Mart. Company is trying its best to keeps its prices low for the products and services they are providing. When the clients try to dictate lower prices the company tries to know whether it is reasonable and if isn't it has no choice but let the client go. The bargaining power of sellers highly influences Wal-Mart. The company makes sure that their suppliers have high bargaining power through helping them show their importance in the industry. Wal-Mart makes sure that the price being asked for a material has the same value as the same materials' quality and durability. This will ensure that budgets will not be wasted.
Tesco is one of several European retailers whose entry into Central Europe has changed the local retailing structure. It grew first through acquisition of local chains and of chains of Western retailers, and then through Greenfield investment in new hypermarkets. Government regulations did not present major problems to its expansion. Tesco is a British retailing company that is known to have gained large international and domestic market share. Tesco is the third largest retailing firm behind Wal-Mart and Carre-Four. Like other retail companies, Tesco wants to have clients that will patronize their product. The company uses a loyalty program to gain the loyalty of its clients. Compared to Wal-Mart, Tesco has started to concentrate on the housing market but it has not been that successful as of late.
Wal-Mart should continue to improve its supply chain so that different issues and problems can be resolved at proper time. It has to develop faster delivery system to prevent shortages of products in their branches. The supply chain should develop a best possible route for delivery of a supply so that branches will not experience product shortages and clients will not wait for products to come in the store. The supply chain should be monitored and deficit should be corrected and additional featured should be added in. This additional features should include, for example, the optimization of stock or inventory movements; planning for peak activity periods; and the organization of transport and distribution systems. The supply chain should have a secured record of supplies of the important thing.
The system should be able to input different information and data that are important to the logistic section of a company. The system would then arrange the said records according to the classification they belong to or in any means the company deems to be help. The system should not be the cause of delays in determining whether there are still supplies for a product or whether the company should start ordering from suppliers. The system should be protected from hackers that want to destroy records of supplies. It should be accessed only by a few people that the company can trust. Those who know how to operate the supply system should be taught on how to fix the system. The company should continue to invest in its website. If the website is improved further it can bring additional benefits to the company and can cost less expenditure to the company. The website should also be promoted more in the Wal-Mart stores so that more users will visit the site. The company can ask their consumers on how the website can be improved and how they want a website appear. The company should try to use the brick and click strategy and interconnect the website with their stores so that clients and the different stores can have interconnection and assistance can be given to the clients on a particular product.
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