HRM Case Study

Download as docx, pdf, or txt
Download as docx, pdf, or txt
You are on page 1of 3

This model can help to evaluate the market position of the company through its strong operating

performance. We will also identify the company’s strengths and opportunities which have also increase
the investors’ confidence. However, the extreme competition can affect the company’s margin.

Strength

1. Scale of operations. The strong market position is the main strength of Wal-Mart with more than $400
billion revenue and almost 11,000 stores worldwide and consumer’s trust that differentiate Wal-Mart
from its competitors. Wal-Mart can also achieve higher profit because of its huge size and it has a strong
buyer power on suppliers to trim down the costs as compared to competitors (Anon, 2013).

2. Competence in information systems. The one reason of Wal-Mart’s success is its Supply Chain and
Logistics management. The company is saving significant cost by using its information system properly
that managed inventory level, orders, sales and other information. Any information can be easily
accessible at each store at any time (Khade and Lovaas, 2009).

3. Wide range of products. The company is offering broad range of both branded and own label
products to attract its customers. Wal-Mart sells health and wellness, entertainment, clothing, home
and grocery related goods under different categories (Novellino, 2013).
4. Cost leadership strategy. Everyday low price strategy makes different to Wal-Mart from its
competitors. Wal-Mart built different discount stores and selling goods at low cost as much as no other
competitor can do. Low cost strategy has helped Wal-Mart to become leader in the Market (Gough,
2013).

5. International operations. Wal-Mart has expended its store Worldwide and the company is also
looking to open more stores in different countries in upcoming days. According to one study, Wal-Mart
earned $135 billion in sales in 2013 from its international stores, which will be grow more faster after
opening more stores (Jurevicius, 2013).

Weaknesses

1. Labor related lawsuits. Wal-Mart’s corporate goodwill has been ruined due to its failure to provide
better workplace for its employees. Poor work conditions, voluntary overtime work, gender
discrimination and litigation costs are some of the examples that Wal-Mart has always been criticized
for. This has resulted in the company to pay million dollars of penalties and lawsuits every year (Farfan,
2013).

2. High employee turnover. Wal-Mart’s employee turnover costs are heavily increased due to high
employee turnover. It has to incur a lot of expenses for employee on-the-job training and recruitment
expenses; the main reason behind these expenses is low skilled labor and low wages jobs (Ungar, 2013).

3. Negative Publicity. Wal-Mart’s has always been criticized for its poor practices such as inducement
and poor work conditions for employees. Several lawsuits against the company have damaged its brand
image; therefore negatively publicized (Jurevicius, 2013).

Opportunities

1. Retail market growth in emerging markets. The company plans to raise its sales by 5 to 7 percent in
next year. According to CEO of Wal-Mart International, the company will make balance in existing
market and through acquisitions will enter higher growth and large markets (Walmart, 2013).

2. Rising acceptance of own label products. The company has a potential to earn higher profit margin
through increasing the sale of their own private label products at its stores. However, over the last 10
years, the sales of private label product have increased by 40% (Chittock, 2013).

3. Online shopping growth. In the first quarter of the year, the online sale of Wal-Mart’s grew by 30%
and in March the total sale was about 9 billion. However, it is reported by the company to expand its
sales around the world through its e-commerce operations (Davis, 2013).

Threats

1. Increasing competition from brick and mortar and online competitors. Best buy is also planning to
start “Same day home delivery” option like Wal-Mart and some other competitors like Target, Tesco and
Amazon are also trying to reduce differences among Wal-Mart’s prices that the company enjoys. The
company is not so much different from other low cost seller which will increase the competition in
future (Ball, n.d.).

2. Increasing resistance from local communities. According to one market analysis report, says that
when Wal-Mart opens new store to any particular area, then some local retailers are usually forced to
close off their operations. Due to this circumstance Wal-Mart faces strict resistance from communities
and retailers which is becoming more difficult for Wal-Mart to open new stores (Catala, n.d.).

3. Rising commodity product prices. Due to increase in manufacturing cost lead the Wal-Mart to raise its
product/commodity prices which is reducing the profit margins of Wal-Mart and down the competitive
gain (Jurevicius, 2013).

You might also like