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Untitled Prezi

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Mariana Medeiros

on 8 May 2015

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Economic factors
Currency, interest rates and inflation can directly impact company’s strategies and results. (Global economic aspects and local economic aspects).

Walmart focus on cost leadership strategy (positive in any kind of economy, considering their customers is price sensitive)
Social factors
As a Global retail, Walmart faces many sociocultural scenarios and must adapt to succeed in foreign countries (local culture of other countries, including woman employees’ workforce, environmental responsibility, healthier foods availability, trends adopted by customers, etc.)
Organized labor unions, legal suits and environmentalists can affect the business.
Suppliers violation against Wal-Mart standards related to child labor, workplace safety etc.
Political factors
Some regions do not want to have Wal-Mart operating there due it is a huge economic impact in local stores.
Legal factors
Every country has its regulation system, currency, and legal system, including labor and taxes. All of them represent a challenge and can affect Wal-Mart performance.
Technological factors
Wal-Mart is a pioneer in investing and adopting new technologies for inventory management and scheduling.

2011- Wal-Mart viewed e-commerce as a big opportunity and managed to rise its retail sales by 10%.

Environmental factors
2010 - Plastic bags and green house gas emissions
2015 - Annual report- focus on environmental.
Industry rivalry
Very high competitive environment (Large competitors and local stores trying to sell goods with better prices);
Rivalry every day seeking to attract more consumers

Huge market share, suppliers depend on them to sell their products;
Wal-mart specifies the products value;
2003- Wal-Mart encouraged its top 75 suppliers to include it in the 3 year strategic discussions involving decisions such as factory size and location.
New entrants
High entry barriers considering:

Wal-Mart bargaining pressure over suppliers;
Wide range of products with reputation for lower prices;
Brand name;
Better operation efficiency (distribution centers, logistic and technology)
Several and very well located real estate.
Wal-Mart has outstanding prices, wide range of products and well located retail outlets

Typical customer is price sensitive and competitors try to have competitive prices over similar products.

Competitors try to have competitive prices over similar products.

The lowest price challenge

- Kmart went to bankruptcy trying to match Wal-Mart prices.
Industry environment analysis
Wal-Mart benefited from the US recession in 2008 by attracting new price conscious consumers. However, this benefit was short and the new consumers started questioning whether Wal-Mart really offered the lowest prices. In this scenario, dollar stores became strong competitors.
2011- Wal Mart seeks to differentiate itself by building small community grocery stores and offering fresh prepared meals, cheap wine, and fresh produce.
Wal Mart became a target to Human Rights as dubious business practices became public. Its image was jeopardized by child labor and employing abuse accusations. Wal Mart invested on environmentally responsibility to try to reduce the negative impact on its image. At the same time, reduced sugar and salt in its products to improve its image as healthier food retail.
As Japanese consumers usually associate low price with low quality, Wal Mart had to applied an aggressive marketing campaign to keep its “Every day low prices” core strategy.
Germany and South Korea
Wal-Mart failed to adapt to local customs and exited the market after only 8 years of activities
Due to a fragmented array of local consumer tastes, and a culture of bribery and kickbacks, Wal-Mart struggles to adapt and comply with labor laws and labor unions.
Wal-Mart used automated distribution centers and linking them by computers to both stores and suppliers.
EDI – Electronic data interchange, to communicate with suppliers.
o Wal-Mart Retail Link – provide suppliers computer access to point-of-sale data on the two year sales trends and the inventories of their products on a store by store basis. Cost: US$ 4 billion (90`s)
o MCAPS – Modular Category Assortment Planning System.
Wal-Mart viewed e-commerce as a big opportunity and managed to rise its retail sales by 10%.
o Click and Collect: Integrating physical retail and digital
Physical aspects
USA went short of room for supercenters, therefore Wal Mart built a high number of smaller stores, targeting urban centers.

China and India- Poor infrastructure is a huge challenge in such a continental country and logistics will require high investments.
As the Government restricts FDI, Walmart had to enter the market as a joint venture with Bharti Enterprises.
The Government and local unions resisted a billionaire merging with Massmart Holdings for a while, but the deal ended approved.
2015- Operated in 27 countries. Wal-Mart must adapt to the internal policies of each country.
PESTEL analyses
Value chain analysis
Primary activities
Support activities
Firm infrastructure
Human resource management
Technological development
Marketing & Sales
Outbound logistics
Inbound logistics
Inbound logistic
and Outbound logistics
Improving customer experience through assortment, price and access.
Decentralization of store management. Store managers are empowered to make decisions and have autonomy.

Marketing & Sales
Low price appeal to customers. “Always the Lowest Prices”; “Always Low Prices. Always”; EDLP – Everyday Low Prices; “Save Money, Live Better”.
“Engaged associates fuel our success”. “Although technology has transformed our business, retail is still a people business” (Doug McMillon, Wal-Mart CEO. Source: annual report 2015)

Wal-Mart’s goal is to create a pleasant shopping experience for its customers provided by its capable associates.
Associates must exceed customer expectations.
Management routines.
Refund police.

General administration
Wal-Mart’s personnel is always obtaining information about competitors and its practices.
Human resource management
Employees as associates to foster a sense of partnership
relationship is based on commitment, trust and incentives.
Low wages but there are benefits, such as, “open door” policy, promotion opportunities, health plans, training, incentives and profit sharing.
Good working environment.
“Social complexity”- strong relationship with employees. Employees are held together tightly because they believe in Wal-Mart.

Technological development
Technology integration.
Effective and efficient control of inventories through point of purchase data collection methods enabling to reach consumers at the right place and time.

Disintermediation: Wal-Mart deals directly with the ultimately manufacturer, bypassing representatives or terminating its relationship with procurements.
Close agreements with its big suppliers, such as P&G.
Wal-Mart started to develop cross-border suppliers (2011). They could reduce the cost of merchandise goods by 10% to 20%.

Superior logistics system.
Keeping the inventory level at each local store low and reducing transportation cost.
Large scale “cross-docking” to transfer merchandise directly from inbound trucks without storing the goods in the distributions centers (90`s). It reduces expenses and gives more control.

• Well known and highly value brand name
• Strong culture
• Financial capacity
• Associates` spirit
• Strong bargaining power over suppliers
• Integrated technology of supply chain
• Effective use of logistics management techniques
• One - stop shopping experience and low price
• Favorable access to distribution networks
• Capability to leverage this bundle of capabilities and resources

• Only attracts price conscious consumers
• Lose of control and best practices due to expansion

Potential market overseas
Expansion of e-commerce
Smaller stores layout
Expand brand portfolio
• Hypercompetition
• Lose of key information systems personnel
• Availability of people with the skills necessary to meet Wal-Mart’s needs
• The size and turnover in the hourly workforce
• Different political and cultural practices
• Suppliers violation against Wal-Mart standards related to child labor, workplace safety etc.
• Anti-trust institutions
• Few women in top management and discrimination about gender
• E-commerce

Costly to imitate
Organized to capture
Integrated technology
Brand equity
Logistic system
Decentralized operating system
Strong culture
Large infrastructure
Price policy
Human resources
Supply Chain
Broad quantity of products
C. parity
Temporary C. Adv.
Temporary C. Adv.
Temporary C. Adv.
C. Advantage
C. parity
C. Advantage
Temporary C. Adv.
C. Advantage
C. Advantage
VRIO analisys
Jalal Sefrioui
Luis Franciozi
Mariana Medeiros
Michele Kawamura
Full transcript