Two near future. 2.) Global Segment: Walmart has presence

Two
segments of the general environment that would affect the company most:

 

1.)      Technological
segment:

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“The
world is moving faster and the magnitude of the changes, and their influence on
business, seem larger than I can remember. In retail, the things made possible
by technology are fundamentally transforming this industry.”

–              
Doug
McMillon (President and CEO, Walmart Stores Inc.)

Walmart
is world’s largest retailer with 11,695 stores in 28 countries and e-commerce
website in 11 countries. Company has rich experience of more than 50 years.
Technology, according to the CEO of the company, has been one of the key
factors behind the success of the company.

According
to Forbes article on World’s Largest Retailers 2017
adoption of e-commerce website has increased rapidly, making Amazon world’s
third largest retailer. Alibaba and Amazon are increasing their share of the
pie with the technological expertise and by developing the culture of
innovation within the organization.

Recent
description in CNN Tech of a test store opened up by
Amazon, AMAZON GO, is example of such innovations. In this store in Seattle,
one doesn’t need to stand in line at the checkout. One can pick-up his needs
and just leave the store, amount will be deducted from the account
automatically.

Such
technological advancements can either be strengths of Walmart or weakness in
near future.

 

 

 

 

2.)      Global
Segment:

Walmart
has presence in 28 countries in world. It serves more than 260 million
customers every week, across the world. Walmart every-year invests considerably
large sum of amount in it’s subsidiaries abroad, which makes it vulnerable to
the effects of recent wave of de-globalization.

Organizations
like Alibaba can also reduce company’s market-share in the USA with their unique
offerings. Chinese produces can offer cheaper products to American consumer via
Alibaba, which is threat to retailers like Walmart and American manufacturing
companies.

Because
of such reasons global segment could affect Walmart.

 

Two
most significant forces of competition in case of Walmart:

Five forces of competition
for Walmart:

1.        
Threat
of new entrants: Low

2.        
Threat
of substitute service: High

3.        
Bargaining
power of buyers: High

4.        
Bargaining
power of suppliers: Very Low

5.        
Rivalry
among existing competitors: Very High

 

Two
of the most important factors among these five:

1. Bargaining power of suppliers: Very
Low

2. Rivalry among existing competitors:
Very High

1.        
Bargaining power of suppliers:

In
Retail industry low priced procurement is one of the most important factors to
ensure profitability. Walmart is using its position of strength in a very
effective manner.

Walmart
is largest seller of world’s one of the largest FMCG companies PnG. Walmart
ensures that is gets PnG products at the cheapest rates in the world and no
other player in the world can compete Walmart on the price of those products.

2.        
Rivalry among existing competitors:

Retailing
in world is rapidly shifting from offline to online. It makes Amazon (3rd
largest retailer in the world) and Alibaba (6th largest retailer in
the world) biggest rivals of Walmart.

These
online retailers have developed their competencies because of which they are
rapidly closing in on Walmart.  Reported
by Forbes in one of its articles.

Walmart
has been increasing its online presence but treats from these competitors is significantly
getting bigger.

 

What
the company might do to improve its ability to address these forces in the near
future

o   Develop strategic partnerships with other
FMCG companies like Netsle, Uniliver etc. for lowest cost procurement

o   Rapidly develop e-commerce capabilities.

o   Develop some of the unique offerings,
that make customer visit the store.

o   Improve its presence in terms of
geographies.

o   Leverage existing technology

o   Sophisticated training programs foe
employees

o   Time saving and customer centric approach

 

 

 

Threats affecting the
organization:

·            
Competition
from online retailers like Amazon, Alibaba etc.

·            
Increasing
adaptability of online retail

·            
Strengthening
dollar

·            
De-globalization

·            
Reduction
in bargaining power of buyer in retail industry

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