Walmart Environmental Complexity

#1: List out as many elements affecting your company as you can for each of the sectors below.

Industry:

  • Competitors:
    • The top 10 competitors for Walmart are: Amazon, J.C. Penny, Kohl’s, Macy’s, Dollar Tree, Costco, Target, Tesco, Carrefour, and Kroger
  • Industry Size:
    • Walmart operates in the Retail Industry (more specifically the Department/Retail Specialty Stores Sector)
    • The retail industry is a $4 trillion a year industry in the U.S. and is expected to gross over $25 trillion worldwide in 2016 alone. (Retail Sales Worldwide Will Top $22 Trillion This Year, 2014)
    • Walmart generated over $482 billion dollars for fy15. This represented an increase in revenue by 1.9% (Soni, 2015)
  • Competitiveness:
    • Walmart generates 4x more revenue ($482 billion) than the next closest competitor (Costco at $114.5 billion) and more than the next 4 competitors combined (Costco, Kroger, Carrefour, Tesco) (Soni, 2015)
    • Walmart offers products at a lower price than their competitors and offers price match guarantee in the rare cases that it isn’t.
    • Walmart has a market share of approx. 11% of the Retail Industry in the U.S.
  • Related industries:
    • None

 

Raw Materials:

  • Suppliers:
    • Walmart has over 3,000 suppliers that they work with including: GE, Johnson Controls, and Tracfone. Walmart also uses a house brand that allows shoppers to choose a less expensive comparable product. The house brand is called Great Value and is serviced by many suppliers such as ConAgra, Sara Lee, and Del Monte.
  • Manufacturers:
    • Walmart doesn’t own any manufacturing plants however, as a retail provider of various products, they sell products that include material made from cotton, silk, gold, diamonds, plastic, polyurethane, propane, wood, and many other items that are too numerous to list
  • Real estate:
    • Walmart has over 11,500 supercenters, neighborhood stores, Sam’s Clubs, and distribution centers worldwide. They are operated on every continent in the world except Australia and Antarctica.
    • Walmart’s real estate is valued at over $116 billion.
    • Walmart headquarters operates out of Bentonville, AR
  • Services:
    • Walmart offers various retail goods in their stores and online such as: groceries, exercise equipment, and clothes
    • They also offer services at certain locations such as: gas, tire and lube, and health and beauty spas.

 

Human Resources:

  • Labor market:
    • According to the Bureau of Labor, the retail sales worker is expected to increase 7%(n.d.).
    • Walmart offers employment at various positions such as store manager, cashier, accountant, and many other positions in a corporate setting, a retail setting, and industrial setting.
  • Employment Agencies:
    • Jobs for Walmart are advertised on their website.
  • Universities:
    • No affiliations.
  • Unions:
    • Walmart does not deal with unions however; Walmart has come under fire for threatening employees who wanted to form a union. There are numerous other groups that have been critical of Walmart employee practices as well.

 

Financial Resources:

  • Stock Markets:
    • Walmart is a publicly traded company on the New York Stock Exchange (NYSE) and the National Association of Securities Dealers Automated Quotations (NASDAQ)
  • Banks:
    • Walmart has nearly $7 billion dollars in cash and over $205 billion in total assets. (WMT Balance Sheet | Wal-Mart Stores, Inc. Common St Stock)
  • Private Investors:
    • Walmart is a publicly traded company.

 

Market:

  • Customers:
    • Walmart serves over 260 million customers worldwide each week.
    • Walmart’s customers are those who are seeking a product at the lowest possible price. They serve many customers
  • Clients:
    • Walmart Realty, a division of Walmart Stores Inc., serves commercial clients looking to open at current or former Walmart locations
  • Potential Users:
    • Walmart is always looking at new opportunities. They are opening over 300 new store in over 11 countries this year

 

Technology:

  • Techniques of production:
    • Walmart uses an integrated supply system that allows for accurate inventory and for on demand delivery.
    • The supply system allows suppliers and the distribution center to independently verify levels of sales as they occur and adjust deliveries as needed
  • Computers:
    • None
  • Information Technology:
    • Integrated Supply Chain.
  • E-Commerce:
    • Walmart had over $12 billion in online sales in 2014 however; this paled in comparison to Amazon’s $89 billion in online sales.

 

Economic Conditions:

  • Recession:
    • Unlike most retailers, Walmart actual thrived during the last economic recession. Same store sales rose 5.1%, doubling analysts’ predictions (2.4%); while competitors like Target lost more than 4% in sales (Lamotta, 2009).
  • Unemployment Rate:
    • Because of its size, Walmart is able to affect the unemployment rates of the local economies of the population they are serving.
  • Inflation Rate:
    • Walmart’s pay practices have been long considered an economic predictor of Inflation. Whenever Walmart increases the pay of their hourly employees, inflation usually follows.
    • Due to their size, Walmart is relatively unaffected by inflation. They are able to control the costs of their goods from their suppliers.
  • Growth:
    • Walmart has recently closed 250 stores, but they also opened more than 300 stores.
    • As a low-cost provider of goods, Walmart will continue to enjoy growth into the foreseeable future.

 

Government:

  • City, State, and Federal laws, regulations, and taxes:
    • Walmart adheres to the laws and regulations of all local cities, states, territories, and countries in which they operate
    • Walmart paid $6.2 billion in U.S. corporate taxes in 2014 (Picchi, 2015).
    • Walmart has recently come under fire for 15 undisclosed tax havens valued at over $76 billion (Picchi, 2015). While it is legal, it has reignited the debate regarding tax shelters for corporations.

Sociocultural:

  • Age:
    • Walmart hires all ages legally able to work. The large majority of Walmart’s workforce is over 30.
  • Values/Beliefs:
    • From Walmart’s website: “Our beliefs are the foundation of our culture: service to our customers, respect for the individual, striving for excellence and acting with integrity. Our adherence to these principles has created a unique work culture at Walmart.” (Walmart Corporate – We save people money so they can live better.)
  • Education:
    • Walmart does not release education data of its employees.
    • Walmart offers Tuition Assistance through American Public University
  • Religion:
    • Walmart CEO spoke out against religious freedom bill in Arkansas that will allow businesses to bar people from entering on the basis of religion.
  • Work ethic:
    • The work ethic of the employees of Walmart are similar to other companies.
  • Consumer and green movements:
    • Is committed to becoming 100% green. Give preferential business to suppliers that meet or exceed their green commitment.
    • Targeting 0% waste by reducing plastic bag use by 38%, utilizing the 3Rs (reduce, reuse, recycle), and beginning an electronic recycling program at more than 3,800 stores.

 

International:

  • Competition from and acquisition by foreign firms:
    • As the largest company in the world, Walmart’s competition has a long way to go to be considered a threat. The 2 largest competitors combined, Tesco and Carrefour, made less than half of Walmart ($ 482 billion vs $202 billion)(Wal-Mart Stores, Inc. Competitors)
  • Entry into overseas markets:
    • Walmart operates 6,500 stores in 27 foreign countries on 5 continents (not available in Australia and Antarctica) (Walmart Corporate – We save people money so they can live better.)
    • Walmart is opening 300 new stores worldwide
  • Foreign customers:
    • See above
  • Regulations:
    • Walmart adheres to the local and federal regulations of their host country.
  • Exchange Rate:
    • None

 

#2: Is the organization internationally diversified?

  • Yes

 

  • If yes, where are they currently?
    • Walmart operates in 28 countries: Argentina, Botswana, Brazil, Canada, Chile, China, Cost Rica, El Salvador, Ghana, Guatemala, Honduras, India, Japan, Kenya, Lesotho, Malawi, Mexico, Mozambique, Namibia, Nicaragua, Nigeria, South Africa, Swaziland, Tanzania, Uganda, United Kingdom, United States, and Zambia (Walmart Corporate – We save people money so they can live better.)

 

  • What markets should they expand to?
    • With the decent returns from online sales, Walmart needs to invest more in the E-commerce market to keep their company growing. They should also invest in mass streaming media to allow compete with Amazon’s growing presence.

 

  • Who are their major competitors?
  • Tesco and Carrefour are the largest international competitors.

 

#3: How complex and unpredictable is the organizations environment? Which environment does your organization exist in?

  • Walmart is in a simple, unstable environment. This means that there are relatively few elements to contend with however, consumer demand changes very rapidly. Walmart is a lot more stable than other retailers in this environment because of their size, large customer base, and ability to dictate lower prices from suppliers. Although Walmart’s environment isn’t complex, they have had to adapt to an onslaught of negative public relations, causing damage to their image. This is unusual for the environment that they are in however, as the biggest bullies on the block and their low wage and benefits practice, they are an easy target. Walmart countered this by spending millions on a new PR department aimed at defending itself from criticism and to act as a “first strike” weapon. (Daft, 2010)

 

#4: Does your organization’s strategies and goals fit their environment?

  • Walmart creates most of the complexity and instability in their environment for their competitors.

 

Circle one of the types in the following categories that you have found your company to portray: environment, strategy type, and organizational goals.

 

  Type 1 Type 2 Type 3 Type 4
Environment Calm Varied Locally stormy Turbulent
Strategy types Reactor Defender Prospector Analyzer with innovation
Organizational goals Neither Efficiency Effectiveness Efficiency and Effectiveness

 

 

#5: Did your organization align across environment, strategy type, and organizational goals?

  • Yes

 

If yes, where do you think the organization should go now? Do you predict changes in their environment?

  • The brick and mortar stores where Walmart does over 90% of its business will eventually start to dwindle. Amazon has the right concept; Consignment and E-commerce. Amazon allows non-primary suppliers to “advertise” their supplies on their website, but Amazon still receives a share of the revenue. Amazon also doesn’t have the brick and mortar purchase sites that takes away from profits. In 2014, Walmart made about 1/6th the sales online as Amazon ($12 billion vs $81 billion). Consumers are finding it easier to let their fingers do the walking versus their feet. I am predicting online sales to be the dominate form of retail transactions within the next 5 years. Walmart has to start investing more capital and resources into improving its foothold in his market or they could find themselves on the opposite end of the bullying tactics that they made so famous.

 

References

Burtless, G. (2015, February 24). Wal-Mart boosts pay of its low wage workers: Is inflation just around the corner? Retrieved February 07, 2016, from http://www.brookings.edu/research/opinions/2015/02/24-walmart-pay-boost-inflation-burtless

Daft, R. L. (2010). Organization theory and design (10th ed.). Mason, OH: South-Western Cengage Learning.

LaMotta, L. (2009, March 05). Wal-Mart Scoffs At Recession. Retrieved February 07, 2016, from http://www.forbes.com/2009/03/05/walmart-aeropostale-abercrombie-markets-equity_retail.html

Picchi, A. (2015, June 17). Report: Walmart has $76 billion in offshore tax havens. Retrieved February 07, 2016, from http://www.cbsnews.com/news/report-walmart-has-76-billion-in-offshore-tax-havens/

Retail Industry Analysis 2016 – Cost & Trends. (n.d.). Retrieved February 07, 2016, from https://www.franchisehelp.com/industry-reports/retail-industry-report/

Retail Sales Worldwide Will Top $22 Trillion This Year – eMarketer. (2014, December 23). Retrieved February 07, 2016, from http://www.emarketer.com/Article/Retail-Sales-Worldwide-Will-Top-22-Trillion-This-Year/1011765

Soni, P. (2015, February 18). Welcome to Market Realist. Retrieved February 07, 2016, from http://marketrealist.com/2015/02/managing-walmarts-supply-chain-cross-docking-tools/

 

Summary. (n.d.). Retrieved February 07, 2016, from http://www.bls.gov/ooh/sales/retail-sales-workers.htm#tab-1

WMT Balance Sheet | Wal-Mart Stores, Inc. Common St Stock – Yahoo! Finance. (2016, February 05). Retrieved February 07, 2016, from https://finance.yahoo.com/q/bs?s=WMT Balance Sheet

Wal-Mart Stores, Inc. Competitors. (2016, February 05). Retrieved February 07, 2016, from http://www.nasdaq.com/symbol/wmt/competitors

Walmart Corporate – We save people money so they can live better. (n.d.). Retrieved February 07, 2016, from http://corporate.walmart.com/

Walmart announces Q4 underlying EPS of $1.61 and additional strategic investments in people & e-commerce; Walmart U.S. comp sales increased 1.5 percent. (n.d.). Retrieved February 07, 2016, from http://news.walmart.com/news-archive/investors/2015/02/19/walmart-announces-q4-underlying-eps-of-161-and-additional-strategic-investments-in-people-e-commerce-walmart-us-comp-sales-increased-15-percent

 

 

 

 

 

 

 

 

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