Swot Analysis †Wal-Mart

Strengths Best positioned global retailer Established disdain objective &038 doctrine that is understood organic law wide Firm centralize on the scheme of address leadership by offering quotidian woeful prices (EDLP) with quotidian low costs (EDLC) Efficient procural and logistics system Strong and stable financial performance and positive immediate payment flows for reinvestment in improving operations Weaknesses Significant dependence on the US grocery store to maintain strong gross revenue performance Wal-Marts big bucks market approach as a retailer creates opportunities for market nichers to take specific market segments which may be overlooked. Wal-Marts extensive swear of products limits its ability to give direct attention to arrest all its clients as opposed to its more focused competitors. FIFO method of accounting for inventory, in the international markets, may not effectively support the strategy of everyday low prices. Opportunities in that location be opportunities to expand in countries with emerge economies There are also opportunities to resuscitate harvest-festival in the US market Innovations in technology present the opportunity to further integrate the evaluate chain for increased efficiency to drive EDLC.Threats The unstable stinting mode in the USA will continue to negatively impact on Wal-Marts performance Wal-Mart can lose customers to more focused competitors if they (competitors) are able to develop a value proposition greater than the unbiased offering of everyday low prices. Wal-Marts global exposure exposes the organization to currency risk, political influences, and other(a) uncertainties that can affect its operations. Wal-Marts cost leadership strategy creates intensive price competition which poses a drab risk to profitability if operational costs are not ffectively managed. Wal-Mart is a large retailer that is keenly focused on the business philosophical system of saving people money so they can live better. This philosophy drives the organization-wide quest of achieving EDLCs which are leveraged in delivering EDLPs. Based on corporate development, Wal-Mart has a total of 9700 retail units spread across 28 countries, as at August 2011. This represents approximately 985 million square feet of retail space from which sales are generated.This broad network of superstores, discount stores, neighbourhood markets, suppliers, and customers are interlink in a value delivery network fuelled by instruction technology. In this system, suppliers are able to track Wal-Marts inventory levels in real-time to ensure that products are available on time, in the discipline quantities, best quality, and at the lowest possible price. Simultaneously, Wal-Mart is able to track purchase patterns, brand preferences, register customer feedback, and capture other related information for their sales and marketing programme.When it is all put together, Wal-Marts use of information technology empowers it to consistently deliver on its promise of everyday low prices, a reliable supply of its vast range of products, and capture an understanding of its customers and members that it serves over 200 million times per week. This, in turn, drives customer pleasure and loyalty which is reflected in Wal-Marts strong financial performance compared to other global retailers. For the 2011 financial year, Wal-Marts sales grew by 3. 4% to US$419b and operating income grew by 6. 4% to US$25b. EPS grew by 12% to US$4. 8 and a total of US$19. 2b was paid out to shareholders through dividends or share repurchases. Between the 2009 and 2010 financial years, Wal-Mart has maintained a ROI of 19. 3% falling slightly to 19. 2% in 2011 due mainly to economic challenges within the US market. For comparison, Wal-Marts closest global competitor, Carrefour Group, generated a USD equivalent of approximately $158b in sales for the 2010 financial year (latest luxuriant year results available). At the close of the second quarter of their 2011 financial year (August 31, 2011), Carrefour experienced a 2. % increase in sales at the USD equivalent of $58. 3b. However, underperformance in France, Greece, and Italy, due to struggling economies, resulted in a 22% reduction in operating income at a USD equivalent of $1. 1b. These results cements Wal-Marts position as the worlds largest and best positioned retailer with compliments to sales revenue. On the flip side, Wal-Mart appears to be dependent on its effectiveness in the US market which showed a forthwith performance by generating US$260b in sales for the 2011 financial year, compared to US$259b in 2010. in spite of expanding during the year to create more retail space, there was reduced customer traffic due to rising unemployment and a 2. 3% reduction in the income of the middle class according to the US Census Bureau. A 1% increase in the poverty rate to 15. 3% also had a negative impact on Wal-Marts performance and highlights the ch allenges within the US economy. In the international segment, the FIFO approach at inventory commission and accounting may not entirely support its established strategy of everyday low prices as it does not allow for cost nest egg to be quickly passed on to its customers.It may also distort the authentic picture of the companys financial performance. Putting it all together, the judgment of Wal-Marts strengths, weaknesses, opportunities, and threats identifies the need for a strategic approach towards achieving its objective of 4-6% growth in sales revenue for the 2012 financial year and beyond. Given its laterality in the US market, the company should strategically move to hold/ substantiate its market position by continuing to leverage IT for EDLCs and EDLPs. Aggressive sales promotions, especially through eCommerce, should be used to improve on the flat sales performance for 2011.Wal-Mart should, however, look to the appear economies for further growth and elaborateness as they show a faster rate of economic retrieval and a growing middle class. China, India, Pakistan, Indonesia, and Saudi Arabia are ranked in the slide by five on the market potential index for emerging markets with respect to market growth rates. China, India, Russia, Brazil, and Indonesia are ranked in the top five based on market size. Pending further PESTEL Analysis, these emerging markets could potentially hold the key for Wal-Marts future expansion.