The company that I will use is Walmart Inc., which is an American company and the leading retail store in the United States.
Walmart Inc. is one of the leading retail stores worldwide. This report will look at the retail industry background, Walmart’s history, some of its strengths and weaknesses, and the opportunities available for its growth. There is also a brief view of the potential recommended opportunities, the risks that will be encountered, and how to mitigate them.
Walmart Inc. is an incorporated company in the United States that has its headquarters in Bentonville, Arkansas. The U.S. is majorly involved in the retail industry worldwide and has several retail stores that are distributed globally. The company brags of being the world’s largest company by revenue and the leading private employer worldwide with an n estimated 2.2 million employees. Walmart publicly trades its shares in the New York stock exchange.
The retail industry is quite a massive industry, especially in the United States. Retailers provide the final consumers with the final product is reduced and desired quantities at reduced costs. This saves the consumers the burden of purchasing unnecessary large quantities of products directly from the producers. Retailers are the link between the customers and the producers. Retail markets have been in existence since prehistoric times. Some of the archaeological proof of trade can be dated back to 10000 years, and they were mainly in the form of barter trade. As years passed by, barter trade was replaced by retail trade, which involved coinage. People began establishing markets where they could display their goods and offer them for sale; in medieval Greece, there existed the agora, an open space where there was the display of goods on mats and stalls during market days. By the 17th century, the leading retail outlets were cultured by permanent shops that had longer operating hours and a variety of goods than the stalls, which only operated during the market days and had limited products. Fast-forward into the 21st century, the retail sector has undergone a massive transformation and is characterized by new technology advancements. The American retail sector plays a vital role in its economy, indicating how important the industry is. The retail industry in America is very competitive and is dominated by Walmart Inc., which owns a majority of the retail stores in the country.
In 1945 Walmart’s founder Sam Walton acquired a branch of ben franklin stores from the butler brothers. His main plan was to offer the consumer products at a lower cost to realize higher sales with a lower profit margin. Due to higher lease and branch purchase prices, he experienced quite some setbacks. He was eventually successful in finding cheap suppliers as compared to the ones used by other stores. He was able to edge out competition due to lower prices, this strategy impacted the sales volume, and by his fifth year, he recorded $250,000 in revenue. After the expiry of his lease, Walton couldn’t come into an agreement on a new lease term with the lessors, and he opened a new store branding it ‘Walton’s five and Dime.’ The year 1962 witnessed the opening of the first Walmart store at 719 W. Walnut Street in Rodgers, Arkansas. The year 1969 saw Walmart’s incorporation as Wal-Mart Inc., and later on, it changed its name to Wal-Mart stores Inc. in the year 1970, it began trading its stock in the New York stock exchange. That same year Walmart was able to open a home office and its first supply center in Bentonville, Arkansas. In the 1980s, Walmart witnessed massive growth in its portfolio, and by its 25th anniversary, it had 1198 stores that recorded sales worth $15.9 billion. Today, Walmart has grown to be the world’s largest retailer and is considered one of the world’s most profitable companies, with an estimated revenue of $523.96 billion.
Walmart’s success in the retail sector can be attributed to its strengths in the retail industry. Being the largest retailer globally, with an incomparable scale of operations and strong market power over its competitors and suppliers. Walmart can maintain a competitive advantage over its rivals and increase its consumer confidence. Walmart’s international presence is also one of its strengths. The ability to operate various stores across different locations means that they can reach a wide range of customers, thereby maximizing their sales. International presence also boosts the consumers’ confidence in the retail store.
Walmart also has some little weaknesses in its business model. One fundamental weakness is its profit margin. By offering goods at lower prices, there is a need to maximize the profits, which will involve maximizing the sales revenue to realize profits. This business model is easily affected by macroeconomic factors such as an increase in inflation rates, leading to losses by the company. Another weakness is that it has a competitive disadvantage against high-end specialty sellers. Walmart’s competitive advantage is on its price, meaning they cannot attract consumers who are low sensitive to price. High-end specialty stores can quickly edge them out by providing quality seeking buyers with desired products at high prices.
Opportunity for growth
Various opportunities are available to Walmart in the retail industry. They can easily penetrate emerging and expanding economies. Such economies are characterized by rapid growths, high production levels, and attraction to foreign investment. Consumers under such economies are susceptible to price; Walmart can use this characteristic since its business model is based on providing goods at lower prices. Another opportunity is deploying some changes in their business model to incorporate consumers whose sensitivity to price is low. This may entail coming up with high-end specialty stores to tap such consumers.
The recommended opportunity for Walmart would be to expand into countries with emerging and expanding economies. Such economies’ characteristics are favorable to their business model, and such an expansion will be reflected positively on their revenues.
The risk associated with such an opportunity is that emerging economies are highly volatile and unstable. Emerging economies face challenges of capital outflows and financial market losses. This may turn out to play negatively on Walmart’s revenue suppose they seize the opportunity in such markets.
How I can help
I can help Walmart by conducting a feasibility study, which will show the emerging economies that are highly volatile and unstable, and less volatile. The management can then decide whether to undertake the opportunity or note based on the information from the study.
In the next two to three years, Walmart’s growth opportunity improves their online retail sector, which their rival company, amazon, currently dominates.
|Read different chapters Conduct research on formal report||Week 2|
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|Writing center appointment||Week 3|
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|Finalize the report||Week 4|
|Submit assignment||Week 5|