Introduction
Walmart is among the largest brick-and-mortar retailers in the United States. It has 10,584 stores and clubs in different countries, and it operates using a total of 46 names globally. The organization is ranked as the largest retailer globally with revenues totaling $570 billion per 2021 financial reports. The company is also the largest employer in the world with 2.2 million employees globally. While Walmart is in numerous countries under different names, it is yet to enter the Swedish Market. Sweden is a country undergoing rapid economic growth. The country’s growth has been on a sharp trajectory in recent years. These factors align with the entry of Walmart into the Swedish space. The PESTEL analysis of the country will shed light on whether it would be a good idea for Walmart to enter the Swedish market based on the external factors present in the market.
Political
Sweden is a constitutional monarchy, which means that the central power is held by the head of state. Sweden is among the oldest constitutional monarchies alongside Britain. The head of state is a ceremonial figure who does not perform governance duties. The Prime Minister is in charge of governing the nation and performs the daily activities required of him. There are a large number of political parties in the region, indicating that Sweden values democracy at all levels of governance. Sweden is traditionally a pacifist and played the role in the past two wars. It has a history of being among the most pacifist countries in the world with non-alignment policies during peacetime and neutral foreign policies during war. Due to this, Sweden is politically stable, which is conducive to the performance of business within its borders. Political stability will be vital for Walmart’s profitability. The political policies in Sweden also favor startups and small businesses and are gradually putting an end to monopolies in a bid to democratize the economy.
Economic
Sweden is a rich country as it had a GDP of $530.83 billion as per 2019. 2020 was overall a difficult fiscal year for most countries due to the effects of the pandemic and the results were reflected on the GDP. However, the GDP is anticipated to reach $570 billion by the end of 2022. Sweden also has very low public debt relative to other countries with the same GDP. The implication of low public debt is that the government can afford to charge less in taxes. Some of the key industries and top employers in the country include manufacturing, agriculture, tourism, pharmaceuticals, telecommunications, and finance. Sweden has also produced some companies that have influenced consumer culture globally such as Ericsson, IKEA, Volvo, H&M, Skanska, and Spotify. Sweden further offers a very competitive market and is filled with skilled workforce for organizations that are hiring. The population is majorly educated and most of them have attained high levels of schooling. Regardless, unemployment, and youth unemployment in particular, poses significant challenges to the country. The presence of a well-developed market and a high GDP means there is a strong consumer culture in Sweden, which is vital for Walmart.
Social
The Swedish people have a high standard of living and enjoy good quality of healthcare. Most of the employers in the country provide healthcare insurance as part of the employment package. The standard of living in Sweden is high and the life expectancy of individuals in Sweden is ranked as among the highest in the world. The Swede drink coffee heavily and most employees take leave on July to observe their annual holiday. One major social and political issue in Sweden is the concern of migrants. The country has taken in large numbers of immigrants, which has placed a strain on the available social welfare resources. The outcome is outrage and hostility towards immigrants from the locals.
Technological
Sweden is a technologically advanced country due to the rapid upsurge in billion-dollar tech companies in cities like Stockholm, Lulea, Gothenburg, and Malmo. New technologies and biotechnology sectors account for a significant portion of the country’s GDP. The nation also reinvests up to 3% of its GDP into research and development, which further boosts the development of technology. The government is placing a heavy emphasis on artificial intelligence and currently is hiring individuals skilled in the IT sector. There is a labor shortage of IT specialists in Sweden.
Legal
Sweden is a democratic country that is guided by a written constitution. The constitution creates equality and promotes the status of all Swedes. The country is very welcoming of foreign investment from global MNEs because it boosts their economy. However, the country takes active measures to protect their citizens. This was demonstrated through the banning of Huawei due to security concerns. The judiciary in Sweden is independent and not swayed by political pressure.
Environmental
Sweden is moving more towards environmental sustainability through the use of sustainable resources. Sweden has a beautiful environment that makes it a good place to visit due to factors such as the northern lights, ice hotels, and distinctive seasons. In addition, the population has a high level of education regarding environmental care. These are factors that Walmart should like to be associated with when it opens up its doors in Sweden.
Conclusion
The analysis of Sweden’s external environment reveals that the market is viable for the entry of Walmart. The country has a strong GDP and a good purchase culture. Sweden has also invested and focused strongly on developing technologies and offers support to companies. Sweden has a beautiful environment and is focusing more on environmental sustainability. Therefore, all conditions are favorable enough to build a successful operational activity in the country.