Introduction
Walmart is a large international retail company, a worldwide industry leader, operating in various countries; however, many internal and external problems pose a danger to this position. Environmental analyses should be made to reveal its strong and weak sides. Globalization, the process of increasing its international presence, is actual for Walmart, which is a global company. It poses many threats that the company should consider if it wants to develop instead of losing its invested money. Lastly, the company’s stakeholders should be evaluated to see which parties have which influence on Walmart, and its corporate responsibility should be described to show whether there are any flaws.
Environmental Analyses: SWOT and PESTLE
SWOT Analysis
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats, which shows the company’s internal and external weak and strong sides, and the results of its application to Walmart may be seen in Table 1. The company’s strengths are based on its large size, presence, and high revenues, allowing it to have significant influence and possibilities. Its revenues are more than $550 billion and continue to growth; its physical presence is large as well (Statista Research Department, 2022b). Leadership position in the market, especially in the field of megamarkets, where it has a market share of over 70% (Walmart Inc. – Company Profile, 2022). It keeps its prices lower than those of competitors by maintaining operating and keeping costs low (John, 2019). Customers are mostly satisfied with Walmart and its goods: the company has a generally high reputation worldwide (Smith, 2019). Thus, Walmart is a strong and large company with power and influence in the United States, it’s home country, and in other countries too.
Its weaknesses are lower innovation and international activity than competitors and violations of its workers’ rights. While the company actively uses the technologies, its technology usage is lower than those of competitors (BBC, 2020; Morgan, 2021). It has many employees safety concerns, such as a case when its worker died from COVID-19 and being infected in the workplace (Burke, 2020). The wages in the U.S. are low, starting only from $12/hour (Sainato, 2021). It is an overreliance on the United States market, as most of its income is from this region (Statista Research Department, 2022c). Lastly, it tried to bribe politicians in Mexico to make them issue policies good for Walmart, which is unethical and breaks its reputation (Debter, 2019). In that way, the company has a relatively low rate of innovations and unethical practices, which hinder its development.
Most opportunities and threats for Walmart are connected with globalization and technological progress. New technologies and emerging markets open many possibilities for growth and improvement, especially for the company such large as Walmart (Shen, 2020). It may improve its efficiency by using innovations and new technologies and conquering new markets, but it is highly susceptible to strong competition, governmental regulation, and possible calamities. Amazon, its closest competitor, experiences very quick growth, using innovations and new business models, and Walmart is clearly lagging behind it (Morgan, 2021; Statista Research Department, 2022a). Thus, both its threats and opportunities are connected with globalisation and should be studied in connection with it.
Table 1. A SWOT analysis of Walmart
PESTLE Analysis for the United Kingdom
PESTLE stands for Political, Economic, Social, Technological, Legal, and Environmental influences, which are to be evaluated using this framework; its structured results are shown in Table 2.
- Political factors, in the case of the UK, include its exit from the European Union, sanctions against certain countries, policies such as lockdowns during the COVID-19, and threats of terrorist attacks (CIPD, 2021). Walmart’s shops may be vulnerable to those factors when working in the UK.
- Economic factors are the amount of money available to customers and their desire to spend it in Walmart. A general decrease in the UK retail industry in 2021 should be considered, too (Office for National Statistics, 2021).
- Social factors, including consumer behavior and wage expectation in the UK should be researched carefully. Failure to do this may lead to the collapse of the whole of Walmart’s business, as customers will reject buying in its shops (Faithfull, 2020).
- Technological factors contribute to the active usage of technologies by customers and the necessity to provide efficient online sales, which is actual for UK customers (Morgan, 2021). More than 80% of households use online shopping regularly, and Walmart should make its business model more online-oriented if it wants to conquer the UK market successfully (Coppola, 2022).
- Legal factors include the minimum wage rate set by the British government, the necessity to keep its supply chain transparent, and the necessity to create a high-quality workplace, as described in the Taylor review (CIPD, 2021). High-quality workspaces should be provided, and workers are eligible to complain if their needs are not fulfilled (Health and Safety Executive, 2022). If Walmart does not provide the mentioned conditions while working in the UK, its business may be limited by the government.
- Environmental factors include the necessity to reduce waste, provide ecologically clean goods, and promote corporate responsibility and sustainability through ethical attitudes toward customers and employees (Neebe, 2020). Corporate social responsibility, such as ecological friendliness, diversity management, efficient supply chains, and supporting local communities, is actively promoted in the UK (Companies House, 2018). Walmart must align its shops to the UK government’s requirements and customer expectations.
Table 2. A PESTLE analysis of Walmart in the UK
Globalisation and Its Consequences
Yip’s Globalisation Framework
Globalisation is a process of increasing connections number between various countries and industries. It increases with the technological growth that eases transportation and information exchange, facilitating the cargo transfer, travelling, and business establishment (Hollensen, 2019; Riesenberger et al., 2019). Yip’s framework was developed by George Yip and shows four main drivers of globalization: competition, cost, government, and market. This framework may be applied to Walmart to explore what drives the company to grow its international presence, and the results are shown in Table 3. To summarize, Walmart should keep its price low while maintaining quality, utilize innovations quicker than competitors, especially Amazon, and enter countries with friendly, stable, democratic, and open governments. Such a strategy will utilize all four drivers with maximum efficiency.
Table 3. A Yip’s globalisation framework for Walmart
Advantages and Disadvantages
A major advantage of globalisation is the opportunity to earn more money by increasing its presence worldwide. Walmart has already obtained large profits from its international presence, operating in all U.S. states and more than 23 countries, including the U.K., China, and India. For example, it bought a large Indian retailer, Flipcart, and started to sell goods under its label (Mintel News, 2018). Globalization creates many opportunities, but they should be used carefully, as there are many dangers as well.
The disadvantage of globalization is, at first, the danger of losing a lot of money in case of an unsuccessful entry. When Walmart sold its Asda share in 2020, it lost its large source of revenue, and its profits dropped by $20 billion (Jordan, 2020; Statista Research Department, 2022c). In Germany, there was a big failure in the 2000s when Walmart failed to predict customer behavior (Faithfull, 2020). Simply replicating its system, Walmart may lose its invested money and experience no growth or revenues (Shen, 2020). In that way, globalization poses new strategic challenges, requiring extensive research of emerging markets.
Another disadvantage is significant competition, which is usually present in global markets. Global markets are much larger; thus, more players are trying to conquer them (Hollensen, 2019). Amazon, for example, by using its business model as an online retailer, experienced unprecedented growth from less than $150 billion in 2016 to $470 billion in 2021 (Statista Research Department, 2022a). While the revenue of Walmart is still higher, being $567 billion in 2021, the growth rate is much higher for Amazon (Statista Research Department, 2022b). Therefore, the competition is not on Walmart’s side in the long term and poses a danger for it.
Lastly, the third disadvantage is a higher risk of human- or nature-based calamities. Examples of the former are wars, revolutions, and terrorist attacks, which may be highly destructive to Walmart shops (Hollensen, 2019). An example of the latter is the COVID-19 pandemic, which led to lockdowns and restrictions of both local and international interconnections. Thus, globalization is a quick, large, and risky process: it can give the company extreme growth and money but also may push it away from the market.
Walmart Stakeholders
Types of Stakeholders
Stakeholders are people with a share of interest in the company and some power over it. Their influence and the desire to use it defines how important they are to the company (Nguyen & Mohamed, 2018). Eight categories of stakeholders, crucial for Walmart to some extent, may be specified; they are shown in Table 4.
- Customers are people who buy goods in Walmart; they are interested in good quality and low prices of the goods and have low influence on the large company.
- Employees of Walmart are interested in good working conditions and, similarly, cannot directly influence it.
- Management includes middle and senior managers, the company’s board of directors, chairman, and the president; their power depends on their status and position.
- Walmart’s suppliers are companies that sell their goods to it; they are usually much smaller and cannot influence it.
- Shareholders have the part of Walmart’s assets, and their power to influence management decisions depends on the size of their shares.
- Governments issue policies that the company should obey if it wants to open its malls and shops on the country’s territory.
- Local communities are small organisations that may communicate with Walmart’s management in some instances.
- Media channels have low interest in the company, but their power depends on their size and the corresponding ability to influence people’s minds.
Table 4. A Walmart’s stakeholder list
Power/Interest Matrix
As mentioned, stakeholders may be classified by the amount of power they have over the company and their interest in it; based on those two metrics, four categories emerge, as shown in Table 5.
- People with high interest and power are key players for Walmart: large shareholders and high-level management.
- Stakeholders with high power and low interest have no direct interest in Walmart but may be able to influence its activity and, thus, should be kept satisfied. Those are massive influencers, such as large media and policymakers, such as governments.
- Those with low power, but high interest, should be kept informed about the company’s decisions and strategy; examples are Walmart’s low-level employees, such as cashiers and its customers.
- Stakeholders with low power and interest are the least important ones, and Walmart may make the least effort to work with them: those are various NGOs and communities and Walmart’s suppliers.
Table 5. Power/interest matrix for Walmart’s stakeholders
Walmart’s Corporate Responsibility
Corporate responsibility is the term used to describe the company’s action to serve its customers better and improve the world. Principles of sustainability are expressed in Walmart’s mission “to save people’s money so they can live better” (Neebe, 2020, p. 67). Still, the company sometimes breaks this culture, lowering wages, worsening working conditions in developing countries, and trying to bribe politicians (Debter, 2019; Sainato, 2021). The COVID-19 pandemic brought additional challenges to Walmart, as it should keep its workers safe and healthy; unfortunately, there were cases when it failed this task. In 2020, Walmart was sued by the brother of a Walmart worker who died from COVID-19, being infected while at work (Burke, 2020). Thus, the company has problems with unethical behavior, which may be classified as an abuse of power. To make the situation better, Walmart can use its large resources to improve the workers’ physical and mental health and adhere to high working standards in all countries, including developing ones.
Conclusion
To summarize, Walmart still has opportunities to retain its leadership position in the world as the largest retailer and one of the largest companies. However, globalisation, technology development, and innovative, successful competitors, such as Amazon, create many challenges for the company. Walmart is vulnerable to governmental regulations, which the company must obey, and social behavior, which should be considered. Calamities, such as wars and pandemics, are especially dangerous for it as well. In addition, the company’s internal flaws are ethical issues and overuse of its influence: it tried to bribe politicians and often violated its workers’ rights. Those issues prevent Walmart from modernizing and further developing and, in the future, may become a danger to its market leadership.
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