The evaluation of the business environment is generally held from the point of view of several factors. Originally, all the most important factors are gathered in the analysis.
PEST analysis
Political
Political environment of the discount department stores network of Wal-Mart is the most favorable for such kind of business activity. Originally, the government and the legislative and political bases do not restrict the grocery retail. Taking into account that it is the largest private employer, the government does not aim to restrict its activity for avoiding the increased unemployment. (Cocheo, 2003).
Economic
The fact is that, the Wal-Mart Corporation is the company with one of the largest revenue and financial turnover. In 2006, Wal-Mart was 67th most profitable corporation (profits divided by total revenue), behind retailers Home Depot, Dell, and Target, and ahead of Costco and Kroger. (Cocheo, 2004) For the fiscal year ending January 31, 2006, Wal-Mart reported a net income of $12 billion on $340 billion of sales revenue. (Jablonsky,, 2005) For the fiscal year ending January 31, 2006, Wal-Mart’s international operations accounted for about 20.1% of total sales. As of Jan 8, 2009, net sales for the 48-week period ending Jan 2, 2009 was $370.5 billion, up 6.5% from the previous year’s results. (Mcconnell, 2008).
Social
It should be stated that it is the least favorable factor of the environment. In spite of the fact that it is the largest private employer, the activity of the trade unions is essentially restricted, and the rights of the employees are often violated.
Technological
Wal-mart is the corporation with the widest use of the RFID marks of the goods, thus, the amount of thefts is essentially decreased.
Recommendations
- Improve the working conditions (take into account the possibility of allergic reactions, lower contacts with chemicals and heavy metals, incorporate sanitary codes).
- Increase the safety level (implement and strictly follow the observation of safety rules).
- Create Wal-Mart’s own Trade Union (thus, it will be easier maintain dialogue with the oher trade unions and restrict their interference).
- Take into account national specifications of people’s ration (encourage employees observe healthy diet, and aim to retail the most popular products in different regions of the world).
- Arrange the food production cycles (farms, factories etc.) (it would promote further lowering of the prices).
- Increase salary of the employees.
- Encourage healthy way of life among employees.
- Restructure the marketing strategy taking into account ethnic particularities of the peoples (Cocheo, 2008).
Originally, the recommendations that may be given to such a huge company will touch upon the issues of HR management and customer care. There is no essential need t improve the managerial strategies, however, the company should pay its attention to managing its human resources.
Driving Forces
The fact is that, the driving force of any company is the dividends, received from the particular investments. The investing factors of the Wal-Mart are the following:
- Research of new markets (some regions of the world do not have properly adjusted grocery retail system, and the competition is rather low. Thus, Wal-mart may use this opportunity for increasing the sales levels).
- Employment of new workers (Originally, the retail companies have high turnover rates, thus, the employment of new workers will help overcome lack of working force. Moreover, additional force may be used for the expansion of the retail network).
- Buildings (expansion of the network requires additional spaces and territories).
- Finding suppliers (competition among suppliers causes the lowering of supply prices).
- Properly adjusted marketing strategy (marketing strategy is the key stone of any commercial activity, thus, proper adjustment and constant improvement of this strategy will promote further development of the network).
- Increase of competitive capacity (improvement of financial, HR and customer care strategies).
Another driving force is the perspective of the future growth. The fact that there is still room for growth and business expansion is the best encouragement ever. This notion may be explained by the fact that any company claims for steady and constant development. If there is distinct realization of further growth, any way possible will be used to increase the company and the income.
References
- Cocheo, S. (2003). Always Aggressive, Always Wal-Mart: What Makes Wal-Mart Keep Coming Back and Back to Financial Services? and Is “Wal-Mart Paranoia” Psychosomatic or Justifiable?. ABA Banking Journal, 95(5), 29.
- Cocheo, S. (2004). Wal-Mart Is Looking for In-Store Partners Again. ABA Banking Journal, 96(4), 10.
- Cocheo, S. (2008). You Can’t Beat Wal-Mart . or Can You? If Your Industry Winds Up in Wal-Mart’s Crosshairs, a Frontal Assault Won’t Generally Win Says a Former Insider. Here’s Why Alternative Approaches May Help When Taking on the Empire. ABA Banking Journal, 100(4), 7.
- “Hi! Welcome to the Wal-Mart Bank”. (2004). ABA Banking Journal, 91(8), 7.
- Jablonsky, S. F., & Barsky, N. P. (2005). The Manager’s Guide to Financial Statement Analysis (2nd ed.). New York: John Wiley & Sons.
- Mcconnell, A. S. (2008). Making Wal-Mart Pretty: Trademarks and Aesthetic Restrictions on Big-Box Retailers. DukeLawJournal, 53(5), 1537.