Wal-Mart in China
October 31, 2011
The team is playing the role of management consultants in the case study of Wal-Mart stores in China. The team decided that a SWOT analysis was the best approach to the case in the beginning stages of the project. The SWOT analysis was designed as a tool that identifies the strengths, weaknesses, opportunities and threats of an organization. The method of SWOT analysis is to take the information from an environmental analysis and separate it into internal (strengths and weaknesses) and external issues (opportunities and threats). Once this is completed, SWOT analysis determines what may assist the firm in accomplishing its objectives, and what obstacles must be overcome or minimized to achieve desired results. Wal-Mart has been a leading retailer since Sam Walton first started the company in 1962. Sam Walton’s ability to use strategic thinking for Wal-Mart’s concept, “Every Day Low Prices”, launched the company to immeasurable heights. Although Wal-Mart is one of the world’s largest retailers, the company found it difficult and a long process to enter markets outside of the United States. SWOT Analysis
Situation being analysed: Wal-Mart in China
Strengths * Financial stability * Experience * Supplier relationships * Every day low prices, Roll Back, and Special Buy * 10 foot rule
| Weaknesses * Issues with transportation * US based operating strategy * Chinese government * Huge gaps in consumer needs * Inability to use Network system * Inability to use Supply Chain system * Other Foreign competitors * Workforce * Food needs
| Opportunities * Flexible supply chain management * Logistics strategy * Technology levels * Financial matters
| Threats * Lack of IT and roadway infrastructure in China * Income disparity in small-town locations * Disadvantages for adhering to government regulations * Local protectionism * Lagging global economy * High unemployment rates * Sluggish recovery in real estate sector * China’s economic structure shifting * Inflation risk * Pro-China protectionist barriers * Aging demographic * Rampant corruption * Widening income gap * Pollution
| The use of marketing tools like “Every Day Low Prices”, “Roll Back”, and “Special Buy” help bring customers in the doors. Sam Walton used to go into competitors stores and if he saw a product that was selling for less he would match the price or beat it (Farhoomand, 2006). Also, he used the three cardinal rules of providing great customer service, showing respect for the person, and trying for excellence (Farhoomand, 2006). One example, of Sam Walton’s influence, when he visited stores was to have every employee promise to that if they came within ten feet of an employee they would say hello and ask them if they needed help (Farhoomand, 2006). This model was transferred to all stores around the country and became a critical strength. Wal-mart realized to keep prices down they needed to have quality relationships with their suppliers. They weren’t suppliers they were partners; to date, they have over 68, 000 suppliers with whom they work and negotiate production (Farhoomand, 2006). The partnerships are another critical strength they carry. The distribution and logistics management is the best in the world. The have 3000 tractors and 12,000 and have full control over all the movement (Farhoomand, 2006). They work on a 24 hour time table, operate within a days distance from the stores they need to deliver too, and have a 99% on time delivery record (Farhoomand, 2006). Sam Walton has been against union since the beginning. If he thought there would be a union problem within a certain area he would refuse to build, even if the area had great promise. Instead, he created an open door policy for his employees, so they would feel free to come in and announce the issues they had and human resources would deal with it fairly (Farhoomand, 2006)....
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