Case Study Description of Wal-Mart's Sustainability Strategy (A)
In October 2005, in an auditorium filled to capacity in Bentonville, Arkansas, Lee Scott, Wal-Mart's president and CEO, made the first speech in the history of Wal-Mart to be broadcast to the company's 1.6 million associates (employees) in all of its 6,000+ stores worldwide and shared with its 60,000+ suppliers. Scott announced that Wal-Mart was launching a sweeping business sustainability strategy to dramatically reduce the company's impact on the global environment and thus become "the most competitive and innovative company in the world." He argued that, "Being a good steward of the environment and being profitable are not mutually exclusive. They are one and the same." He also committed Wal-Mart to three aspirational goals: "To be supplied 100 percent by renewable energy; to create zero waste; and to sell products that sustain our resources and the environment." Against this backdrop, the case introduces Andrew Ruben, vice president of corporate strategy and business sustainability, and Tyler Elm, senior director of the same group. Ruben and Elm, who were chosen by Scott to lead the sustainability strategy, recognized that they needed to keep environmental improvement tightly coupled with business value and profitability for the strategy to succeed. The case describes Wal-Mart's efforts to accomplish this, focusing on three of the company's primary focus areas (seafood, electronics, and textiles) and their effect on the company's operations, supplier relationships, and results. It also explores how Wal-Mart is measuring and communicating its ideas about sustainability to its suppliers, associates, customers, and the public.
Swot Analysis of "Wal-Mart's Sustainability Strategy (A)" written by Erica Plambeck, Lyn Denend includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Wal Mart facing as an external strategic factors. Some of the topics covered in Wal-Mart's Sustainability Strategy (A) case study are - Strategic Management Strategies, Entrepreneurship, Supply chain, Sustainability and Organizational Development.
Some of the macro environment factors that can be used to understand the Wal-Mart's Sustainability Strategy (A) casestudy better are - – wage bills are increasing, competitive advantages are harder to sustain because of technology dispersion, digital marketing is dominated by two big players Facebook and Google, customer relationship management is fast transforming because of increasing concerns over data privacy, there is backlash against globalization, geopolitical disruptions, increasing inequality as vast percentage of new income is going to the top 1%,
cloud computing is disrupting traditional business models, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of Wal-Mart's Sustainability Strategy (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Wal-Mart's Sustainability Strategy (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Wal Mart, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Wal Mart operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Wal-Mart's Sustainability Strategy (A) can be done for the following purposes –
1. Strategic planning using facts provided in Wal-Mart's Sustainability Strategy (A) case study
2. Improving business portfolio management of Wal Mart
3. Assessing feasibility of the new initiative in Organizational Development field.
4. Making a Organizational Development topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Wal Mart
Strengths Wal-Mart's Sustainability Strategy (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Wal Mart in Wal-Mart's Sustainability Strategy (A) Harvard Business Review case study are -
Strong track record of project management
– Wal Mart is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Organizational Resilience of Wal Mart
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Wal Mart does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Sustainable margins compare to other players in Organizational Development industry
– Wal-Mart's Sustainability Strategy (A) firm has clearly differentiated products in the market place. This has enabled Wal Mart to fetch slight price premium compare to the competitors in the Organizational Development industry. The sustainable margins have also helped Wal Mart to invest into research and development (R&D) and innovation.
Superior customer experience
– The customer experience strategy of Wal Mart in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Innovation driven organization
– Wal Mart is one of the most innovative firm in sector. Manager in Wal-Mart's Sustainability Strategy (A) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High switching costs
– The high switching costs that Wal Mart has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Digital Transformation in Organizational Development segment
- digital transformation varies from industry to industry. For Wal Mart digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Wal Mart has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Ability to lead change in Organizational Development field
– Wal Mart is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Wal Mart in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Training and development
– Wal Mart has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Wal-Mart's Sustainability Strategy (A) Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
High brand equity
– Wal Mart has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Wal Mart to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Low bargaining power of suppliers
– Suppliers of Wal Mart in the sector have low bargaining power. Wal-Mart's Sustainability Strategy (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Wal Mart to manage not only supply disruptions but also source products at highly competitive prices.
Highly skilled collaborators
– Wal Mart has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Wal-Mart's Sustainability Strategy (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Wal-Mart's Sustainability Strategy (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Wal-Mart's Sustainability Strategy (A) are -
No frontier risks strategy
– After analyzing the HBR case study Wal-Mart's Sustainability Strategy (A), it seems that company is thinking about the frontier risks that can impact Organizational Development strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
High bargaining power of channel partners
– Because of the regulatory requirements, Erica Plambeck, Lyn Denend suggests that, Wal Mart is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Low market penetration in new markets
– Outside its home market of Wal Mart, firm in the HBR case study Wal-Mart's Sustainability Strategy (A) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Wal-Mart's Sustainability Strategy (A), in the dynamic environment Wal Mart has struggled to respond to the nimble upstart competition. Wal Mart has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Wal-Mart's Sustainability Strategy (A), it seems that the employees of Wal Mart don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Wal-Mart's Sustainability Strategy (A) HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Wal Mart has relatively successful track record of launching new products.
Slow to strategic competitive environment developments
– As Wal-Mart's Sustainability Strategy (A) HBR case study mentions - Wal Mart takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Aligning sales with marketing
– It come across in the case study Wal-Mart's Sustainability Strategy (A) that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Wal-Mart's Sustainability Strategy (A) can leverage the sales team experience to cultivate customer relationships as Wal Mart is planning to shift buying processes online.
Products dominated business model
– Even though Wal Mart has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Wal-Mart's Sustainability Strategy (A) should strive to include more intangible value offerings along with its core products and services.
Increasing silos among functional specialists
– The organizational structure of Wal Mart is dominated by functional specialists. It is not different from other players in the Organizational Development segment. Wal Mart needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Wal Mart to focus more on services rather than just following the product oriented approach.
Capital Spending Reduction
– Even during the low interest decade, Wal Mart has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Opportunities Wal-Mart's Sustainability Strategy (A) | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Wal-Mart's Sustainability Strategy (A) are -
Buying journey improvements
– Wal Mart can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Wal-Mart's Sustainability Strategy (A) suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Organizational Development industry, but it has also influenced the consumer preferences. Wal Mart can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Loyalty marketing
– Wal Mart has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Wal Mart in the consumer business. Now Wal Mart can target international markets with far fewer capital restrictions requirements than the existing system.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Organizational Development industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Wal Mart can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Wal Mart can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Developing new processes and practices
– Wal Mart can develop new processes and procedures in Organizational Development industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Using analytics as competitive advantage
– Wal Mart has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Wal-Mart's Sustainability Strategy (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Wal Mart to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Better consumer reach
– The expansion of the 5G network will help Wal Mart to increase its market reach. Wal Mart will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Learning at scale
– Online learning technologies has now opened space for Wal Mart to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Wal Mart can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Wal-Mart's Sustainability Strategy (A), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Wal Mart can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Wal Mart in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Organizational Development segment, and it will provide faster access to the consumers.
Leveraging digital technologies
– Wal Mart can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Threats Wal-Mart's Sustainability Strategy (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Wal-Mart's Sustainability Strategy (A) are -
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Wal Mart will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Wal-Mart's Sustainability Strategy (A), Wal Mart may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Organizational Development .
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Wal Mart.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Wal Mart in the Organizational Development industry. The Organizational Development industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Wal Mart with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Wal Mart business can come under increasing regulations regarding data privacy, data security, etc.
Stagnating economy with rate increase
– Wal Mart can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Wal Mart needs to understand the core reasons impacting the Organizational Development industry. This will help it in building a better workplace.
Easy access to finance
– Easy access to finance in Organizational Development field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Wal Mart can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on Wal Mart demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Wal Mart can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Wal-Mart's Sustainability Strategy (A) .
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Wal Mart in the Organizational Development sector and impact the bottomline of the organization.
Weighted SWOT Analysis of Wal-Mart's Sustainability Strategy (A) Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Wal-Mart's Sustainability Strategy (A) needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Wal-Mart's Sustainability Strategy (A) is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Wal-Mart's Sustainability Strategy (A) is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Wal-Mart's Sustainability Strategy (A) is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Wal Mart needs to make to build a sustainable competitive advantage.