Case Study Description of Walmart: Navigating a Changing Retail Landscape
As the largest company, by revenue, in the world, Walmart has been a lightning rod for criticism. However, in an attempt to stay ahead of traditional and digital retailers, and keep customers satisfied with evolving demands, the company is strengthening its competitive advantage by creating Shared Value. Current CEO, Doug McMillon outlines his strategy for fending off competition, navigating a challenging retail landscape, and positioning Walmart as a leading retailer for today and the future.
Authors :: Michael E. Porter, Jorge Ramirez-Vallejo
Swot Analysis of "Walmart: Navigating a Changing Retail Landscape" written by Michael E. Porter, Jorge Ramirez-Vallejo includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Walmart Navigating facing as an external strategic factors. Some of the topics covered in Walmart: Navigating a Changing Retail Landscape case study are - Strategic Management Strategies, Social responsibility, Sustainability and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Walmart: Navigating a Changing Retail Landscape casestudy better are - – increasing household debt because of falling income levels, digital marketing is dominated by two big players Facebook and Google, competitive advantages are harder to sustain because of technology dispersion, there is backlash against globalization, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing inequality as vast percentage of new income is going to the top 1%, talent flight as more people leaving formal jobs,
geopolitical disruptions, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of Walmart: Navigating a Changing Retail Landscape
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Walmart: Navigating a Changing Retail Landscape case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Walmart Navigating, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Walmart Navigating 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 Walmart: Navigating a Changing Retail Landscape can be done for the following purposes –
1. Strategic planning using facts provided in Walmart: Navigating a Changing Retail Landscape case study
2. Improving business portfolio management of Walmart Navigating
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Walmart Navigating
Strengths Walmart: Navigating a Changing Retail Landscape | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Walmart Navigating in Walmart: Navigating a Changing Retail Landscape Harvard Business Review case study are -
Highly skilled collaborators
– Walmart Navigating 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 Walmart: Navigating a Changing Retail Landscape HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Cross disciplinary teams
– Horizontal connected teams at the Walmart Navigating are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
High brand equity
– Walmart Navigating has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Walmart Navigating to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Organizational Resilience of Walmart Navigating
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Walmart Navigating does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High switching costs
– The high switching costs that Walmart Navigating 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.
Effective Research and Development (R&D)
– Walmart Navigating has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Walmart: Navigating a Changing Retail Landscape - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Superior customer experience
– The customer experience strategy of Walmart Navigating in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Innovation driven organization
– Walmart Navigating is one of the most innovative firm in sector. Manager in Walmart: Navigating a Changing Retail Landscape Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Training and development
– Walmart Navigating has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Walmart: Navigating a Changing Retail Landscape 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.
Ability to lead change in Strategy & Execution field
– Walmart Navigating 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 Walmart Navigating in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Strategy & Execution industry
– Walmart: Navigating a Changing Retail Landscape firm has clearly differentiated products in the market place. This has enabled Walmart Navigating to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Walmart Navigating to invest into research and development (R&D) and innovation.
Analytics focus
– Walmart Navigating is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Michael E. Porter, Jorge Ramirez-Vallejo can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Weaknesses Walmart: Navigating a Changing Retail Landscape | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Walmart: Navigating a Changing Retail Landscape are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Walmart: Navigating a Changing Retail Landscape, is just above the industry average. Walmart Navigating needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Need for greater diversity
– Walmart Navigating has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High operating costs
– Compare to the competitors, firm in the HBR case study Walmart: Navigating a Changing Retail Landscape has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Walmart Navigating 's lucrative customers.
Slow to strategic competitive environment developments
– As Walmart: Navigating a Changing Retail Landscape HBR case study mentions - Walmart Navigating 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 Walmart: Navigating a Changing Retail Landscape 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 Walmart: Navigating a Changing Retail Landscape can leverage the sales team experience to cultivate customer relationships as Walmart Navigating is planning to shift buying processes online.
Interest costs
– Compare to the competition, Walmart Navigating has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Low market penetration in new markets
– Outside its home market of Walmart Navigating, firm in the HBR case study Walmart: Navigating a Changing Retail Landscape needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High bargaining power of channel partners
– Because of the regulatory requirements, Michael E. Porter, Jorge Ramirez-Vallejo suggests that, Walmart Navigating 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.
Lack of clear differentiation of Walmart Navigating products
– To increase the profitability and margins on the products, Walmart Navigating needs to provide more differentiated products than what it is currently offering in the marketplace.
Increasing silos among functional specialists
– The organizational structure of Walmart Navigating is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Walmart Navigating needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Walmart Navigating to focus more on services rather than just following the product oriented approach.
Products dominated business model
– Even though Walmart Navigating 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 - Walmart: Navigating a Changing Retail Landscape should strive to include more intangible value offerings along with its core products and services.
Opportunities Walmart: Navigating a Changing Retail Landscape | 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 Walmart: Navigating a Changing Retail Landscape are -
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 Walmart Navigating in the consumer business. Now Walmart Navigating can target international markets with far fewer capital restrictions requirements than the existing system.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Walmart Navigating to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Walmart Navigating 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, Walmart: Navigating a Changing Retail Landscape, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Building a culture of innovation
– managers at Walmart Navigating can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
Leveraging digital technologies
– Walmart Navigating 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.
Using analytics as competitive advantage
– Walmart Navigating 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 Walmart: Navigating a Changing Retail Landscape - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Walmart Navigating to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Walmart Navigating can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Walmart Navigating can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Low interest rates
– Even though inflation is raising its head in most developed economies, Walmart Navigating can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Walmart Navigating is facing challenges because of the dominance of functional experts in the organization. Walmart: Navigating a Changing Retail Landscape case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Creating value in data economy
– The success of analytics program of Walmart Navigating has opened avenues for new revenue streams for the organization in the industry. This can help Walmart Navigating to build a more holistic ecosystem as suggested in the Walmart: Navigating a Changing Retail Landscape case study. Walmart Navigating can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Better consumer reach
– The expansion of the 5G network will help Walmart Navigating to increase its market reach. Walmart Navigating 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 Walmart Navigating 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.
Threats Walmart: Navigating a Changing Retail Landscape External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Walmart: Navigating a Changing Retail Landscape are -
High dependence on third party suppliers
– Walmart Navigating high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
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 Walmart Navigating business can come under increasing regulations regarding data privacy, data security, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Walmart: Navigating a Changing Retail Landscape, Walmart Navigating may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Walmart Navigating 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 Walmart: Navigating a Changing Retail Landscape .
Technology acceleration in Forth Industrial Revolution
– Walmart Navigating has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Walmart Navigating needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Walmart Navigating in the Strategy & Execution industry. The Strategy & Execution 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.
Increasing wage structure of Walmart Navigating
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Walmart Navigating.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Walmart Navigating can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Stagnating economy with rate increase
– Walmart Navigating 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.
Environmental challenges
– Walmart Navigating needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Walmart Navigating can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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 Walmart Navigating in the Strategy & Execution sector and impact the bottomline of the organization.
Weighted SWOT Analysis of Walmart: Navigating a Changing Retail Landscape 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 Walmart: Navigating a Changing Retail Landscape 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 Walmart: Navigating a Changing Retail Landscape 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 Walmart: Navigating a Changing Retail Landscape 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 Walmart: Navigating a Changing Retail Landscape 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 Walmart Navigating needs to make to build a sustainable competitive advantage.