Case Study Description of Wal-Mart: Nonmarket Pressure and Reputation Risk (A)
In 2002, when Wal-Mart became the largest U.S. company in sales, it began to attract considerable attention. Its expansion into the grocery business seemed to ignite a firestorm of contention and bad press. Wal-Mart was criticized for providing low wages and inadequate health care benefits, driving small merchants out of business, damaging the culture in small towns, harming the environment, and violating workers rights. The company realized that its practice of focusing solely on customers and employees was no longer sufficient--it needed a nonmarket strategy to address the criticism and repair its deteriorating reputation. This case explores the opposition that organized around Wal-Mart's practices and the issues raised. It sets the stage for developing and analyzing a successful nonmarket strategy for Wal-Mart.
Swot Analysis of "Wal-Mart: Nonmarket Pressure and Reputation Risk (A)" written by David P. Baron includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Wal Nonmarket facing as an external strategic factors. Some of the topics covered in Wal-Mart: Nonmarket Pressure and Reputation Risk (A) case study are - Strategic Management Strategies, Labor, Public relations, Strategy, Sustainability and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Wal-Mart: Nonmarket Pressure and Reputation Risk (A) casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, wage bills are increasing, customer relationship management is fast transforming because of increasing concerns over data privacy, central banks are concerned over increasing inflation, increasing commodity prices, increasing inequality as vast percentage of new income is going to the top 1%, supply chains are disrupted by pandemic ,
geopolitical disruptions, technology disruption, etc
Introduction to SWOT Analysis of Wal-Mart: Nonmarket Pressure and Reputation Risk (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Wal-Mart: Nonmarket Pressure and Reputation Risk (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Wal Nonmarket, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Wal Nonmarket 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: Nonmarket Pressure and Reputation Risk (A) can be done for the following purposes –
1. Strategic planning using facts provided in Wal-Mart: Nonmarket Pressure and Reputation Risk (A) case study
2. Improving business portfolio management of Wal Nonmarket
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 Wal Nonmarket
Strengths Wal-Mart: Nonmarket Pressure and Reputation Risk (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Wal Nonmarket in Wal-Mart: Nonmarket Pressure and Reputation Risk (A) Harvard Business Review case study are -
Ability to lead change in Strategy & Execution field
– Wal Nonmarket 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 Nonmarket 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
– Wal-Mart: Nonmarket Pressure and Reputation Risk (A) firm has clearly differentiated products in the market place. This has enabled Wal Nonmarket to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Wal Nonmarket to invest into research and development (R&D) and innovation.
Organizational Resilience of Wal Nonmarket
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Wal Nonmarket does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Superior customer experience
– The customer experience strategy of Wal Nonmarket in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Effective Research and Development (R&D)
– Wal Nonmarket 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 Wal-Mart: Nonmarket Pressure and Reputation Risk (A) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Strong track record of project management
– Wal Nonmarket is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Cross disciplinary teams
– Horizontal connected teams at the Wal Nonmarket 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.
Innovation driven organization
– Wal Nonmarket is one of the most innovative firm in sector. Manager in Wal-Mart: Nonmarket Pressure and Reputation Risk (A) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Analytics focus
– Wal Nonmarket 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 David P. Baron 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.
High brand equity
– Wal Nonmarket has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Wal Nonmarket to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Wal Nonmarket has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Wal Nonmarket has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Wal Nonmarket digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Wal Nonmarket 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.
Weaknesses Wal-Mart: Nonmarket Pressure and Reputation Risk (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Wal-Mart: Nonmarket Pressure and Reputation Risk (A) are -
Workers concerns about automation
– As automation is fast increasing in the segment, Wal Nonmarket needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Interest costs
– Compare to the competition, Wal Nonmarket 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.
Lack of clear differentiation of Wal Nonmarket products
– To increase the profitability and margins on the products, Wal Nonmarket needs to provide more differentiated products than what it is currently offering in the marketplace.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Wal Nonmarket supply chain. Even after few cautionary changes mentioned in the HBR case study - Wal-Mart: Nonmarket Pressure and Reputation Risk (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Wal Nonmarket vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– It come across in the case study Wal-Mart: Nonmarket Pressure and Reputation Risk (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: Nonmarket Pressure and Reputation Risk (A) can leverage the sales team experience to cultivate customer relationships as Wal Nonmarket is planning to shift buying processes online.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Wal-Mart: Nonmarket Pressure and Reputation Risk (A), it seems that the employees of Wal Nonmarket 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.
Capital Spending Reduction
– Even during the low interest decade, Wal Nonmarket 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.
High cash cycle compare to competitors
Wal Nonmarket has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Need for greater diversity
– Wal Nonmarket 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Wal-Mart: Nonmarket Pressure and Reputation Risk (A), in the dynamic environment Wal Nonmarket has struggled to respond to the nimble upstart competition. Wal Nonmarket has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Skills based hiring
– The stress on hiring functional specialists at Wal Nonmarket has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Opportunities Wal-Mart: Nonmarket Pressure and Reputation Risk (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: Nonmarket Pressure and Reputation Risk (A) 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 Wal Nonmarket in the consumer business. Now Wal Nonmarket can target international markets with far fewer capital restrictions requirements than the existing system.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Wal Nonmarket to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Wal Nonmarket to hire the very best people irrespective of their geographical location.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Wal Nonmarket 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: Nonmarket Pressure and Reputation Risk (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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Wal Nonmarket 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 Nonmarket 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Wal Nonmarket in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Low interest rates
– Even though inflation is raising its head in most developed economies, Wal Nonmarket 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, Wal Nonmarket is facing challenges because of the dominance of functional experts in the organization. Wal-Mart: Nonmarket Pressure and Reputation Risk (A) 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.
Better consumer reach
– The expansion of the 5G network will help Wal Nonmarket to increase its market reach. Wal Nonmarket 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.
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. Wal Nonmarket can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Wal Nonmarket can use these opportunities to build new business models that can help the communities that Wal Nonmarket operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Manufacturing automation
– Wal Nonmarket can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Buying journey improvements
– Wal Nonmarket can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Wal-Mart: Nonmarket Pressure and Reputation Risk (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 Strategy & Execution industry, but it has also influenced the consumer preferences. Wal Nonmarket can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats Wal-Mart: Nonmarket Pressure and Reputation Risk (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: Nonmarket Pressure and Reputation Risk (A) are -
Environmental challenges
– Wal Nonmarket 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. Wal Nonmarket can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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. Wal Nonmarket can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Wal Nonmarket is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Wal Nonmarket 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: Nonmarket Pressure and Reputation Risk (A) .
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 Nonmarket needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Increasing wage structure of Wal Nonmarket
– 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 Wal Nonmarket.
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.
Regulatory challenges
– Wal Nonmarket needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.
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 Nonmarket business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Wal Nonmarket 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.
Stagnating economy with rate increase
– Wal Nonmarket 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Wal Nonmarket with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Nonmarket in the Strategy & Execution sector and impact the bottomline of the organization.
Weighted SWOT Analysis of Wal-Mart: Nonmarket Pressure and Reputation Risk (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: Nonmarket Pressure and Reputation Risk (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: Nonmarket Pressure and Reputation Risk (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: Nonmarket Pressure and Reputation Risk (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: Nonmarket Pressure and Reputation Risk (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 Nonmarket needs to make to build a sustainable competitive advantage.
