BUS 440 Final

Walmart Inc. Strategic Analysis Name Professor Course Date Table of Contents TOC \o "1-3" \h \z \u 1. Introduction PAGEREF _Toc171994923 \h 32. Background PAGEREF _Toc171994924 \h 32.1 Historical Background PAGEREF _Toc171994925 \h 32.2 Recent Challenges and Opportunities PAGEREF _Toc171994926 \h 42.3 Walmart’s Current Situation PAGEREF _Toc171994927 \h 43. Five Forces Model PAGEREF _Toc171994928 \h 53.1 Bargaining Power of Buyers – Strong PAGEREF _Toc171994929 \h 53.2 Bargaining Power of Suppliers – Weak PAGEREF _Toc171994930 \h 53.3 Threats of Substitute Products – Strong PAGEREF _Toc171994931 \h 53.4 Threats of New Entrants – Weak PAGEREF _Toc171994932 \h 63.5 Industrial Rivalry – Strong PAGEREF _Toc171994933 \h 73.6 Advice to Walmart PAGEREF _Toc171994934 \h 73.7 Limitations of Five Forces Model PAGEREF _Toc171994935 \h 84. Business Strategy PAGEREF _Toc171994936 \h 94.1 Walmart’s Current Strategy PAGEREF _Toc171994937 \h 94.2 Actions to Align with Industry Trends PAGEREF _Toc171994938 \h 105. Corporate Strategy PAGEREF _Toc171994939 \h 115.1 Walmart’s Current and Recent Historical Strategy PAGEREF _Toc171994940 \h 115.2 Moves to Future Corporate Strategy PAGEREF _Toc171994941 \h 126. Next Steps, Additional Risks, and Opportunities PAGEREF _Toc171994942 \h 137. Conclusion PAGEREF _Toc171994943 \h 14References PAGEREF _Toc171994944 \h 15 1. Introduction “Blockbuster laughed at us. Now, there's no one left” (Levin, 2019). Marc Randolph gave this iconic statement about Netflix after gaining unprecedented success. Netflix is the best example to understand the significance of business strategies in the modern epoch. Strategic significance is beyond the entertainment industry. Instead, fortune companies like ‘Walmart Inc. (Walmart)’ need similar tactics to sustain their market position and continue their growth cycle in the long run. According to Kestenbaum (2022), ‘Big Box Retailers (BBRs)’ like Walmart experienced a paradigm shift in industrial trends since the COVID-19 outbreak. BBRs combat complexities in managing and adding channels to maintain business model relevance among the customer base. Technology integration is a subsequent challenge compelling businesses like Walmart to perform infrastructure investments and sustain competitive advantages in the long run (Kestenbaum, 2022). This essay will evaluate macro environment insights, followed by business and corporate strategies for Walmart in the global retail sector. 2. Background 2.1 Historical Background Walmart is a signature brand in the global retail industry. The company initiated operations in 1962 as Sam Walton, the founder of Walmart, envisioned to offer affordable marketplace to households for groceries, apparel, and routine essentials. Today, Walmart owns 10,000+ discount stores, supercentres, warehouses, membership clubs, and neighbourhood shops worldwide (Ozbun, 2024). The BBR industry historically strategized operations to generate profitability by integrating cost-minimization approach in the business model. The industry focused on attracting footfall through discounts and low prices on household commodities. However, the strategic focused evolved into sustainability, waste control, recycling, and other social benchmarks while focusing on maximization of shareholder’s value through commercial activities (Sheehan, 2022). 2.2 Recent Challenges and Opportunities According to Kestenbaum (2022), channel addition has been a primary challenge for BBRs since the pandemic. Customers prefer digital platforms to purchase routine commodities, requiring companies to invest in technological integration. Technology advancements become a simultaneous constraint for BBRs to retain customers and achieve sustainable profitability through operations. Nonetheless, the COVID-19 outbreak introduced social and environmental sensitivities among customers while making responsible purchases. According to Sheehan (2022), BBRs with a robust Corporate Social Responsibility (CSR) portfolio attract more customers for repeated sales opportunities. Customers emphasize recyclability and waste management efforts on companies to demonstrate citizenship towards social and ecological paradigms in the long run. 2.3 Walmart’s Current Situation Walmart’s current strategy emphasizes business model innovations to retain a cost advantage over competitors. According to Kumar (2006), retailers combat low-cost rivals to maintain industrial relevance and retain market share in the long run. Walmart follows a similar strategy through its business model framework to sustain industrial excellence. As evidence, Walmart diversified retail channels through a hybrid framework to capture multi-generational customers. Walmart also invested in a supply chain network to create operational synergies and control rising material costs for price competitiveness. Walmart’s current strategy forecasts a 4% increase in operating income until FY2027, making the company a global leader through market share and financial viability in the BBR industry (Walmart, 2023). 3. Five Forces Model 3.1 Bargaining Power of Buyers – Strong This force emphasizes customer’s sensitivity towards value proposition, price, and servicescape convenience (Porter, 2008). The COVID-19 outbreak shifted paradigms for companies by introducing an e-commerce culture. Customers could access digital stores through household gadgets and make convenient purchases through online channels. The process allows customers to evaluate price options, delivery lead time, and other propositions to value purchase decisions. As a result, customers offer minimal brand loyalty to companies and switch brands to secure better deals for household commodities (Sabanoglu, 2024). Hence, this force is critical for Walmart to retain its market share and maintain brand relevance while offering differentiating factors to mass customers in the long run. 3.2 Bargaining Power of Suppliers – Weak This force emphasizes supplier’s negotiation to secure maximum value from industry players against raw materials, delivering finished goods, and other supply chain activities (Porter, 2008). The BBR industry competes on cost minimization and price differentiation. Large-scale enterprises (LSEs) like Walmart and Costco offer competitive prices to customers, attracting more footfalls in physical stores or web traffic on digital channels for sale maximization. As a result, suppliers could secure less value through high prices or delayed lead time in delivery processes. Suppliers must offer competitive prices to industry players to continue business relationships and receive repeated orders for raw materials in the long run (Goldstein, 2023). 3.3 Threats of Substitute Products – Strong This force emphasizes the functionality of an industry offered by other sectors or commodities to attract customers (Porter, 2008). According to Tabaeeian et al. (2023), small-scale retailers are substituting BBRs with micro accessibility and technological integration. Small-scale players offer physical and digital convenience to customers with neighborhood reaches, capitalizing on market share through indirect competition. As a result, BBRs like Walmart struggle to retain competitive tendencies and offer differentiating value to customers for sustainable profitability. However, the research found that small-scale retailers include direct manufacturers of household commodities, willing to deliver goods in minimal lead time and more price efficacy, causing a disruption in the supply chain network (Tabaeeian et al., 2023). 3.4 Threats of New Entrants – Weak This force indicates the capacity of new propositions and value novice players could offer. The force determines the barriers to entry an industry has due to minimal competition or increasing market size (Porter, 2008). According to Cho et al. (2022), the BBR industry has unprecedented barriers to entry for new players. The industry is saturated due to existing competition and high operational costs. The return on investments (ROI) requires lead time while revenue expenditures continue to rise due to competitive tendencies and complexities in purchasing behaviors. As a result, survival for new entrants requires high investments to initiate a start-up venture in the BBR industry (Cho et al., 2022). Nonetheless, Walmart requires focusing on existing competition instead of new players since the barriers of entry prevent entrants from penetrating the BBR sector. Walmart has minimal threat from this force since the industrial paradigm disallows new players and restricts competition among existing participants in the long run. The BBR sector anticipates a rise in market size due to social, technological, and ecological shifts. However, the success probability for new entrants remains low since operational costs reduce ROI while increasing working capital complexities. 3.5 Industrial Rivalry – Strong Industrial rivalry is a common phenomenon in customer-driven marketplaces. Companies like Coca-Cola Corporation (Coke) and Pepsi Cola International (PepsiCo) underwent an infamous ‘Cola War’ to exhibit industrial rivalry for decades (Paul, 2022). According to Sabanoglu (2024a), the BBR industry undergoes cutthroat competition by revenue. Statistically, Walmart is the industrial leader by surpassing the $572 billion revenue ...