Essay on "External Market Analysis"

Essay 5 pages (1243 words) Sources: 5

[EXCERPT] . . . .

Wal-Mart: External Market Analysis

The objective of this study is to conduct an external market analysis for Wal-Mart and to analyze the HRM data trends and issues to identify appropriate strengths, weaknesses, opportunities, and threats from a global perspective. This information will be utilized as the basis for the strategic workforce improvement plan.

Wal-Mart is the largest retailer in the world as well as being the second-largest company in the world following Exxonmobile as well as the largest nongovernmental employer in the United States. Wal-Mart Stores, Inc. operates retail stores in all 50 U.S. states. Wal-Mart is reported to have labor relations issues and external threats due to competition. Low sales in the clothing lines due to reductions in personal consumption spending are reported in the apparel industry at a rate from somewhere between 5% and 15%. The hurt that was put on such as Ann Taylor and Talbots and that leaked over to Wal-Mart loss of sales as well.

The economy has been weak with a consumer survey reporting Nearly 130 million customers shop its 3,200 U.S. stores each week with only a little more than 45% shopping throughout the store and regular shoppers reporting sticking to low-margin basics, by passing a higher margin sections such as apparel" (Berner, p.67 cited in: Akkad, Chelune, and Coppolla, 2011, p.19) The competition derived from the global marketplace which is characterized by consumer quality increases and service receipts and competitions in the price game keep prices competitive with retailers searching for ways to increase profitability and experience growth in dismal times.

II. Strengths<br />

The strengths of Wal-Mart include the great market share that they hold and the offering of a great deal of business to both wholesalers and manufacturers. This provides Wal-Mart with a great deal of power because the threat of Wal-Mart switching to a different supplier would result in a panic to the suppliers of Wal-Mart. Wal-Mart deals with major suppliers such as Coca-Cola, and Proctor & Gamble providing Wal-Mart with more bargaining power than the smaller retailers. The entry barriers are high in this retailing sector and Wal-Mart's distribution center is outstanding as are its locations, and brand name as well as Wal-Mart possessing the financial capital needed to fight competitors.

III. Weaknesses

Wal-Mart's clothing line has suffered greatly in sales due to the downturn of the economy.

IV. Opportunities

Included in the opportunities of Wal-Mart is the ability to create a new more affordable line of apparel that would fit the budgets of families in today's economy better. With the purchasing power of Wal-Mart and its global presence, the company should seek alternative clothing producers for its apparel line. Wal-Mart should additionally concentrate on increasing its online sales.

V. Threats

External factors for Wal-Mart includes both opportunities and threats including the opportunities of the rise in healthcare spending in the U.S. And the increase in online sales in addition to an increasing network of stores. Threats are due to intense competition and the effects of the subprime banking crisis.

V. Online Sales

It is reported that Wal-Mart Stores, Inc. reported that it had a growth in its online sales "more than 39% in the first quarter of the year [2013] and that it planned to expand around the world." (Davis, 2013, p.1) E-commerce will be a growing area of importance for Wal-Mart Stores, Inc. according to Chief Financial Officer, Charles Holly who stated specifically as follows:

"During the quarter, e-commerce sales increased by over 30%, and we continue to make strategic investments in the markets that offer us the greatest growth opportunity. We're focusing this investment in key areas, including our global technology platform and next-generation fulfillment networks, as well as scaling additional markets around the world." (Davis, 2013,… READ MORE

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