Wal-Mart After Entry into the Chinese Market

Introduction

Wal-Mart retail was established more than four decades ago. The retail stores began expanding its operations in international markets way back in 1992. Today, Wal-Mart is one of the largest retail stores globally. The retail store is operating in more than 4,150 retail facilities in the world. Over the past few years, Wal-Mart realized that the Chinese market is characterized by massive growth as a result of the larger population, and an increased per capita income in China.

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China offers a unique market for Wal-Mart. As a result of the huge sales and purchases from the Chinese manufacturers, Wal-Mart has been making substantial presence both as a purchaser and seller in the Chinese market. Analysts observe that Wal-Mart’s expansion in the Chinese markets would boost the economy by creating more jobs. After venturing in the Chinese market, the retail stores offer consumers its global practice of lowering prices. The company has also been successful in localizing its offerings in the Chinese market with critical innovations. However, business analysts argue that the industry environment had not been favorable for the retail stores in the Chinese market.

Mission, Goals and Current Strategies

The company has a good mission statement, which is to offer cheap prices, in order to ensure that clients save their earnings. If employees and management work together they will ensure that costs are reduced to everyone. Thus, people will realize the importance of making savings. The retail store offers its products at very low prices. In addition, the company is guided by three basic beliefs, and values. These form the company’s guiding principles which include respecting diversity by encouraging workers to have freedom to express their views and ideas. In addition, managers are supposed to treat employees in a dignified manner. The next guiding principle is to provide quality goods and services. This is achieved through training opportunities given to clients. The other vital value is to strive for excellence.

Internal analysis

The company’s internal factor evaluation is utilized to assess the key strengths and weaknesses of the company.

Management

The company’s management designed practices and policies to ensure equality for all. The company solicits feedback from its employees on a yearly basis, taking into consideration their views and needs at the workplace. In addition, the company believes in employee development through training and leadership skills, equality in recruitments, and hiring of employees. Other areas include diversity and prevention of workplace discrimination. The company is investing heavily in training opportunities by giving employees an opportunity to access the current state-of-the-art resources for training, as well as development time to help in achieving its strategic objectives. The company’s management is also committed to its customers, and the communities in which they operate. In its recruitment strategies, the company hires local people, hence representing diversity in the regions they serve. However, the main weakness the company experiences in the management area is lack of a formal mission statement. In spite of this the company has core values which are a fundamental requirement of the company. On the other hand, a major weakness in the management is lack of gender equality in its top management. Thus, with the current demand in gender equality in business leadership, the company is performing poorly. In addition, the company lacks union involvement which is a setback to its operations because of the perception that employees are treated poorly. However, as result of the non-formal mission statement, the firm was weighed at.05.

Finance

The financial position of the company was weighed at.07. The company’s revenue has been increasing steadily. The growth in revenues has been vital considering the size and scope of the company. The increase in revenues has been vital to the company’s cash flow. In addition, the growth in revenues has been beneficial to the company’s net income, which has resulted into control of the expenses, while the company is making efforts to expand and grow in their business operations. The other important strength of the company is evident in its financial ratios. The company’s ratios are regarded as strengths which are ascertained through industry averages. The ration analysis indicates that the company has the potential to compete in the market place. On the other hand, the fluctuation of commodity prices has been seen as strength of the company. This has enabled the dividends, as well as, investments in the company’s shares to perform well in the market. However, the company’s insufficient financial ratios were weighed at 0.3.

Marketing and service

Marketing strategy used by Wal-Mart is seen as a success to the company. This is because of the campaigns of low prices, provided by the company. The company’s CEO designed marketing strategy which prevents the management from hedging prices. In addition, the company has an important marketing strategy where they emphasize on the one-stop shopping experience for its customers. On the other hand, the company provides a conglomeration of products in its retail stores, which has made it attract its customers.

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Production and operations

This is one of the most important areas which have made the company achieve success through its distribution networks. The company applies an approach of cross-docking, which refers to the delivery of products to warehouses where sorting and distribution to stores is conducted within a single day. This is beneficial to the retail stores since it takes advantage of economies of scale. In addition, the company is given the opportunity to enhance the speed of deliveries to the stores. However, a major area of interest is the slow speed experienced at the check outlines. Since many clients continue attending the stores, the majority of checkouts have been stagnant which can make customers choose other retail stores.

Human resource management

Wal-Mart has the best strategy in managing people. Thus, effective human resource management is beneficial to the company in creating a high perspective team work, as well as fair treatment and respect of employees which achieved through motivating employees, which makes them feel that they are part of the company. Employees are motivated in different perspectives in order to provide proof that the company is not only concerned with making profits but also taking care of the employees needs, particularly in times of crisis. The other important aspect is employee promotion which has enabled the company to make strides in managing its human resources. The other important aspect is the external recruitment for new associates, as well as high profile employees.

Research and development

This is an area which the company has performed very poorly in, for instance, of the company had to make expansion it would do without doing any external research. This is a weakness to the company since they do not conduct any prior research before deciding to open up a new store.

Computer information systems

The company utilizes one of the most sophisticated satellite based information systems. On the other hand, these systems provide a complete and very secure and reliable website to the clients in order to be able to access the same products online. In this area, the company has not experienced any weakness.

External analysis

An external factor evaluation matrix provides an evaluation of the industry wide-based opportunities, as well as threats. The weights are based on how well the retail stores respond to the threats and opportunities.

Competition and industry

There is an opportunity which the company faces, which is attributed to the weakening of the currency. This will assist the industry to minimize the ability of rival firms to provide discounts to consumers. However, the threat experienced in this area consists in the fact that the industry is not following the market trends, particularly, in terms of consumer taste. However, in order to overcome this threat, the retail stores do not provide the consumer needs, while the traditional markets are being edged out as the middle class clients increase as the youth migrate to the urban centres.

Economic

The company has an opportunity particularly in the free trade zone; hence, making the retail stores able to offer products from foreign countries in their stores. The main advantage of this initiative is that it enables the company to expand markets to its retailers. Consequently, the company faces threats in the economy. However, it is not possible to mitigate this threat, since it affects all businesses by reducing the profit margins as cutting process is a strategy to attract more clients.

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Demographics, social, and cultural factors

The opportunity that the company faces is ease of shopping which is required by the clients. The industry provides a guarantee that clients will be able to obtain the goods they require, which is supported by the efficient level of service provided to the clients at their convenience time. The main threat in this area is client theft cases. The other threat in this area is customer and employee theft, which was rated 20.

Technological

The company takes an advantage of the online shopping; hence making clients to receive efficient order fulfillments, as well as convenient delivery of products, coupled with professional service. However, the threat which the industry faces is that through the use of technology, the products may be rendered outdated, and this was rated 10. This will result into the provision of fewer products to the retailers, and eventually, the clients. Online shopping was weighted 1.5.

Recommendations

The company should continue to expand its supply chain in order to minimize different issues and challenges which affect its operations. Therefore, the management should device ways which could contribute to a faster delivery of supplies in order to minimize the shortages of communities in the retail stores. This will ensure that customers are provided with the best services.

Conclusions

The weights indicate the strengths and weaknesses of the company. Their determination is achieved through understanding the importance of quality of the company. Based on the ratings, it is easy to understand how the company has positioned itself against its rival firms.

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