Walmart business operations and impact

WMT II

There are a number of major threats to Wal-Mart's ability to serve its stakeholders and make its mission a reality. One such threat is increased competition. As Wal-Mart is the world's largest retailer, they are the subject of intense pressure from competitors. These include companies that operate with variations of the Wal-Mart or Sam's Club business model (i.e. Target or Costco) and those that focus on differentiating themselves from Wal-Mart. This competition has already forced adjustments to Wal-Mart's business-level tactics (Gregory, 2009).

Another threat that Wal-Mart faces is an appreciation of the Chinese yuan. Wal-Mart sources much of its goods from China, and is able to do so at low cost because of the artificially low value of the yuan. There has been considerable pressure from the White House for China to bring its currency closer to a free float, and the result of that would be higher prices for Wal-Mart products (Wall Street Journal, 2010). This will diminish one of Wal-Mart's key competitive advantages, although most of its discount competition also sources from China as well. However, such a move could upset Wal-Mart's supply chain advantages and reduce its ability to compete against differentiated competition.

A third major threat to Wal-Mart's ability to meet its mission is economic recovery. While most retailers benefit from recovery, Wal-Mart with its low cost strategy benefited from the downturn. Critical to Wal-Mart's success is going to be its ability to retain its new customers even when the economy improves. There is evidence that the recovery thus far has allowed Americans to boost their discretionary spending and that Wal-Mart has retained much of this business (LaMotta, 2009).

One major opportunity for Wal-Mart in the coming years is the opportunity to expand overseas. The company has in place strong expansion plans for China and Latin America, two of its major growth markets. These markets are long-term growth markets in which the company already has experience, so they are sound options for Wal-Mart's long-term growth strategy.

Another opportunity that the company has is to gain market share by running competition out of business. Many smaller and weaker firms have already been run out of business by Wal-Mart. There are, however, some other players such as K-Mart that the company is capable of bankrupting. Wal-Mart is also targeting relatively weak firms like Toys'R'Us before setting its sights on major players such as Target or Costco (Gregory, 2009). The company's financial strength through the recession has left it in a strong position that it was in a couple of years ago, unlike many of its competitors. The company is poised to leverage this strength to enhance its competitive advantages over its customers.