This paper examines environmental scanning and strategic analysis through a comparative case study of two major retailers: Target and Walmart. Using SWOT analysis to evaluate internal and external environments, the paper identifies each company's distinct competitive advantages, strategic approaches, and value-creation methods. Walmart pursues cost leadership through pricing and operational efficiency, while Target differentiates through designer partnerships, customer experience, and sustainability commitments. The paper evaluates measurement guidelines—cost focus for Walmart and product focus for Target—and assesses the effectiveness of each company's strategic execution in serving different customer segments.
Environmental scanning is defined as "the monitoring, evaluating, and disseminating of information from the external and internal environments to key people within the corporation" (Wheelen & Hunger, 2010, p. 16). The essential purpose of environmental scanning is to identify strategic factors that help detect the future of business. One effective way to organize and regulate environmental scanning is through Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis. In this framework, external environment variables are classified as opportunities and threats, while internal environment variables are strengths and weaknesses. This paper examines how two major retailers use environmental scanning and SWOT analysis to guide strategic decisions, comparing their competitive advantages, value-creation methods, measurement guidelines, and overall strategic effectiveness.
Corporations that are aware of changing trends—and the fact that those trends can shift rapidly—are better positioned for success. A business must be susceptible to change and able to adapt to market conditions. This analysis focuses on two mainstream corporations known to virtually all consumers: Target and Walmart. These enterprises are in constant competition with each other and collectively dominate the U.S. retail landscape. Both organizations provide a wide array of goods and services to communities nationwide, and each store strives to bring quality products to the table. Target and Walmart execute environmental scanning to establish themselves above competing retailers and maintain their market positions.
Environmental scanning helps a business determine the strategic position of internal and external factors. Some internal factors both stores evaluate are tangible resources (such as facilities and inventory) and intangible resources (such as brand reputation). Specific internal resources include financial capacity, organizational structure, marketing capabilities, and technology infrastructure. External factors that Target and Walmart monitor include the overall economy, demographic shifts, consumer preferences, and unforeseen disruptions. By systematically scanning both dimensions, each company shapes its strategic direction.
Walmart's competitive advantages include affordable pricing, a large assortment of products, high financial stability, extended store hours, and price-matching policies. In most cases, Walmart's pricing is lower than close competitors. The company's well-known motto, "save money, live better," encapsulates its core value proposition. As the corporation states, "Our 'Everyday Low Cost' strategy helps people save money, stretch their paychecks, and provide a better life for their families" (corporate.walmart.com, 2014). Through this approach, Walmart offers satisfying products at lower prices than Target, appealing primarily to cost-conscious consumers.
Target pursues a distinctly different competitive advantage strategy. Rather than competing on price, Target focuses on selling exclusive products made by higher-quality designers. Target uses its competitive strategy through partnerships with designer labels to offer designer items at affordable Target prices (Zynski, 2013). Beyond product exclusivity, Target emphasizes fast checkout lanes, creativity, and environment-friendly products as competitive differentiators. As Target's corporate statement reflects, "We believe that together we are designing a better tomorrow today. Target will lead the way to developing more value, positive impact and healthy, vibrant communities" (Corporate.target.com, 2014). This positioning appeals to consumers who value design, experience, and sustainability alongside price.
Walmart does not rely on just one type of strategy to increase sales and service to consumers. One approach Walmart employs is the differentiation strategy, defined as "the ability of a company to provide unique and superior value to the buyer in terms of product quality, special features, or after-sale service" (Wheelen & Hunger, 2010, p. 185). Walmart gathers information from consumer purchase patterns to understand demand and optimize assortment. The company stays current with reputable market research resources and innovates its store formats. Walmart pioneered the supercenter concept, which combines groceries and household items under one roof, making shopping more convenient. This integrated approach was revolutionary at the time and allowed Walmart to capture greater wallet share from consumers seeking one-stop convenience.
Target relies heavily on firm marketing strategies, including entertaining commercials and celebrity endorsements. "Target has teamed up with many celebrities, including Justin Timberlake, Taylor Swift, and Christina Aguilera, among others" (Corporate.target.com, 2014). These partnerships help Target appeal to the trendy, style-conscious side of consumers. Target's marketing-driven strategy reinforces its positioning as a lifestyle retailer. The company's motto, "expect more, pay less," encourages shoppers to pursue higher quality without premium pricing. Additionally, Target offers a five percent cash-back incentive through its credit card program—an advantage Walmart does not match. More recently, Target has expanded grocery offerings in most stores, moving closer to Walmart's supercenter model while maintaining its distinct brand identity. While Target may not match Walmart's grocery selection, this diversification represents strategic progress in value creation.
Walmart creates value by offering everyday consumer items at lower costs than most competitors (with the exception of dollar stores). Beyond price leadership, Walmart continues to create value by offering shoppers the ability to find nearly everything they need at a single location. This operational convenience translates directly into saved time and reduced shopping friction, which consumers value highly.
Although Target does not focus on providing products at lower costs than Walmart, the company maintains an excellent reputation for creativity, faster checkout service, store cleanliness, and trendy merchandise selection. Target also wins consumers through its visible commitment to environmental sustainability and community responsibility. These non-price value drivers resonate with Target's core demographic and support customer loyalty despite higher price points.
Three primary approaches exist to measure the effectiveness of competitive strategies: cost focus, product focus, and customer focus. Cost focus naturally emphasizes controlling costs and maximizing operational efficiency. Product focus targets a niche product or particular service segment. Customer focus keeps close watch on service quality and customer satisfaction.
Walmart utilizes the cost focus strategy. "They use their competitive advantage in the form of quick turnaround, distribution channels, cost effectiveness, streamlining processes, and vendor influences" (Light, 2004). Cost-focused companies must safeguard against attempting to serve all three strategic dimensions simultaneously, as doing so can dilute competitive edge. Based on the strategic frameworks outlined, Target employs a product-focused approach as its primary measuring guideline. Target offers specialty products that Walmart does not carry, and some brands or items are Target-exclusive. Target also provides detailed information to consumers and investors through its website, highlighting progress on corporate goals and initiatives.
Both stores publish annual reports on progress and finances. Target extends this transparency further by issuing civic activity reports, sustainability reports, and detailed reports on company goals and achievements. This comprehensive reporting approach supports accountability and stakeholder trust, aligning with Target's emphasis on brand reputation and values-driven positioning.
The measurement guidelines of Walmart do not appear as comprehensive or as effective as those of Target. This represents an area where Walmart could strengthen its strategic communication and accountability practices. Target generally exceeds average consumer expectations across most regions through its focus on experience, quality, and transparency. However, it is important to recognize that both stores target different customer segments; therefore, direct comparisons must account for their distinct market positioning. Ultimately, Walmart's effectiveness in cost leadership is proven through market share and profitability, while Target's effectiveness in differentiation and brand loyalty is reflected in customer satisfaction and premium positioning.
Target and Walmart are two strong and large retail conglomerates. Both have high competitive strategies and know how to build competitive value. Both companies have their own set of measurement guides and understand how effective those guides are. Although Walmart appears to be a successful business because of its affordable prices and shopping convenience, Target is a corporation that appears successful because it focuses on providing quality service, creativity, organization, and trust. Each company has identified distinct customer segments and crafted strategies aligned with those segments' values, demonstrating the power of environmental scanning and strategic positioning in retail competition.
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