Walmart Strategy, Organization, and Global Expansion Analysis
This paper examines Walmart as a major multinational corporation, covering its founding history, organizational divisions, and core strategic framework. Beginning with Sam Walton's founding vision of everyday low prices, the paper surveys Walmart's operational structure — including discount stores, supercenters, neighborhood markets, Sam's Club, and the international division — before assessing its cost leadership and expansion strategies. The long-term strategic assessment evaluates both competitive advantages and significant weaknesses, with particular attention to Walmart's failed entry into the German market as a case study in the risks of applying a uniform business model across culturally distinct markets. The paper concludes with recommendations for stakeholder-sensitive and locally adapted international strategies.
- Introduction: Globalization and the Rise of Multinational Retailers: Globalization enables multinational retail expansion across borders
- Company Description: Walmart's founding history, scale, and financial overview
- Organization and Strategy: Walmart's divisions, leadership structure, and strategic pillars
- Long-Term Strategic Assessment: Competitive strengths, stakeholder complaints, and Germany failure
- Conclusions: Recommendations for sustainable international and domestic strategy
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What makes this paper effective
- The paper moves logically from macro context (globalization, comparative advantage) to company-specific detail, grounding the strategic analysis in a clear conceptual frame before examining Walmart's own decisions.
- The Walmart Germany case study is used effectively as concrete evidence for the abstract claim that uniform business models fail in culturally distinct markets, making the argument more persuasive than assertion alone.
- The paper balances internal and external perspectives, drawing on corporate annual reports alongside critical sources such as Robert Greenwald's documentary and academic research by Knorr and Arndt.
Key academic technique demonstrated
The paper demonstrates integrated SWOT-style reasoning without labeling it as such — it presents financial strengths, then stakeholder complaints as weaknesses, then international expansion failures as strategic vulnerabilities, building toward a conditional conclusion about long-term sustainability. This implicit framework keeps the analysis cohesive across multiple sections.
Structure breakdown
Five sections progress from context to description to analysis to evaluation to recommendation. The introduction establishes globalization as the enabling force; the company description provides factual background; the organization and strategy section maps internal structure and strategic pillars; the long-term assessment delivers the critical analysis (domestic image problems and the Germany failure); and the conclusion synthesizes findings with brief recommendations.
Introduction: Globalization and the Rise of Multinational Retailers
The incremental forces of competition created a new international setting in which economic agents became able to transcend boundaries and benefit from the comparative advantage of other regions. This comparative advantage included elements such as labor force cost efficiencies and an abundance of natural resources.
The increase in international operations was supported not only by comparative advantages, but also by the fact that economic agents could expand their retail operations to other global regions. In other words, globalization and the liberalization of markets allowed economic agents to sell their products and services in other countries, thereby increasing their market shares and the adjacent revenues.
Walmart is often recognized as the number one retailer in the United States, but the company has also opened numerous stores outside North America. The story of Walmart International is often associated with its failures in Europe — most notably Germany — where the company was eventually forced to count its losses and close its stores. The main issue behind this failure was the company's inability to adapt to local culture. In the years that followed, however, the organization developed stronger strategies and has since become a notable international competitor.
This paper sets out to analyze the reputable retailer from two distinctive angles: its organization and its strategies. The analysis is divided into two specific sections — the presentation of data drawn from research on the company, followed by an analysis of the strategic course of action pursued by the firm. In order to better understand this analysis, it is first necessary to provide background by describing the company.
Company Description
Walmart was founded in 1962 in Bentonville, Arkansas, by Sam Walton. Having returned from the army, the young Walton envisioned a store in which people could purchase all of their everyday goods without having to travel to multiple shops around town. The focus of this one-stop store was a wide product palette from which customers could choose the specific items they desired. Additionally, Walton strived to offer these product selections at low prices. This motto remains valid in today's Walmart, and the organizational slogan is "Save money. Live better" (Walmart Website, 2011).
"Saving people money to help them live better was the goal that Sam Walton envisioned when he opened the doors to the first Walmart. This focus drives everything we do at Walmart. And, for the millions of customers who shop in our stores around the world each week, it means they can trust that our brand means we have every day low prices" (Walmart 2011 Annual Report).
At the time of this analysis, Walmart operated in a total of 8,970 locations, both within the United States and internationally. The retail chain was the number one consumer preference in the United States and also registered success in other American countries, such as Argentina, Brazil, and Canada. Across all of its stores, Walmart employed a total of 2.1 million individuals, headed by Chairman S. Robson Walton and President and CEO Mike Duke.
Walmart is a publicly traded company on the New York Stock Exchange under the ticker symbol WMT. Specific statistics regarding Walmart's market share are difficult to retrieve, but company executives have declared that they seek 30 percent of the total grocery industry (Democratic Socialists of America). As a retailer, Walmart has been the preferred choice of American consumers, a position it maintained even during the economic crisis.
Organization and Strategy
Walmart is traditionally associated with its retail facilities, but the organization is considerably more complex, integrating multiple operational divisions. These divisions include the Walmart stores (comprising discount stores, supercenters, and neighborhood markets), Marketside, Sam's Club, and Walmart International. Each division is characterized by its own specifics, as described below.
Walmart Stores represent the largest division of the corporation, contributing more than 60 percent of the group's total revenues. The stores traditionally focused on non-grocery product types, but in recent years greater emphasis has been placed on grocery items.
Walmart Discount Stores have an average size of 12,000 square feet and sell general merchandise and food selections. Several also include adjacent facilities such as tire service centers, pharmacies, and optical centers.
Walmart Supercenters have average sizes of 197,000 square feet. In addition to all items sold by discount stores and the same adjacent facilities, supercenters include a full-service supermarket offering fresh meat, baked goods, dairy products, and fresh seafood.
Walmart Neighborhood Markets are smaller stores, averaging 42,000 square feet, that retail a wide array of products including general merchandise and fresh food. They are positioned as intermediary stores between the discount stores and the supercenters.
Marketside stores are a newer format, smaller in size than traditional supermarkets. The first Marketside store opened in 2008.
Sam's Club locations are large-format stores selling general merchandise and food products in large volumes, accessible only to members holding membership cards.
Walmart International integrates over 3,000 stores across various global regions, and revenues from this division account for more than 30 percent of the group's total sales (CIPP, 2009).
At the administrative level, Walmart is led by S. Robson Walton and Mike Duke, along with numerous directors. From a financial standpoint, Walmart has followed a consistently ascending trend, recording sales growth in each of the five years preceding this analysis. With the exception of 2009, when they slightly decreased, organizational assets also grew gradually — from $151,274 million in 2007 to $180,663 million in 2011 (Walmart 2011 Annual Report).
At the strategic level, Walmart executives have developed and implemented a course of action based on the following pillars:
A cost leadership strategy according to which Walmart strives to offer the lowest possible price to its consumers (Ireland, Hoskisson, and Hitt, 2008). This commitment to low prices has been described as the "strategy [that] shaped Walmart's culture and driven the company's growth" (Wilbert).
A sustained focus on cost efficiencies and operational efficiencies across all divisions.
A sustained strategy of expansion both within the United States and internationally, through traditional store formats as well as new ones (Blanchard, 2005).
Beginning in 2010, the organization also developed and implemented an electronic commerce strategy targeting three specific objectives: "(1) Develop and execute a global eCommerce strategy; (2) Accelerate global online channel growth; and (3) Create technology platforms and applications for every Walmart market" (Walmart 2011 Annual Report).
References
Blanchard, R. The Digital Challenge for Libraries: Understanding the Culture and Technology of Total Information. iUniverse, 2005.
Knorr, A., and Arndt, A. "Why Did Walmart Fail in Germany?" Institute for World Economics and International Management, 2006.
Ireland, R.D., Hoskisson, R.E., and Hitt, M.A. Understanding Business Strategy: Concepts and Cases, 2nd edition. Cengage Learning, 2008.
Wilbert, C. "How Walmart Works." How Stuff Works. http://money.howstuffworks.com/wal-mart.htm
Operating Divisions, CIPP, 2009.
Walmart Stores Inc. Morningstar, 2011. http://quote.morningstar.com/Stock/s.aspx?t=WMT
Walmart Stores Inc. Cogmap. http://www.cogmap.com/chart/wal-mart-stores,-inc.
Walmart 2011 Annual Report. http://investors.walmartstores.com/phoenix.zhtml?c=112761&p=irol-reportsannual
Walmart Website, 2011. http://www.walmart.com
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