Walmart’s

BUSINESS ENVIRONMENT ANALYSIS REPORT

Group Members:
LYU Boshi 56364748
REN Shouchen 56514128
XIN Zekun 56394845
FENG Xiaohua 56402118
CHEN Yanyan 56407114
 The Intro of Walmart

Walmart Inc. was founded by Sam Walton in 1962 and incorporated on October 31, 1969.

Walmart is the world's largest company by revenue, with US$514.405 billion, according to the Fortune
Global 500 list in 2019. It is also the largest private employer in the world with 2.2 million employees. It is
a publicly traded family-owned business, as the company is controlled by the Walton family.

As the largest retailer in the U.S., Walmart collects and analyzes a large amount of consumer data. The big
data sets are mined for use in predictive analytics, which allow the company to optimize operations by
predicting customer's habits. Walmart's datacenter is unofficially referred to as Area.

In April 2011, Walmart acquired Kosmix to develop software for analyzing real-time data streams. In August
2012, Walmart announced its Polaris search engine.
SIS Approach: Build Rather Than Buy

“Walmart is not a technology company, but it is a company in which

technology is a key enabler of business strategies.”
In the past years, Walmart operates a massive information system
infrastructure that has been called the largest private computer system
in the US.
The “build rather than buy” strategy was made since the company’s
foundation. Those in-house strategic systems kept proprietary business
process and systems knowledge out of the hands of competitors.
It contains the famous RETAIL-LINK system to stay Walmart’s close
cooperation with its mega suppliers such as P&G on sales and
inventories data exchange.
The RFID system as well as the most efficient logistics chain make
Walmart’s brick and mortar business indestructible.
To win in the tide of mobile Internet, Walmart exhibits its
insightfulness and technological accumulation once again. The giant
developed its Walmart App for both customers and suppliers, and it
even have a Walmart Pay function, which could forge a great
advantage in the era of mobile payment.
Threat of new entrants: Low to Moderate
Porter’s Five Forces Analysis of Walmart
High capital cost and investment.

Price advantages deficiency.

For Large Lack of mature and excellent management system, like:

Low New Retailer Entrances human resources management, supply chain

management, enterprise resources planning, etc.

Limited market shares.

to Low costs of doing business.

Placed in locations that are

Moderate For Small

convenient for local customers.

Less pressure on prices- customers

New Retailer Entrances are willing to pay a little more to
(Convenience stores) purchase a needed item close to
neighborhood. So the same product
can earn greater profits.

Simple management system.

 Bargaining power of suppliers: low to moderate

Low:
1. It can bring business opportunities to suppliers and require suppliers to comply with its guidelines. As a large retailer,
Wal-Mart is the supplier’s main customer and has huge purchasing power.

2. Its switching cost is very low, and it can be switched from one supplier to another without incurring any significant costs.

3. Fierce competition among suppliers.

Moderate:
Large suppliers with high status in the industry have certain bargaining power, such as Coca-Cola and Unilever.
 Bargaining Power of Buyers ： low
The force is obviously LOW!!!

01 Every day low price strategy.

• When other retailers raise prices, it will attract
buyers to Walmart.
• Walmart’s low-price strategy is the biggest
advantage competitive.

Targeted buyers'
02 characteristics limit the force.
• Large population of consumers.
• High diversity of consumers.
• Small size of individual purchases.
Threat of Substitute Products of Services : Low

Online Retail Service Providers (such as Amazon and Target ）

are the major threat to Walmart’s conventional business mode
Bring challenges to this giant company:
• Customers tend to buy goods online because of the lower price
• Door to door shipping services saves people’s time and develop new shopping habits

Countermeasures
To face this emerging online opponents
Walmart opened up its own E-commerce platform to compete its rivals.
• Walmart implemented its “Everyday low prices” strategy so good that its online opponents can’t beat.
• It’s widespread markets allows people pick up
their goods without waiting for too long.
• Since the logistics system also allow Walmart
have a two-day free shipping promise that its
rivals’ poor shipping service will feel shame.
 Rivalry Among Existing Firms: High

Cost Sales Revenue

In the retail industry, Wal-Mart has Wal-Mart (China) sales have
the lowest advertising costs. shown a steady development
Private label products are directly trend. In 2019, sales were 82.28
produced by manufacturers. billion yuan, a year-on-year
increase of 4.3%[2].

Ranking Of Market Share Scale

In the ranking of market share in 2019, The increase in the number of

high-paying retail （ RT-Mart 、 Wal-Mart (China) stores has
Auchan ） is 8.6%,Vanguard is 7%, Wal- gradually slowed down. Wal-Mart
Mart is 5.3%[1]. (China) has 422 stores in 2019, a
year-on-year increase of 1.6%[2].

1.Data source: http://www.chyxx.com/industry/201905/738038.html

2.Data source: compiled by China Chain Store & Franchise Association and China Commercial Industry Research Institute
 Conclusion
Threat of New Entrants
Large scale retailers pose low threat to Wal-Mart.
Nevertheless, convenience stores can entry the
barriers more easily. 01
The Bargaining Power of Buyers
Low-price strategy and stable demand
Rivalry Among Existing Firms 02 make the bargaining power of buyers low.
Based on the factors of rivalry
among existing firms, it is 05
presents a higher level of risk.

Threat of Substitute Products of Services

Bargaining Power of Suppliers

Wal-Mart's purchasing power is huge
and the cost of switching suppliers is low.
So this characteristic tends to develop from
low to moderate.
03 As a result of Walmart’s fightback on ramping up e-
commerce, According to the company’s Q2 report. Its
04 online sales surge during the pandemic, grew by 97%,
bolstering its place as a strong No. 2 to Amazon. The
giant even builds up a well-organized online shopping
circle by its mobile application matrix. Walmart could
get rid of the upcoming substitution dangers. Easily.
Therefore the risk level is low.

In general, Wal-Mart’s external influences pose a moderate threat to Wal-Mart’s future development.

Data source: https://s2.q4cdn.com/056532643/files/doc_financials/2021/q2/Earnings-Release-7.31.2020-final.pdf