Walmart External and Internal Audit

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Strategic Alternatives:

S/O- Strengths and Opportunities Strategy

- Opening smaller non-supercenter stores to gain presence in more urban areas to gain market share. The smaller design stores may affect the supply chain system. The small store may not hold well with consumers who could go to larger stores because of more products.

- Wal-Mart has a cost advantage over competitors and in the economic downturn Wal-Mart has retain customer loyalty by still offering products at affordable prices.

- For being such a large company Wal-Mart has nearly perfected their economy of scale by spreading out their fixed costs throughout their product line. Wal-Mart could implement their economies of scale to apply that to Sam’s Club, and to reduce the average cost per item they sell. This could be an opportunity to target a higher-end consumer. A con is that it could not transfer easily and take more time and money than expected, making the transition not viable.

S/T- Strength and Threats Strategy

- Wal-Mart should be constantly seeking out new items or even brands to keep fresh products of the shelves. The risk they face is the new products may not be high quality and could face negative consequences because of it. In order to combat the possibility of this Wal-Mart should offer satisfaction guarantees to keep the goodwill of the dissatisfied customers.

- Recently Wal-Mart has had a bad reputation on them for bullying smaller, local businesses. To face this they could lower their prices to make it not even worth going to small businesses. Then face more backlash, but basically give consumer no choice to got to Wal-Mart. This probably wouldn’t be a smart plan because the news of this incident will affect the entire company even where they may not face much competition.

- Wal-Mart should keep their product line diverse instead of loading up in a certain area. Consumers don’t necessary go to Wal-Mart for specific items, but rather go for the array of items they carry. Focusing on one department too much can limit the amount of other products making the store less appealing to consumers. Although focusing on one department can bring in more people who are interested in that area, it doesn’t seem economical for Wal-Mart’s model.

W/O- Weakness and Opportunity Strategy

- Open new stores in emerging markets to gain market share and expose foreign markets to retail shopping. The whole world is still rebounding from the economic collapse and Wal-Mart can take advantage by providing low cost products there. If they pay reasonable wages in the market it can provide good views on the company. The downside is if it isn’t received well, it would be a huge waste of investment.

- Since Wal-Mart is such a large company it’s expected that it is difficult to keep the span of control in line. As a whole their span of control is decided at the corporate level leaving the managers. If they passed some responsibilities down to the business level it might make the stores more efficient. Contrary this system is set for a reason, to make a standardized way of working. If they allowed this changed it means some stores would be operating on different hours, changing the customer experience for better or worse.

- By entering in other markets more opportunities open to explore for new suppliers. If it works out, they might find a local supplier that can source products at a lower price and reduce transportation costs. The downside is you don’t know the quality standards in the market and could find out too late they aren’t up to specification and supply customers with low quality products.

W/T- Weakness and Threats Strategy

- It would be wise for Wal-Mart to settle allegations to keep bad representations of the company out of the press. By doing this they keep they promote the view of caring for the welfare of consumers and appeal to more customers. This may prevent the name and reputation from being tarnished. The con is that media may view it as a media stunt to look good in front of the people. Also the continued expenses from future settlements will hurt revenue.

- Wal-Mart should implement a quality control standard that’s higher than their competition. Starting with their suppliers, Wal-Mart has high leverage on who supplies their products dues to large orders they place. They should make it staple in the business agreement that there products are guaranteed to meet a certain threshold. They can do this by providing they information on how to improve their management, logistics, and economies of scale. This may be difficult to do because not all companies have the means to make the changes that Wal-Mart may require them to do.

- It’s no secret that it is almost impossible for local businesses to compete with Wal-Mart. To get the goodwill of the locals, they could offer business advice to local businesses to help them stay afloat in this tough economic time. The only downside is the business lost to those companies, but the customer goodwill from the deed will out way it.

Recommendations:

In order to implement a new course of action to promote traffic to the store as well as drive sales numerous things would have to change. I would begin at the top of each store. Managers will be prompted to begin cleaning up the act by hiring more staff to properly keep the stores clean. Not only by simply mopping the floors but by dusting shelves and rearranging items on shelves to optimize assurance that customers can see each item present. This first implementation would increase operating costs but I feel in the long run (5-10 years) we will see it returned to us. This year we began to invest in our people now we need to invest in the stores that house our people.

The second action would be to keep items stocked in the front of house so customers will pick them up thus earning us a profit. This can make or break a store's profit or loss for a quarter almost more than anything. Waste can sink a company faster than lost customers or raising employees pay.

The third item at hand is to rearrange the store layout. To increase sales a customer must see every item we house. Personally when I’m in a store geared specifically to marketing every item there my eyes become bigger than my stomach and i begin putting items in my cart i don’t need and sometimes i don’t even want it just happens to come over me that this item looks good here and i want to try it. By driving more traffic to each store by making it a one stop shop customers will stay longer and spend