Marketing Management Assignment help on : Wal-Mart
Introduction
Wal-Mart is the biggest international retailer of the world by sales. It is an American MNC which owns and operates the largest chain of discount departmental and warehouse superstores worldwide. Founded by Sam Walton in 1962 with its very first discount store in Rogers, Arkansas, Wal-Mart has grown multifold to become the world’s third largest public corporation following Royal Dutch Shell and ExxonMobil (Fortune 500 2012). It is also the biggest private sector employer of the world, providing employment to more than more than 2 million employees all over the world. Wal-Mart caters to consumers of 15 countries with 8,500 departmental stores. Wal-Mart is known for its aggressive expansion strategy and its wholly owned operations in countries like Argentina, Brazil and Canada have proved very successful. Wal-Mart has become a household name in USA, South America, UK (as ASDA) and China for its cheap prices and quality products. At the same time, it has experienced some fallback with its expansion plans in Korea, Germany and Mexico. Australia, with a population of over 20 million consumers (Australian Bureau of Statistics 2012), is still in not any serious contention of Wal-Mart. However, with its superstores’ overwhelming success in China and a proposed enthusiastic entry plan for India, two of the biggest consumer markets of the world, Wal-Mart is now eying Australasian market for expansion and Australia features as one of the top priorities in this plan.
Marketing Environment Analysis of Australia
PESTLE Analysis
1. Political – Australia is a democratic country with liberal policies. Australia is one of those commonwealth countries where constitutional monarchy still exists; showing that the head of state in Australia is the Queen of Australia, i.e., Queen Elizabeth II but her power is limited by constitution of Australia and operates within the confines of it. Australia has also embraced the federal system of America which divides the power between states of the country and national government (Constitution of Australia 2003). Such a political system where the governing authorities are in plural number, marketers find it very tough to operate. But since Wal-Mart comes from America where the same sort of democracy is exercised, the political situation of Australia won’t be an area of concern for Wal-Mart.
2. Economical – Australia is considered as one of the wealthiest countries of the world marked with high GDP per capita and low poverty level. With an ever increasing GDP growth (3 % in 2012, 2.2 % in 2011) and exports exceeding imports (262,015 A$m as compared to 227,108 A$m in 2012), we can definitely say that Australia is experiencing a growth-period now (International Monetary Fund 2012). With GDP per capita reaching a new height with 68,916 A$, Australia can boast of a population with high disposable income which in turn gives a marketer indications of consumers’ increased purchasing power (Australian Bureau of Statistics 2012).
3. Sociological – Australia has a small population of 22.7 million citizens as compared to its huge size of 7,617,930 square kilometers. Australia is a multi-cultural society comprising of many ethical identities such as European, Asian, and Hispanic etc. Majority of the Australian population is Christian and the national language is English. Approximately 80% Australians live in metro cities like Adelaide, Sydney, Brisbane, Melbourne, Canberra etc. With one of the highest literacy rates (approx. 99%) among the world and the fourth highest life-expectancy age, Australia is one of the most developed nations of the world which provides ample opportunities to businesses to grow (UNDP 2012).
4. Technological – Australia is one of the topmost countries of the world who spends heavily on technological evolution. In 2012, they rank 14th in the world having spent around US $21.8 bn. as compared to US $20.6 bn. in 2011 on R & D activities (Australian Anthill 2012). With 90% internet penetration and 10.9 million subscribers, Australia boasts of one of the most tech-savvy population in the world (ABS 2011). Wal-Mart will find this technological evolution beneficial as knowledgeable and alert consumers always provide better feedback to a company that will in-turn help Wal-Mart improve its services in a better way.
5. Legal – Australia is known for its flexible regulatory framework which provides businesses the right environment to grow. Australia has been honored by the OECD as the country having fewest restrictions on products market and least impact of its regulations on the business’ economic behavior (OECD Going for Growth 2006). With unbelievable transparency in government policies, Australia is ranked as one of the top six economies of the world for its regulatory and legal framework (IMD World Competitiveness Yearbook 2009). These distinctions of Australian legal framework indicates that rules and regulations are very transparent and flexible as far as operating a business is concerned in Australia and Wal-Mart will find these policies extremely favorable (Australian Trade Commission 2012).
6. Environmental – Climate change has become one of the most challenging issues for Australian Government over the years now. Water Shortages in urban-cities too has become a major problem for the businesses in Metro cities primarily due to increased immigration of villagers to metros. Australia also experiences a lot of droughts and floods which always exert devastating effects on country’s economy. Australian federal and state laws require a company to comply itself with all the international treaties like Kyoto Protocol so that company’s operations could have the least possible side-effects on environment (Clayton Utz 2011). Wal-Mart must show compliance with the environmental laws of Australia in order to operate its operations smoothly in the region.
SWOT Analysis of Wal-Mart and Strategic Direction
1. Strength
a) Wal-Mart has a superb logistics system which helps them move the merchandise from any of their distribution center to a particular location using the most efficient and cheapest route.
b) They have a network of distribution centers for fulfilling the online orders.
c) Technological inventions like having a website of their own has accounted for increased sales over the years.
d) Aggressive pricing policy offering heavy discounts on quality products.
e) Excellent marketing research providing first-hand knowledge about customer preference.
2. Weaknesses
a) Wal-Mart faces critical image problems in ethical circle of retailers who criticize it for its monopolizing activities. This is primarily due to Wal-Mart’s huge reputation and giant upscale operations which force small retailers to shutdown their operations because of no-sales (Barney Jopson 2012).
b) Wal-Mart’s huge superstores’ premise is also a concern for environmentalist as they argue that such large size of buildings produce a lot of traffic pollution and congestion for neighboring communities.
c) Its pricing policies which focus on heavy discounts push suppliers to cut their margins even further in retrospect, providing them with almost nothing to live on, ultimately resulting in closing down their businesses (Barney Jopson 2012).
d) Wal-Mart is accused of its faulty laws regarding employees’ health-benefits plan. They are also known as a company which discriminates against its female employees and violate child-labor laws. Their compensation structure regarding wages is considered very poor by social scientists.
3. Opportunities
a) Australia is an untapped territory as far as the retailing is concerned and Wal-Mart can cash on the huge disposable incomes and purchasing power of Australians (Mary Evans 2006).
b) Wal-Mart has all the resources to cure its shortcomings and diversify its operations in a country as big as Australia in different categories like music products, baby products etc.
c) Having its operations in Australia could help Wal-Mart strategically in order to expand its operations in Oceania regions of New Zealand and Indonesia (Mary Evans 2006).
4. Threats
a) Wal-Mart’s intimidating image of a giant and as one who monopolizes the retail market could affect his operations and stock-prices (Chris Zappone 2012).
b) Lack of Australian market research can lead to faulty conclusions about consumer preferences.
c) Oppositions from small retailers of Australia could prove a big headache for Wal-Mart as this case is already a burning issue in India.
d) Competitors like TESCO and Carrefour always pose great challenges in front of Wal-Mart in terms of diversified operations and satisfied customers, employees and suppliers.
Recommendation and Conclusion
Wal-Mart is the largest retailer of the world and one of the most reputed companies in the corporate sphere. However, it has a lot of issues to deal with, starting from employment concerns and ending with the image and environmental concerns (Chris Zappone 2012). Wal-Mart should address these issues with utmost care and resolve as these issues are tainting its image. Its hiring policy is under the scanner of many social scientists and Wal-Mart should make sure that they provide their employees with at least competitive pay and healthcare benefits. And when it comes to decide on the strategic direction of Wal-Mart in reference to Australian retail operations, company should go ahead with the proposed investment plan in Australia as Australia could prove to be a gold reserve for Wal-Mart as it is one of the wealthiest economies of the world and can yield Wal-Mart huge amounts of profit and reputation.
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