B.-
In this section, provide strategy recommendation(s) and rationale to address problems
identified in Part A. Note that one recommendation may address many problems and
opportunities/threats. I have identified 2 problems, please provide 3 recommendations each
and rationale to address the problems.
This is Part A
Corporate Problems – Walmart
A problem that Walmart encounters is their struggles to grow their market share outside
of their primary business model. One substantial problem is competing with Amazon as a
substitute for Walmart. This had led Walmart to expand their purchasing of smaller online
retailers to grow their e-commerce footprint, as well as their distribution and shipping networks.
These purchases include Jet.com, Bonobos, Modcloth and Eloquii. Despite these efforts,
Walmart continues to underperform in comparison to potential substitutes that are more
established within the online retail environment in which they underperform in terms of market
share. Within their department store market with more direct competitors, their Sam’s Club
subsection has been forced to close many locations due to underperformance compared to more
successful competitors like Costco. In response to this trend, they have shifted the Sam’s Club
model to include more of an online centered focus, which along with the store closures combines
with their distribution efforts to shift their focus towards online e-commerce sales of low-priced
goods in high quantities, using an economy of scale. While they have demonstrated plans to
combat these concerns, it remains to be seen if these efforts are sufficient to combat the losses.
Costco has also grown their online presence, and have reported thus far that their online sales
have grown by 75.8% in 2021, which presents a further threat to Sam’s Club when attempting to
use their redirection as a tactic.
A second problem raised is that due to Walmart’s geographical diversity, they are more
vulnerable to political unrest. An additional problem raised is the potential for unsafe
environments and unstable markets, where Walmart operates in Nicaragua and Mozambique
where risks exist related to kidnappings and violence that have led to concerns over tourist visits
and public safety. In response, the Canadian government has issued travel advisories for both
nations. In Mozambique, there has been political instability caused by religious militia groups.
Meanwhile, Nicaragua has had various protests related to their government’s human rights
abuses. This instability could present an issue, as Walmart employees and customers may face
potential threats to their safety, alongside a decrease in visitors to these countries who may
increase the revenues of these stores if they felt safe in visiting them. Additionally, these reflect
political unrest and instability that could reduce the chances of their success as they deal with
frequent changes in the market and political/legal environments. However, these threats are not
solely faced by Walmart within their global strategy and would impact any businesses operating
in countries experiencing difficulties. Should issues worsen, however, it could form a major loss
should Walmart be required to exit these markets, an impact that would likely be felt by other
multinational corporations operating in nations like Nicaragua and Mozambique. Additionally,
economic instability can reduce the amount of expendable income, reducing the amount spent in
department stores. For Walmart, such a threat is minimized due to the low cost of the majority of
their wares, which slightly reduces risks.