Pestle Analysis of Walmart PDF

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It discusses the Macro Environment affecting the Walmart Company. (PESTLE analysis)...

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Macro-Environment

Economic forces

Wal-Mart is under great pressure from developments in the economy. One of the essential factors affecting the operation of Wal-Mart is the economic condition. Any such change leads directly to changes in revenues for the company.

❖ According to Walmart Annual Report, economic factors affecting Walmart can also affect its suppliers, as a result of which an increase in the cost of the sold goods can affect its low-price strategy on Everyday low price (edlp). Lower price is Wal-Mart’s principal competitive advantage. In this case, Walmart cannot compete for a long time with its competitors and may face thinner profit margins or even a loss. ❖ Economic changes and instability are another major threat to Walmart Inc. and may affect its global profitability. Inflation ❖ Inflation is one of the biggest concerns for the food sector’s future, and even Wal-Mart will not be able to fully absorb inflation costs. The food prices had reached their highest level in 30 years by mid-2008. At that time, skyrocketing oil prices were to blame – by July 2008 they had reached an all-time trading record of 147 per barrel not only did this make it more expensive to transport food and other products, but it also made it more costly to manufacture and package consumer goods. The silver lining for retailers like Wal-Mart, however, is that shoppers look to consolidate trips when the gas price goes up. ❖ Make a significant contribution to the quality of life in every society the organization has been doing business in. Following the Katrina tragedy, the company built nine disaster distribution centers strategically positioned throughout the United States, filled with relief supplies needed to help communities recover in the event of a disaster. In numerous Wal-Mart stores, health clinics to treat common ailments were opened as a means to help bring affordable and accessible health care to low-income people – between 30 and 40 percent of patients in these clinics were uninsured.

Economic Growth: ❖ The stability of major economies (opportunity) should focus on developing countries' fastgrowing economies, which have increased demand from retail firms such as Wal-Mart for goods. ❖ The economic recession that started at the beginning of 2008, accompanied by the global financial crisis and even sharper economic decline that occurred in the fall of 2008, culminating in substantial rises in consumer traffic and sales in Wal-Mart stores. ❖ Promoting growth in the international operations of the company through both the acquisition of foreign retailers (whose operations could later be converted to Wal-Mart

stores) and the opening of newly built stores. The goal of this strategic push was to turn Wal-Mart into an increasingly global retailer with growing numbers of stores in more and more countries.

❖ Another economic factor that can affect Wal-Mart’s earnings is the higher interest rate, as a result of which he can face thin profit margins that Walmart cannot afford at this time. Other factors include an increase in bills for medical and utility services, an increase in unemployment that may weaken consumer purchasing power. ❖ Making Wal-Mart a better place to work than ever. Senior management was mindful of the value of providing fair wages and benefits for good workers. In early 2008 the average hourly rate pay for full-time Wal-Mart associates was 10.83; in metropolitan areas and states like California, the hourly average was 11.12 level. ❖ Wal-Mart planned 400 "Wal-Mart Clinic" outlets by 2010; all clinics were leased and run by local, licensed healthcare practitioners, not Wal-Mart employees. Wal-Mart was the biggest corporate cash donor in the United States, giving around 296 million to 4,000 + organizations in 2007. It contributed 1 million or more annually to such charities as the National Fish and Wildlife Foundation, the Special Olympics, the Boys and Girls Club of America, the United Negro College Fund and, the Muscular Dystrophy Association.

Social, Cultural, Demographic, and Natural Environment Forces Social factors include all those factors that can affect Walmart's market strategy, development and success related to customer lifestyle, culture and that behavior. Health consciousness ❖ Consumers are becoming health-conscious and Walmart has the opportunity to increase healthy and organic food items throughout its retail stores. It will increase the image of a Walmart brand in consumers ' minds.

Lifestyle attitudes/attitudes ❖ Customers tend to buy low-priced but high-quality products, so it's an opportunity for Wal-Mart to earn those customers ' trust because they want to "help people save money so they can live better" as they have in their mission statement. ❖ Wal-Mart increases its appeal to current customers and encourages new consumers to shop at Wal-Mart, improves product offerings, creates quicker check-out processes, and reviews the layout and design of Wal-Mart stores to improve store environment and better display product offerings in a manner calculated to increase sales. A substantial number of the company's apparel lines have been upgraded to appeal better to shoppers looking for a bit more upscale and stylish clothing. Redecorated stores, opened aisles,

In this analysis of Wal-Mart, we can find such environmental issues can affect the retail giant brand image. ❖ Global population aging, a multi-polar power balance, income inequality, technology's disruptive power, increased energy demand. ❖ Support from the officials of Conservation International: and another environmentallyfocused one; all three argued that by going green, Wal-Mart will boost its reputation,

inspire workers, and save money. International recycling has found ways for Wal Mart to minimize waste, eliminate unnecessary packaging, and increase energy quality, saving hundreds of millions of dollars in the process.

Weather climate ❖ Wal-Mart had gained favorable coverage in the media after the Katrina hurricane. While his swift response with food supplies and cash aid was lauded for being quicker than the initiative of the U.S. government; Wal-Mart has contributed 15 million for the Katrina recovery effort. They push people and the environment to the limits.

Safety emphasis ❖ Wal-Mart launch a multi-faceted campaign called "Zero Waste" Through its Kids Recycling Challenge, Wal-Mart worked with elementary schools in 12 states to start recycling plastic bags- for every 60-gallon collection bag that students brought to their local Wal-Mart store, each school received $5. Wal-Mart introduced "Paper or Plastic? Neither" reusable shopping bags in October 2007; management estimated that a reusable bag could eliminate the use of 100 disposable plastic bags and, by May 2008, Wal-Mart had sold enough of the reusable shopping bags to eliminate the need for 400 million plastic bags. ❖ Making Wal-Mart a better place to work than ever. This included making both full-time and part-time Wal-Mart partner (and their children) eligible for health insurance, increasing the quality of the different health insurance plans (both in terms of monthly premiums and co-pay amounts) and revising health insurance coverage to provide protection from unforeseen medical costs (no liability after one year of eligibility).

Demographic ❖ In 2008, more than 154,000 Hispanics were employed by Wal-Mart; 237,000 African Americans; 41,000 Asian Americans; 15,000 Native Americans; 826,000 women; 256,000 age 55 or older. ❖ Entry to Canada, Mexico, Brazil, Japan, Puerto Rico, China, Germany, South Korea, and Great Britain by Waal-Mart.

Political, Governmental, and Legal Forces The Business has to deal with political concerns and policy policies that pose opportunities or challenges that can impact Walmart. The political forces can affect its operation in a negative or positive way. ❖ Walmart is one of the biggest retailers who serve millions of customers each week. In the various sections of the world, Walmart is subject to compliance with laws and regulations. In the pestle analysis, these external environmental factors affect Walmart and its competitors in the retail sector. There are a number of legal factors that can affect Walmart, such as discrimination laws, employment laws, food and safety regulations, data protection laws, consumer law.

Complaints against Wal-Mart ❖ Critics at Wal-Mart and a string of embarrassing events. During the period 2003-2005, numerous journalists, union leaders, community activists and so-called cultural

progressives had united in a campaign to bash Wal-Mart on a variety of fronts and turn public opinion against Wal-Mart and its seemingly virtuous business model of steadfastly

winging cost efficiencies out of its supply chain and providing low daily prices to customers. ❖ Critics' biggest complaint was that the zealous pursuit of low cost by Wal-Mart had resulted in under-standard wages and insufficient medical benefits for U.S. employees at Wal-Mart. Others argued that so much of Wal-Mart’s products came from Chinese manufacturers, thereby costing American employees employment and hastening the downturn in the U.S. manufacturing sector. ❖ Political stability for Walmart, its suppliers and distributors is an important consideration for the pestle research. If Walmart decides to expand its physical stores, and political stability plays a critical role in its growth strategy’s success. In addition, political stability where its suppliers and manufacturers operate enables suppliers to meet standards and focus on operations. Labor law ❖ Based on the case study management, the manner in which suppliers conducted their business with regard to the hours of work expected by regular and weekly workers, the use of child labor, discrimination on the grounds of race or religion or other factors and the health of the workforce and whether suppliers complied with local laws and regulations may be attributed to Wal-Mart and have an effect on its image. ❖ In Colorado, the UFCW had accused Wal-Mart of harassing workers to prevent them from joining its local in Denver and elsewhere; in recent years, the number of such complaints has grown. Discrimination laws Discrimination against female employees ❖ Wal-Mart faced a class-action discrimination lawsuit filed by six female employees in 2003, alleging that management routinely discriminated against women in pay , promotions, training , and work assignments at Wal-Mart's U.S. stores. Women held less than 15 per cent of management positions, according to data from various sources, while two-thirds of Wal-Mart's hourly employees were women. ❖ In Colorado, the UFCW had accused Wal-Mart of harassing workers to keep them from joining in Denver and elsewhere; the number of such complaints had grown in recent years.

Government and NGO Interventions ❖ It was a member of the Wal-Mart board, a senior executive and two Wal-Mart associates. Dismissed after an internal inquiry into improper expense account payments, unauthorized payment of third-party invoices and illegal usage of gift cards (some of which, according to critics, included attempts to fund anti-union activities and thwart unionization attempts at various Wal-Mart stores). ❖ Wal-Mart had to temporarily stop selling guns at its 118 stores across California after what the attorney general of California said were hundreds of violations of state laws....