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External Environment Analysis
Stage1. Input stage
General Environment analysis
Political Factor
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Economic Factor
Social Factor
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Technology Factor
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Competitive Analysis
Analyze by Five forces Model as following
Rivalry among Existing Competitors
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Threats of New Entrants
4. Small Retail Store These small shops are
important to the economy
and market share of the
retail channel in Mexico
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Threats of Substitute products
Bargaining Power of Suppliers
Bargaining Power of Customers
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Summaries
Opportunities
1. United State and Mexico have agreement with the passage of the North American
Free Trade Agreement (NAFTA)
2. Joint ventures to increase market share in international market.
3. The inflation in Mexico market diverts the customer from buying expensive
products towards cheap products.
4. Open free market tends to grow into new market well and is a popular and general
accepted.
5. Due to the cheap rate that the organization is able to buy its products from
suppliers, it is able to provide low cost.
6. Customers with even better bargains to give confidence them to shop at Wal‐Mart.
Threats
1. Variety of competition nationally, regionally and locally.
2. The competitors are gaining control over International Market.
3. Uncertainty of the economic.
4. Substitute products more easily because of intense competition.
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External Factors Evaluation (EFE)
Threats
1. Variety of competition nationally, 0.12 3 0.36
regionally and locally.
2. The competitors are gaining control over 0.07 2 0.14
International Market.
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B. Internal Environment Analysis
This part we analyze Resource Based View.
Management
WalMart entered to
1. Entered to Mexico Mexico by joint venture with
Gropo Cifra, the largest
retailer in the Mexico. It
make the WalMart is
leadership position in the
Mexico retail industry.
WalMart create a good
2. CSR image by investing over $8
million in 2003 and 2004 to
open 73 water treatment
plants and a variety of
recycling, energy
conservation and pollution
reduce activities. Program
focus on education,
nutrition, homelessness and
health. It makes the
customer have felt good to
corporation and the
customer can known the
corporation.
WalMart has the
3. Organizational organizational structure
Structure and appropriate human
resource development. That
has ability to create an
environment for good work
resulting in performance
management.
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Finance/Accounting
Research and Development
WalMart manages the
1.Develop product development brand
products with other business
areas by directing suppliers
to create products,
identifying quality
standards for categories,
identifying and allocating
product development
resources, planning,
executing, and monitoring
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product development
projects; and ensuring
products and categories
meet Company goals.
Marketing
WalMart is the famous
1. Product brand that show low cost
leadership is to create
efficient in the preparation
of promotion on sale they
produce the best product
every day and low price for
the customer. It makes the
customer more satisfaction
and customer have brand
loyalty to corporation.
WalMart has low cost of
2.Price the product so, they sell
product as low price that is
strengths doing customers
prefer to buy the product at
WalMart.
WalMart has expansion
3.Place 25 branches in the Mexico. It
helps them to distribute
product and near the
customer.
WalMart is very little
4.Promotion publicity. It don’t emphasize
promote their shop in this
side.
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Production and operation
WalMart have
1. Employee employee more than
109,000 people. The
employee comes from Local
area. It good for the
company for the employee
can understand what the
customers want. It is
strength of corporation that
the employee can attractive
the customer.
The corporation have
2. Training extensive training program
for the employee. It makes
the employee have the same
standard it emphasis in the
team work and increase skill
of employee.
Management information system
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inventories through process
sales data obtained from the
use of RFID system, the
company does not need to
have inventory in the
amount of excess demand
of customers. It reduce
operational costs of
company
Summaries
Strengths
1. Wal‐Mart entered to Mexico by joint venture with Gropo Cifra, the largest retailer in the
Mexico.
2. Wal‐Mart distributes the power to the employee in each branch manager to manage,
control and set policy it make the each branch have more efficient for management.
3. Employee of Wal‐Mart has more skill and team work because Wal‐Mart has training for
the new employee.
4. Wal‐Mart offer product and service to meet customer’s needs or the needs of customer at
low price.
5. Wal‐Mart is the famous brand and low cost leadership.
6. Wal‐Mart has expansion of 25branches around Mexico.
7. Technology of Wal‐Mart has more efficient and up to date.
Weaknesses
1. Wal‐Mart has not much emphasized on advertisement and doing their promotion.
2. Wal‐Mart has more divisions in Mexico but some divisions getting low profitable.
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Internal Factors Evaluation (IFE)
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C. Existing Strategy
Exist Vision
“Contribute towards improving the quality of life for Mexican families.”
Exist Mission
The mission upholding our Company’s permanence and success is value creation.
All our efforts, strategies and actions are aimed at this objective. Generating
development opportunities for our Associates, by creating alliances with our suppliers,
and by conducting environment‐friendly operations and programs that have a positive
impact in our communities
Construct a new one
Vision
The biggest retailer store in Mexico is not as we mention, but mostly, we focus is to
be the best retailer in Mexico.
Mission
"We always tend to improve and generate better quality of life for all Mexican by
fulfilling the value exceed their expected need both for individual and society together with
caring environmental friendly. Also, creation career opportunity for all of employees as
with expended more the right targets market and the right price to them"
Long Term Objectives
‐ To expend more branches to be 900 stores in the next 6 years coverage more in
not just urban area.
‐ Lowering cost 40 % by improving the Management Information System fore every
store and cooperate well with supplies chain.
‐ To emphasize more promoting for focus on brand perception and increase brand
loyalty.
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D. Strategy formulation
Stage 2 The Matching Stage
We use BCG and IE Matrix because it’s Autonomous Divisions. Wal‐Mart Mexico divided
into 6 divisions which are Aurerra, Suburbia, Sam’s Club, Supercenter, Superama and Vips.
And also doing the QSPM in order to determine the relative feasible alternative actions.
1.BCG MATRIX
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• Question mark Suburbia
The business unit has low market share compared to competitors (they can
generate only 6 % form total revenue). However it is doing business in high‐growth
market like offering fashionable apparel. This market is growing and there are
opportunities for new businesses. At the same time there is risk involved with
investing in this business.
The suggestion is that they should develop and grow by investing and continuously
improving their business. Additionally, they have to grow sales by increasing market
share and using cash from Cash Cows to support required investments.
The strategies appropriate are Market Penetration, Market development, Product
Development and Divestiture.
• Star Aurerra
The business has high market share compared to competitors (Wal‐Mart
Mexico has 55% of retail market share and this business has 30% total revenue if
generate form other businesses) and it is doing business in high‐growth market.
This business is a market leader. Stars have to improve their business continuously
in order to keep their position in the marketplace.
The suggestion is that investing for sales growth and market share. They should use
cash from Cash Cows to support required investments.
The strategies appropriate are Backward, Forward or Horizontal Integration and
Market Penetration, Market development and Product Development.
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• Cash Cow – Sam’s Club and Supercenter
The market is not quite attractive – low market growth rate, however the
business has high market share compared to competitors (they get 29% and 27%
in total revenue). This business generates a lot of cash and helps the organization
invest in other businesses
The suggestion is that maintaining the strong market position and defends their
market share. They should take advantage of sales volume and leverage the size of
operations. Moreover, they should support other businesses.
The strategies appropriate are Product Development, Diversification,
Retrenchment and Divestiture.
• Dogs – Superama and Vips
This business has low market share and operates in low‐growth market.
There are low profitable from these two businesses. These business needs
consideration and new strategy development.
The suggestion is that optimizing your current operations. Getting rid of all non
value added activities and features. Reposition your offering to generate positive
cash flow or sell this business.
The strategies appropriate are Liquidation, Divestiture and Retrenchment.
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2. IE Matrix
IFE
Strong Average Weak
3.00‐4.00 2.00‐2.99 1.00‐1.99
EFE High
3.00‐4.00
Medium
2.00‐2.99
Low
1.00‐1.99
Section % Profit IFE EFE
1. Aurerra 30 3.5 3.2
2. Sam’s Club 29 2.8 3.1
3. Supercenter 27 2.7 3.1
4. Suburbia 6 3.5 1.8
5. Superama 3 2.7 1.9
6. Vips 3 2.9 1.5
From above table, we can conclude that;
Aurera, Sam’s Club and Supercenter is available Grow and Build position. So, the
strategies which appropriate are Backward, Forward or Horizontal Integration
and Market Penetration, Market development and Product Development.
Suburbia is available in Hold and Maintain. So, the strategies which appropriate are
Market Penetration and Market development.
Superama and Vips are available in Harvest or divest. So, the strategies which
appropriate are Divestiture and Retrenchment.
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QSPM
Stage3. The decision stage
Strategic Alternative for Aurera, Sam’s Club and Supercenter
Weight Market Forward Horizontal
Development Integration Integration
Key External Factors
Economy 0.1 3 3 3
Political/Legal 0.12 4 4 4
Social/Cultural 0.05 2 2 2
Environmental 0.05 2 2 2
Technological 0.08 3 3 3
Competitive 0.1 4 3 3
Key Internal Factors
Management 0.07 3 2 3
Marketing 0.12 4 4 4
Finance/Accounting 0.1 4 3 3
Production/Operations 0.08 3 3 3
Research and 0.06 2 2 2
Development
Computer Information 0.07 3 2 3
Systems
Total 1 3.28 2.94 3.08
We suggest Aurera, Sam’s Club and Supercenter should do Market Development
Strategy which getting the highest rate. These three business tend to successful in this
market so, the thing next they should to do is introduce the original one to the new
market in order to increase their market share.
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Strategic Alternative for Suburbia
Weight Market Market Product
Penetration Development Development
Key External Factors
Economy 0.1 4 3 3
Political/Legal 0.12 4 4 3
Social/Cultural 0.05 2 2 1
Environmental 0.05 2 2 1
Technological 0.08 3 2 2
Competitive 0.1 4 3 3
Key Internal Factors
Management 0.07 3 2 2
Marketing 0.12 4 4 3
Finance/Accounting 0.1 4 3 3
Production/Operations 0.08 3 2 3
Research and 0.06 3 2 2
Development
Computer Information 0.07 3 2 2
Systems
Total 1 3.44 2.78 2.52
We suggest Suburbia should do Market Penetration which getting the highest rate.
In order to hold and maintain this market, this business should increase market
share through marketing efforts.
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Strategic Alternative for Superama and Vips
Weight Liquidation Divestiture Retrenchment
Key External Factors
Economy 0.1 3 4 4
Political/Legal 0.12 4 4 4
Social/Cultural 0.05 1 2 2
Environmental 0.05 1 2 2
Technological 0.08 2 3 3
Competitive 0.1 3 4 4
Key Internal Factors
Management 0.07 2 2 2
Marketing 0.12 4 4 4
Finance/Accounting 0.1 3 4 3
Production/Operations 0.08 2 3 3
Research and 0.06 2 2 2
Development
Computer Information 0.07 3 2 2
Systems
Total 1 2.75 3.24 3.14
We suggest Superama and Vips should do Divestiture which getting the highest rate.
According to their available in Harvest/Divest or Dogs position with also getting
lowest profitability if compare with other division so, Wal‐Mart Mexico should
selling these two divisions in order to support more in other divisions instead.
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E. Explain Implementation Plan
Topic Strategy Remark
Aurera, Sam’s Club and
Supercenter
Market development Develop and grow by Do research for find the potential
investing and area in Mexico rural markets then
continuously improving expanding the business to
their business to other appropriate areas such as Mexico
market City, Guadalajara, Monterrey and
so on, where is the top ten largest
city as high intensity competition
in Mexico, by establish new
stores in rural to get more
customers within theses area.
The reason is that War‐Mart
always give low price of product
so, no matter rural or urban they
still have power purchasing in
order to get more profit
consonance with the objectives.
Suburbia
Market Penetration Increasing and The shop can get more
maintains the market opportunity by open more hours
share in old market and in every branch and increasing
customers publicity in Mexico such as
advertising on magazine,
billboard and publication media
to get more chance for customers
to perceive brand image and
increase customer’s purchase and
knowing the Suburbia
department store. Created of
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promotion such as buy one get
one free or reduce the price etc to
attract the old customers because
Mexican people are very price
sensitive.
Superama and Vips
Divestiture Sell some part of If there is a possibility of the
business to support situation that the performance of
other part of the Wal‐mart business, especially
company from sale, is not growing well in
Mexico market then we
recommend that Wal‐mart’s
company should sell some part of
division that have a low profit
and benefits to growing
profitable in order to reduce
some cost that effect the
company income.
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