GROUP 2

Introduction
•Background
•Tools & Analysis – Answering 24 Questions
•Recommendation & Conclusion

Background
•Walmart - Largest retail store in the United States, and
is larger than any other retail chain in the world
•Strategy – selling high quality and brand name
products at the lowest price
•Reduces costs by the use of advanced electronic
technology and warehousing
Q1Q2.Usefulness of SWOT and TOWS analysis

 1. The usefulness of SWOT analysis

• Audit internal and external factors.

• Identifies company’s internal forces (Strengths and Weaknesses) and external

forces (Opportunities and Threats).

• Gives an overview of company’s position.

• SWOT can be used as a basis to develop TOWS matrix.

 2. The usefulness of TOWS Matrix

• Determines strategic alternatives to improve company’s business performance.

• Allows company to make use of strengths and opportunities to overcome

weaknesses and threats.
Q1 Q2. SWOT and TOWS Matrix
 Q3. PESTLE Analysis

PESTLE Explanation
Political • Stable political condition in The United States
• Government support for globalization
Economic • Economic downturn (year 2008)
• Decline in gasoline prices

Social • Consumers are opting to purchase cheaper products

• Diverse population
• Increase women in the workforce
Technological • Energy efficient products
• Online purchasing
• Increase in mobile usage
Legal • Employment Law
• U.S Resource Conservation and Recovery Act
• Hazardous waste disposal regulation
Environmental • Natural disaster (Katrina)
• Green technology
 Q.4 Porter’s 5 Forces

Threat of new entrants

High  Low barrier to
entry

Bargaining power of Bargaining power of

buyers Rivalry among firms supplier
High  Low switching High  There are many Low  There are many
cost; Many substitutes . retailers “Target, Kmart” suppliers

Threat of substitutes
Low  Online purchasing
Q5. Justify the application of PESTLE and Porter 5 forces in
this study and how are they interrelated?

 Walmart can identify opportunities and threat using these 2 analysis

method.
 Both are used to identify forces in external environment
 PESTLE analysis is used to analyze “macro external environment” whereas
Porter’s 5 forces is used to analyze “micro external environment”.

Q.6 The importance of BCG matrix to Walmart

 Help Walmart to identify its current position in the market (market structure).
 This matrix also provide a base for management to decide and plan where to
be in the future. (as-is and to-be)
 This matrix is able to give a guidance to Walmart in terms of the approach to
invest and support business units.
 The position of the company in the matrix is decided based on market share
and market growth.
Q7. BCG Matrix

Oligopoly

WALMART Monopolistic
(Short Run)

Monopoly

Monopolistic
(Long Run)
 8. SPACE Matrix
Financial Position (FP)
1. Return on investment
2. Cash flow
3. Liquidity
4. Working capital
5. Earning per share
Stability Position (SP)
6 1. Technological changes -2
5 2. Rate of inflation -3
4 3. Demand variability -2
6 4. Competitive pressure -3
5 5. Risk involved in business -3
6. Price range of competing products -2

TOTAL 26 TOTAL -15 y-axis:

5.2 + (-2.5) = 2.7
AVERAGE 5.2 AVERAGE -2.5
Competitive Position (CP) Industry Position (IP)
x-axis:
1. Market share -2 1. Growth potential 4 4.8 + (-2.25) =
2. Control over supplier and -2 2. Profit potential 5 2.55
distributor
3. Customer loyalty -3 3. Financial stability 6
4. Technological know-how -2 4. Productivity 5
5. Ease of entry into market 4
TOTAL -9 TOTAL 24
AVERAGE -2.25 AVERAGE 4.8
 SPACE Matrix
FP  Walmart is at aggressive position
in the market as according to the
x-axis Aggressive point (2.55, 2.7).
2.55  The strategies that can be adopted
y-axis by Walmart are
2.7 3 vertical/horizontal integration,
2.7 market penetration, market
2 development, product
Conservative development and diversification.
CP IP
0 2 2.55 3
Defensive
Competitive

SP
  Walmart is located in Quadrant 1
Q9. Grand Strategy because it is in an excellent strategic
position (rapid growth market and
strong competitive position).
 The strategies that can be adopted by
Walmart is market development,
Rapid market growth market penetration, product
development, related diversification,
forward, backward and horizontal
QUADRANT 2 QUADRANT 1
integration.
1. Market development 1. Market development
2. Market penetration 2. Market penetration
3. Product development 3. Product development
4. Horizontal integration 4. Related diversification
5. Divestiture 5. Forward and backward integration
6. Liquidation 6. Horizontal integration
Weak competitive Strong competitive
position position

QUADRANT 3 QUADRANT 4
1. Retrenchment 1. Related diversification
2. Related diversification 2. Unrelated diversification
3. Unrelated diversification 3. Joint venture
4. Divestiture
5. Liquidation

Slow market growth

Q10. Internal and External Factor Evaluation
(IFE & EFE)

Strengths Weight Rating Weighted Score

1. High customer loyalty 0.15 4 0.60
Opportunities Weight Rating Weighted Score
2. Well known brand 0.10 3 0.30
1. Increase sales during economic downturn 0.25 4 1.00
3. Affordable pricing 0.10 4 0.40
2. Exploit European and Asian market 0.15 3 0.45
4. Diversified or differentiated product 0.10 3 0.30
3. Acquisition of foreign retailer 0.10 3 0.30
5. Good customer service 0.10 3 0.30
6.Threats
Clean and appealing store layout Weight
0.05 Rating
3 Weighted
0.15 Score
1. Changing customer’s expectations
Weaknesses 0.30
Weight 4
Rating 1.20Score
Weighted
1.2.Lack
Competition among
of flexibility rivals against its rivals
to compete 0.15
0.20 23 0.45
0.40
in some disaster
3. Natural sectors 0.05 2 0.10
2.Total
Executives
EFE find it difficult to infuse existing 0.20
1.0 2 0.40
3.50 (>2.5)
culture in distribution centre and stores
Total IFE 1.0 2.85 (>2.5)
 Q10.IE Matrix

EFE

- Product development II. III.

3.50 Growth And Build
- Market
IV. V. VI.
penetration/development
Hold And Maintain

- Diversification
VII. VIII. IX.
- Horizontal/Vertical Harvest And Divest

Integration IFE
2.85
Q11. The Usefulness of IFE, EFE and IE Matrix

• IFE is used to evaluate the internal environment (strengths and

weaknesses).
IFE >2.5 indicates that Walmart is able to face internal
environment/has strong internal position.
• EFE is deployed to assess the external environment
(opportunities & threats). It enables an organization to
- Develop policies to achieve annual policies;
- Design strategies to attain long-term objectives.
EFE >2.5 suggests that Walmart shows strong response to
external environment.
• IE matrix is utilized to analyze the current position of the
division and to suggest strategies for future in order to
produce better results and for Walmart to achieve its long
term objectives.
Q12. Discuss the importance of Ansoff Matrix? In what
way does it help the company to make decision.

 Importance of Ansoff
Matrix
 Help company to
decide their market
growth as well as
product growth
strategies.
 Acknowledge the risk
associated with
various options
 To determine the best
strategy to adopt to
increase sales
Q13. Which generic competitive model should be
adopted by the company?
LOW COST DIFFERENTIATION
B
R Broad
O Overall Low Differentiation
A
D Cost
Best Cost
N
A
Focus
R Focus Low Cost
R Differentiation
O
W
Overall Low Cost Strategy:
• Efficiency in supply chain management
• Good relationship with supplier – ability to negotiate for low price
 Q14. Prepare the value chain analysis to support your
generic competitive model
Firm Infrastructure: Close connection between Headquarters and local
stores
Human Resource: Low pay but attractive benefits, roughly provide 300
SECONDARY

jobs
ACTIVITY

Information & Technology: Computer based technology, Satellite system,

Point of Sales System
Procurement: Deal directly with manufacturer (Walmart – Manufacturer –
Customer)
Inbound Logistic Operations
Outbound Marketing &
- Vendor - Real time
Logistic Sales
Manage inventory and
PRIMARY ACTIVITY

- Cross - Word of
Inventory sales tracking
docking, mouth
(continuous system
Logistic communication
replenishment) - Has 3
technique to - Focus on
- Electronic Data business
make everyday low
Interchange segment
distribution price
(EDI) system - Use of
process more - Self service
for 90% of its cutting-
efficient sales, cash and
suppliers. edge
carry basis
technology
Q15. Ishikawa Fishbone - To identify the root
cause of a problem faced by Walmart

How Why Where

1. United States
1. Exposed by the media. 1. Bad reputation 2. US has strict labor
2. Stakeholder’s 2. Poor employee benefit laws.
dissatisfaction 3. Low wages 3. To regulate firms on
3. Poor company responses 4. Cost control employment
Issue:
4. Poor corporate 5. Poor cost cutting strategy 4. Catering to labor Bad Publicity
communication union
5. Poor crisis management 5. Poor Walmart HR
practices

1. Walmart’s 1. Bad practices

management. 1. Year 2008
exposed.
2. Marginalized 2. Legal battle.
2. Poor employee
employee welfare. 3. Poor regulation
benefits
3. Too focused on cutting adherence.
3. Cost control
cost 4. Walmart’s poor
4. Poor cost
4. Poor strategy company policy.
cutting
execution 5. Poor HR
strategy.
5. Poor leadership. practices.

Who When What

 Q16.Pareto Analysis

To find and eliminate most possible problems that result from the
small cause by using 20-80 rule
Frequency Weightage Adjusted Cumulated Cumulative
Pareto Analysis frequency frequency frequency
120 70

60 60
60
100 100 Poor cost 2 30 60 60 37.5%
cutting
87.5 50 strategy
80
CUMULATIVE FREQUENCY

ADJUSTED FREQUENCY

75 Poor HR 2 30 60 120 75%

40 practices
60
Poor 1 20 20 140 87.5%
30 leadership

40 20 20
37.5
20
Poor crisis 1 20 20 160 100%
manageme
20 nt.
10

0 0
Poor cost cutting Poor HR Poor leadership Poor crisis
160
strategy practices management
 Q17. Does Walmart has a winning strategy?

YES GOODNESS OF FIT

TEST
 Strong Distribution + - Strategy to
strengthen on
Inventory Management System Internal and External
situation – Tools:
 Differentiated Pricing SWOT/TOWS/PESTLE
IFE, EFE & IE
 Cost Advantage Strategy Matrix/Porter’s 5
Forces of Competition
 IT Advantage
COMPETITIVE
ADVANTAGE TEST
PERFORMANCE TEST - Strategy leads to
- Strategy to boost sustainable
performance competitive
–Increase profitability advantages
– Low cost strategy –
-Business strength Tools-BCG
and competitive Growth/Space
position Matrix/Grand
– Tools : Balance Strategy/
Scorecard
Ansoff Matrix
 Q18. Discuss the importance of stakeholder
engagement matrix in this case study

 Stakeholder analysis is
important to identify the
Key Player
personal or group is
Keep Satisfied (Manage Closely)
High
affected or be affected
the organization.
Government Shareholder
Customers  To identify the key
Power

personal or group who

are most powerful and
influenced the
Monitor Keep Informed organization.
(Minimal Efforts)
 Understanding of
Suppliers stakeholders and provide
Low NGO Employees
Competitors insight as to how best to
engage them.

Interest
Low High
Q19. If Walmart were to join venture with a local player like
GIANT, what would be the consideration for shared values
analysis?
MC KINSEY’S
7S COMPANIES ISSUES RISKS ALIGNMENT COMPLIANCE
STRATEGY Walmart Low Cost Strategy LOW RISK Maintain GIANT’s vision and YES.
mission.
GIANT Low Cost Strategy Share similar main strategy Both companies have similar
and targeted customer. Comprehensive audit of strategy and would be able
GIANT’s goals and operations. to maintain and build
competitive advantage over
Thorough audit of GIANT’s the competition.
suppliers capabilities and
pricing.

STRUCTURE Walmart Hierarchical and LOW RISK Comprehensive audit of YES.

functional GIANT’s exisiting structure to
Share almost similar streamline job functions, GIANT will be able to
GIANT Hierarchical and
structure and functionality. operations, monitoring and leverage and adopt on
centralized decision-
performance measurement. Walmart’s efficient
making
operation and management
style.

SYSTEM Walmart Efficient distribution MEDIUM RISK Gap analysis and necessary YES
system. resources to improve the gap
Adopted Technology gap in supply in GIANT’s logistics and GIANT currently operates
technologies for chain management. distribution capabilities. with more than 126 outlets
effective supply Efficiency gap in distribution throughout Malaysia with its
chain. center and company’s fleet fleet operation. It has
operations. capabilities to improve and
GIANT Traditional supply
meet Walmart’s quality of
chain management
SCM.
MC KINSEY’S
7S COMPANIES ISSUES RISKS ALIGNMENT COMPLIANCE
SHARED Walmart Sustainable business, LOW RISK Immediate stringent YES
VALUE environmental protection and standard set and to
enriching customers’ Have almost similar shared be met by GIANT. Resources and assistance
experience values. GIANT need to needed from Walmart for
emphasize on sustainable GIANT to adopt best practice
and environment friendly in sustainable and
GIANT Provides biggest on saving business practices to meet environmental requirements.
and value across products, Walmart’s standard.
along with customers right
experience.

STYLE Walmart Customer service oriented – LOW RISK Comprehensive YES

listen to customers and
associates as well as share
information and capabilities
with suppliers.
GIANT Customers oriented – Strives
to offer the good service and
customer satisfaction.
Both companies are multi-
national company and
adopted almost similar
leadership style.
analysis of current
GIANT leadership Constant monitoring and
style to review the evaluation of company’s
efficiency and performance.
effectiveness to suit
with South East
Asia’s culture and
nature of work.

STAFF Walmart Insufficient salaries and MEDIUM RISK To abide by legal YES
benefits requirements set by Review employee reward
GIANT to adhere to minimum the government. and compensation to improve
GIANT Local school leavers and wage policy, employing To review employee retention and
immigrants workers, legal immigrant workers and employee rewards provide training to improve
overworked and underpaid. setting customer service and compensation competencies and
standard. benefit . satisfaction.

SKILL Walmart Highly trained staff. HIGH RISK
GIANT need to increase
workers’ knowledge and
GIANT Medium to zero skilled and skills through on-the-job
knowledge staff.
training and improve
professional attitude in
engaging customers.
Extensive and YES
planned training
needs for different Identification and
type of jobs implementation of training.
Monitoring outcome and
impact of training.
Q20. Strategy Map for The New Entity in Malaysia
VISION No. 1 Choice of Malaysians Shopping Place for Groceries and Households Products

MISSION To provide big value products with big cost saving prices to enhance customer satisfaction and loyalty

FINANCIAL Cost-Efficient of Operation and Cost-Efficient for Storage, Distribution and Logistics
PERSPECTIVE Increase of Sales
Administrative Expenses Network

CUSTOMER Cost High value products Hassle

Bulk purchase Loyalty Convenient and
PERSPECTIVE Saving at low price Free Accessibility of Locations

INTERNAL Technology-driven Effective and Efficient Effective Customer

Reduce Cost Layout Constant
PROCESS Supply Chain Fleet & Distribution Relations
and Wastage Optimization Internal Audit
PERSPECTIVE Management Management Management

Human Capital Organizational Capital Information Capital

LEARNING &
GROWTH Training & Career Core Work Customers Product Geographical
PERSPECTIVE Development Development Values Culture Database Database Spread
Q21. Factors Need to Consider from Time to Time in Order
to Make New Entity Remain Competitive

Perform • OT
• EFE Matrix
External
• PESTLE
Audit • Porter 5 Forces

• Value Chain Analysis

• McKinsey’s 7S
Develop Generate, • Winning Strategy
Establish Measure
Vision and Evaluate, Implement • Strategy Map
Long Term and Evaluate
Mission and Select Strategies • Ishikawa Fish bone
Objectives Performance diagram
Statement Strategies
• Pareto 80-20
• TOWS Principle
• IE Matrix
• Porter’s Generic Strategy
• BCG Matrix
Perform • SPACE Matrix
• SW
Internal • Ansoff Matrix
• IFE Matrix
Audit • Grand Strategy

STRATEGY FORMULATION STRATEGY STRATEGY

IMPLEMENTATION EVALUATION
Q22. The Importance of Applying Balance Scorecard
to Measure the Performance of New Entity

 BSC evaluates strategies from four perspectives which are financial

performance, customer knowledge, internal business process,
learning and growth and subsequently provides the information of
how well the new entity is doing and what areas need improvements
to keep it aligned with its strategic goals.

Q23. Relate Mitzberg's paper on crafting strategy

 The concept of the craftman pertaining to strategy formulation
 The intimate connection between thought and action
 Managers formulate strategy and plan but strategy can also
emerge without a plan
Q24. Importance of understanding the strategy
process flow

Clear direction where all strategies can be evaluated and cross

check with the vision and mission
To ensure the whole team members understand and moving
towards the same direction
Recommendation
Walmart to adopt a friendlier corporate attitude
Improve for better public image and perception
International expansion should be done with the help of Local
retailers