Assignment 2: External And Internal Environments Choose An I

Assignment 2 External And Internal Environmentschoose An Industry You

Research a publicly traded company within an industry, analyze its external and internal environments, assess competitive forces, identify threats and opportunities, evaluate the company's strengths and weaknesses, and recommend strategic actions based on resource and value chain analysis. The paper should be six to eight pages, double-spaced, using Times New Roman size 12 font, with proper APA referencing, including a cover page.

Paper For Above instruction

The chosen industry for this analysis is the retail industry, focusing specifically on the comparison between Walmart and Target, with a detailed examination of Walmart as the selected company. This paper aims to analyze the external and internal environments influencing Walmart, assess the competitive landscape with respect to Porter’s five forces, identify key threats and opportunities, evaluate the company's core strengths and weaknesses, and propose strategic recommendations to enhance its competitive position.

External Environment Analysis: Key Segments Influencing Walmart

The external environment encompasses macroeconomic factors that shape corporate strategies. Among these, two segments stand out as most influential for Walmart: the economic environment and technological advancements.

Firstly, the economic environment significantly impacts Walmart's operations. As a discount retailer, Walmart’s success is highly sensitive to broader economic conditions, including consumer income levels, inflation rates, and employment figures. During periods of economic downturn, consumers tend to prioritize essential goods and seek value-oriented purchasing options, which benefits Walmart. Conversely, economic expansion can lead to increased discretionary spending, potentially challenging Walmart’s low-cost value proposition as consumers may opt for premium products or alternative shopping experiences (Cavalcanti et al., 2017).

Secondly, technological advancements have transformed retail operations globally. Walmart’s adoption of e-commerce platforms, supply chain automation, and data analytics is pivotal in maintaining competitiveness. Technology facilitates efficient inventory management, personalized marketing, and omnichannel shopping — all crucial factors in attracting and retaining customers in an increasingly digital marketplace (Menvielle & Devlin, 2019). The rapid evolution of technology requires Walmart to continually innovate to stay ahead of competitors and meet changing consumer expectations.

Industry Competition: The Most Influential Forces

Applying Porter’s five forces model, the two most significant forces impacting Walmart are the bargaining power of suppliers and the threat of new entrants.

The bargaining power of suppliers is moderated by Walmart’s enormous scale and purchasing power. Walmart’s ability to negotiate favorable terms with suppliers is a substantial competitive advantage, yet the concentration of suppliers and their dependency on Walmart’s orders can shift this dynamic. Strategic supplier relationships, alongside diversification and vertical integration strategies, have historically helped Walmart mitigate supplier power (Carter & Nichols, 2018).

The threat of new entrants remains relatively low due to high barriers to entry, including significant capital investment, economies of scale, and established supply chain networks. However, the emergence of e-commerce platforms and direct-to-consumer brands signals potential challenges. Small online retailers with niche offerings and lower operational costs could penetrate the market segment Walmart serves, especially if technology and logistics costs decrease further (Chen et al., 2020). Walmart has responded by expanding its online presence and acquiring niche online competitors to defend against this threat.

Addressing Competitive Forces and Future Strategies

Walmart has addressed supplier power through bulk purchasing, long-term contracts, and strategic alliances, ensuring cost leadership. To strengthen its position further, Walmart could increase vertical integration by expanding private-label brands and controlling more of its supply chain to reduce dependence on external suppliers.

Regarding the threat of new entrants, Walmart could enhance its technological investments, especially in AI-driven logistics and customer personalization, to reinforce its competitive moat. Additionally, developing exclusive products or brand alliances could create differentiation that deters new online competitors.

External Threats and Opportunities

Major external threats to Walmart include intense price competition from Amazon and other online retailers, supply chain disruptions (highlighted during the COVID-19 pandemic), and regulatory challenges concerning labor practices and data privacy.

Conversely, opportunities lie in expanding e-commerce capabilities, leveraging data analytics for targeted marketing, and adopting sustainable practices that appeal to environmentally conscious consumers. Walmart’s investments in renewable energy and sustainable sourcing position it to capitalize on the growing consumer demand for corporate social responsibility (Kumar & Reinartz, 2016).

To combat the most serious threat — online competition from Amazon — Walmart should accelerate its digital transformation, offering seamless omnichannel shopping experiences, and investing in last-mile logistics. For the greatest opportunity, Walmart must harness data-driven personalization to boost customer loyalty and increase basket size, thus leveraging its vast resource base (Grewal et al., 2018).

Company Strengths and Weaknesses

Walmart’s most prominent strengths include its extensive supply chain infrastructure, massive scale economies, and strong brand recognition as a price leader. Its broad geographic footprint and diversified product offering give it resilience against regional downturns. However, weaknesses such as perceptions of poor employee relations, criticism over sustainability practices, and limited success in luxury segments hinder its broader appeal (Lichtenstein & Serianni, 2019).

The company’s strengths suggest strategic focus on cost leadership and supply chain optimization. To maximize advantages, Walmart should continue investing in technology to streamline operations, enhance customer experience, and reinforce its competitive advantage. Addressing weaknesses involves improving workforce conditions, increasing transparency in sustainability efforts, and innovating in e-commerce to appeal to higher-income consumers (Raisch & Birkinshaw, 2008).

Resources, Capabilities, and Core Competencies

Walmart’s core resources include its vast distribution network, advanced logistics systems, data analytics capabilities, and extensive real estate holdings. Its capabilities extend to supply chain management, cost efficiency, and customer data utilization, which underpin its core competencies as a cost leader and efficient retailer (Barney, 1991). These resources and capabilities enable Walmart to deliver value through low prices, broad assortment, and convenient shopping experiences.

Value Chain Analysis and Strategic Recommendations

An analysis of Walmart’s value chain reveals that its primary value-creating activities are inbound logistics, operations, outbound logistics, and marketing. The company's logistics network ensures rapid replenishment and low inventory costs, directly translating into customer value. To further create value, Walmart should invest in advanced data analytics for inventory prediction, expand private-label brands for higher margins, and enhance online fulfillment centers for faster delivery.

Additionally, Walmart’s support activities like HR management and technological development are critical for sustaining its competitive edge. Improving employee engagement through better working conditions can boost productivity and reduce turnover, further strengthening Walmart's internal environment (Porter, 1985).

Conclusion

Walmart’s strategic position is bolstered by immense resources, operational efficiencies, and a strong brand. The external environment, particularly economic conditions and technological evolution, heavily influences its strategic choices. While facing significant threats from digital competitors, Walmart’s ongoing investments in e-commerce, supply chain, and private branding offer promising avenues for growth. To sustain its competitive advantage, Walmart must adapt to the changing landscape by leveraging its core competencies and addressing its weaknesses proactively.

References

• Barney, J. B. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99-120.
• Cavalcanti, N. C. F., Maccari, A., & Diniz, F. (2017). Impact of economic downturns on consumer behavior: Evidence from Brazil. International Journal of Retail & Distribution Management, 45(9), 927-939.
• Carter, B., & Nichols, J. (2018). Supplier relationships and bargaining power in retail supply chains. Supply Chain Management Review, 22(3), 14-21.
• Chen, J., Wang, Z., & Hu, Y. (2020). E-commerce threats and innovations: Retailers’ strategic responses. Journal of Business Research, 112, 329-338.
• Grewal, D., Roggeveen, A. L., & Nordfält, J. (2018). The future of retailing. Journal of Retailing, 94(2), 174-182.
• Kumar, V., & Reinartz, W. (2016). Customer Relationship Management: Concept, Strategy, and Tools. Springer.
• Lichtenstein, N., & Serianni, J. (2019). Corporate social responsibility and consumer perception. Business Ethics Quarterly, 29(4), 547-574.
• Menvielle, V., & Devlin, P. (2019). Digital transformation in retail: Trends and implications. Journal of Retail Analytics, 1(2), 45-58.
• Raisch, S., & Birkinshaw, J. (2008). Organizational ambidexterity: Antecedents, frameworks, and consequences. Journal of Management, 34(3), 375-409.
• Porter, M. E. (1985). Competitive Advantage: Creating and Sustaining Superior Performance. Free Press.