Walmart Case Assignment

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In Search of Renewed Growth.

Introduction

Every Company desires to grow in stock number and expand in many areas as they grow.

As time goes, strategies and ideas can be improvised and implemented so to increase the

company profitability and gain more customers and increase their company share price. In doing

so, it would be inevitable for a company to be recognized and investors start flocking in to

purchase shares hoping that the company grows more than the previous years due to their

outstanding financial performance of the past years. For a company to reach that level, it should

not only implement strategies and hope that all will go well, but they have to research for the

best options available, understand the current trend of the market and closely keep watch on their

competitors.

A good example of a growing company is Walmart. Walmart has been passing through

some challenges and its desires of upscaling has not been going as plan. Walmart was created by

Sam Walton in 1962 and has been one of the famous retail companies in the industry as it has

had a good reputation and good customer service (Walmart, 2023). It has been on the Fortune

500 since 2013 and has never missed its mark till to date as its performance has been outstanding

and threatening to its competitors (Hale, 2020). Despite of that all, it has barely made it up to the

top 3 companies in the retail industry. In this essay, I would elaborate more on the Walmart

desires to upscale, and the risk and benefits that Walmart might face during upscaling.

The industry and The Economic Conditions

Before elaborating out the reasons as to why Walmart has had a rough patch in the

market, it is important to understand the industry it is in and the economic conditions that is
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affecting it performance. Walmart is headquartered in Bentonville, Arkansas, United States and

is obligated to follow the rules and perform according to the standards outlined by the governing

body in doing so. By doing so, their activities could be permitted in the country it is located.

Walmart is situated in many countries such as Canada, Central America, Chile, China etc.

(Walmart, 2023). This had made it even quite tougher for the company as every country has its

own rules and guidelines and rules to be followed. An example of one country that Walmart

closed its offices was Russia. Due to disagreements on price had thwarted its acquisition plans, it

had to shut down their Moscow offices. Other countries where Walmart closed it stores are

Germany and South Korea (Kroeger, 2022). This has a negative impact to the company revenue

and the sales generated per year.

Not only are the regulations in place that can affect the performance of the company, but

also the overall economic condition that can affect the company input. With the rising inflation

numbers in the US and other countries, prices of commodities have gone up and has reduced the

number of sales in overall. Additional to that, the COVID outbreak had a big impact to their

financial position and made them lay of some employees so they can keep up their expenses.

This reduced the activities in the industry and made processes and revenue income slow.

Challenges in managing its supply chain, such as transportation, logistics, and sourcing became a

concerning issue during that period.

The Company and Competitors Financial Performance

Walmart performance for the past 5 years has been good and it has seen a grown in their

share price from $86 to around $140 as of January 2023 (Yahoo, 2023). Despite of that, it has

faced some stiff competition from its competitors such as Amazon, Costco, Target ad other

minor companies. Comparing to amazon $70 to $ 160 at the beginning of the year, it can be
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considered the growth rate was higher than that of Walmart. Other competitors such as Costco

increased from $180 to $500 and Target from $65 to $230 in the past 5 years (Yahoo, 2023).

Comparing their performance to Walmart can show that other companies such as Amazon,

Costco and Target increased their share price by 227%, 277%,355% respectively whereas

Walmart increased by only 175% which substantially low. This bring a major concern as to why

Walmart underperformed compared to other competitors during the 5 years.

Walmart Upscale Strategy

It has become a main concern as to why Walmart has underperformed and it is high time

to come up with strategies to improve the performance of the company. It is evident that major

companies had performed well during the COVID-19 period because of their advanced e-

commerce platform in place hence increasing the revenue generated on that period. Walmart has

its own ecommerce but it requires a little more of improvement and clarifications so it could

have a competitive advantage towards its competitors such as Amazon. Walmart competitive

advantage to its competitors is the fact that it sales products quite cheaply and has a great

customer satisfaction rate compared to other competitors. For it to grow, it need to focus on

improving its interactions with the ecommerce platform by adding AI technology and build up

more e-stores in the US and other countries.

Risk of Walmart Upscale strategy

Some of the risks that the company might face for following up with the strategy include

the following:

1. With the advancement of products offered, the company would be forced to increase its

prices and therefore losing some of its customers due to the higher prices
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2. Financial Risk is also a major concern as the strategy might require some more debt for

the company leading to a crisis if customers start leaving

3. Walmart may have difficulty competing with established upscale brands on price and

quality.

Benefit of Walmart Upscaling Strategy

1. There could increase in revenue and profits earned which is good for the company’s

growth.

2. The Walmart brand could be expanding which could lead to more customers getting to

try out the company’s services.

3. Walmart could gain market share by competing with higher-end stores in areas such as

apparel, furniture, and home goods.

Conclusion

In Summary, the decision for the CEO to upscale Walmart could be a wise decision and it

could have a positive impact to the company if all goes well. Despite of the challenges the

company might face, I would recommend the company to start upscaling in sections and have a

proper project management so to ensure all goes as by the plan. Having a proper project

management plan in place is also crucial to ensure that the upscaling process runs smoothly. By

breaking the upscaling process into manageable sections, the company can ensure that each

section is properly planned and executed, reducing the risk of unexpected issues.
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References

Hale, Tyler. (2020, May 19). WALMART TAKES TOP SPOT ON FORTUNE 500 LIST; FIVE

TOTAL ARKANSAS COMPANIES RANKED. [Link]. Accessible

on [Link]

arkansas-companies-ranked/#:~:text=Walmart%20retained%20the%20top%20spot,where

%20it%20stayed%20until%201998.

Kroeger, Kyle. (2022, December 1). Why Did Walmart Fail in Germany? [Link].

Accessible on [Link]

Walmart. (2023) Walmart history. Past, present and potential. Walmart. Accessible on

[Link]

%20man,help%20more%20customers%20than%20ever.

Yahoo. (2023). Walmart Inc.(WMT). Yahoo. Accessible on

[Link]

Yahoo. (2023). [Link], Inc. Yahoo. Accessible on

[Link]

Yahoo. (2023). Costco Wholesale Corporation (COST). Yahoo. Accessible on

[Link]