The Marketing Environment: Wal-Mart Corporation
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The Marketing Environment: Wal-Mart Corporation
Wal-Mart is one of the worlds greatest assets to most people. It provides consumers a place they can go to virtually get anything they need from, car repairs, to groceries, prescriptions, even the latest toys and electronics. With all that said, this paper relates to the different forces in business that affects business: competitive, economic, political + legal + regulatory, technological, cultural + social, demographic, and natural forces. Although there are technically seven we are going to focus on competitive, political, technological, and natural forces.
Competitive Force
Wal-Mart is the worlds largest retailer and second largest corporation. It is the largest private employer in the United States and Mexico. Wal-Mart is the largest grocery retailer in the United States, with an estimated 20% of the retail grocery and consumables business, and the largest toy seller in the United States, with an estimated 45% of the retail toy business, having surpassed Toys”R” Us in the late 1990s. Wal-Mart has 1,929 stores which as of 2005 sales figures totaled about $155,477,000,000 in sales. Wal-Marts revenue as of 2006 was an estimated $315,654 billion USD, net income $11.231billion USD, and employs more than 1.8 million employees.1
Wal -Marts major competitors are the Kroger
co. #2 in annual sales, Albertsons Inc. #3, Safeway,Inc. #4, and Costco Wholesale Group #5. Now even though Wal- Mart is leading the way in total sales the #2 and #3 businesses lead in way with total # of stores. The Kroger Co. has 3,302 with Albertsons at 2,476 stores nationwide. Wal-Marts total sales for that year alone was beating its 2nd place competition alone by more than 80 billion dollars. Wal-Marts major competitors in low-end general merchandise department would include Sears Holding Corporation, the slowly diminishing K-Mart chain, and Target whose trying different approaches including building Super Target stores to compete with Super Wal-Marts. With Wal-Mart moving into the grocery business it has put a strain on grocery retailers also including: H-E-B, Kroger, Albertsons, Publix, Giant Eagle, SafeWay, Winn Dixie, Food Lion and Save-A-Lot just to name a few. However with a small number of low-cost product store like Family Dollar and Dollar General, they have proven a match for Wal-Mart successfully competing with them head-to-head for consumer sales. However, like the case in pure competition Wal-Mart has countered those low-cost product stores with a subsection in it store known as “Pennies n-Cents. 2
Political, Legal, and Regulatory Forces
Wal-Mart has come under fire as of late over issues regarding local communities arguing over Wal-Marts planning new store locations.
The communities argue that they are concerned about traffic problems, environment problems, public safety, absentee landlordism, poor public relations, low wages and benefits, and predatory pricing (aggressive pricing). However, there are some people in those communities that defend Wal-Mart. They claim consumer choice and claimed economic benefits. With the pace of Wal-Mart building more and more stores every year you might be the one eventually making a decision to be for or against this act.
Many claim arguments towards the opinion that Wal-Mart uses cheap, foreign labor to provide its customers with lower prices. According to the AFL-CIO, “Wal-Mart is the single largest importer of foreign-produced goods in the United States”, Wal-Marts biggest trading partners is China which coincidently constitutes about 10% of the total U.S trade deficit with China. In 2004 60% of products sold at Wal-Mart were imported to the U.S from other countries.
Health Care and employee benefits are so big its even gotten the attention of State Legislators. A judge in Maryland overturned a law in Maryland that required Wal-Mart to provide more health-care coverage for its employees. In 2006 Maryland originally passed a bill requiring all corporations with more than 10,000 employees in the state to spend at least 8% of their payroll on employee benefits, or pay into a state fund for the uninsured.
Wal-Mart, which had 170,000 employees in the state of Maryland, was the only company not to follow through with the requirement before the bill passed. Thats what lead way to the overturning of the bill on July 7, 2006. District Judge Frederick Motz of the federal supreme court ruled, the law would “hurt Wal-Mart by imposing the administrative burden of tracking benefits in Maryland differently than in other States2.