Essay about Swot Analysis of Wal-Mart in China

In 1998 Wal-Mart became one of the first international retailers in China. After many frustrations and difficulties Wal-Mart became the 20th largest retailer in China at the end of 2005, with 59 stores. In the year 2006 the company outbid its largest competitor in China and acquired Trust-Mart, a chain of over 100 super centers located in 20 cities in China. This acquisition made Wal-Mart the largest network of food and department stores in China.

There was a marked improvement in China’s economy. To further increase and attract foreign investment, the Chinese government increased its numbers of experimental, special economic-zoned cities in which foreigners could operate a business. There were, however, restrictions set forward by the government. One restriction in 1996 was that all foreign businesses would have to be in a joint venture or other type of cooperative agreement with at least one Chinese partner, with that Chinese partner getting a stake greater than 51%. In August 1995, Wal-Mart, the great American retail chain and Middle America success story, arrived in China, establishing a joint venture with Shenzhen International Fiduciary Investment Co, Ltd, China. In the following year, 1996, Wal-Mart opened its first supercentre and a Sam’s Club, its members-only big-box store, in the special economic zone of Shenzhen, in the southernmost Guangdong Province. However, it took the Chinese government’s removal of further trade restrictions for foreign retailers in 2004 for Wal-Mart to kick-start its expansion plans. Three years later, in 2007, Wal-Mart acquired a 35% stake in Trust-Mart, a Taiwanese-owned chain of retail supercentres operating in the Middle Kingdom. By 5 August 2010, Wal-Mart’s presence in China grew to 189 units in 101 Chinese cities, with the creation of over 50,000 local jobs. By early 2012, Wal-Mart nearly doubled its

A SWOT analysis is a tool used to identify the strengths, weaknesses, opportunities and threats of an organization. A SWOT model measures what an organization can or cannot do as well as the possible opportunities and threats. This is done by taking data from the organization’s environment, analyzing the information and separating it into the internal (strengths and weaknesses) and external (opportunities and threats). When this is completed the analysis can create a plan for the organization to achieve its goals, and identify what difficulties must be overcome to attain

Wal-Mart’s expansion in China had been hindered and slowed down by regulatory restrictions for a long time. Thus, international retailers were limited to certain cities, in which not more than three stores were allowed. Additionally, each new store needed the approval of the central government. Furthermore, enforcement of local interest such as tax revenues or jobs and local protectionism by local governmental agencies handicapped Wal-Mart’s expansion in China. As a result, the retailer had only 43 stores in China by early 2005 (p.12-14).

Most of Wal-Mart’s suppliers are from China and that means less American made products and more foreign products going around. This lack of American production is what causes American factories to shut down, leaving the employees without jobs. Even if these employees decided to work with Wal-Mart, they would make around half of their normal salary with no health care or the job security benefits that have been the normal in factory work. “Wal-Mart wants high turnover, so people won't become attached to the company, and make demands on it."-Glen Ford.

Inventory from China is now reaching 18 billion dollars, and has increased 20 percent over the past two years. Currently over 5,000 suppliers have steady alliances with Wal-Mart. Not only does this benefit U.S. customers by keeping prices down, but it keeps the Wal-Mart corp. very well received by the Chinese people. A large portion of the world's population is located in China being a respected company in this part of the world will greatly increase sales. Wal-Mart is, however, responsible for 10 percent of the countries trade deficit to China.

3) Do those same sources of cost advantage enable Walmart to achieve a sustainable competitive advantage in China? With a localized demand, localized supply base, and localized distribution in China also provided domestic stores with an edge in establishing a strong regional dominance when foreign retailers found it hard to leverage national presence in a regional market. In China, however, the constraints on a foreign retailers operation directly limited the regional expansion of Walmart stores and the efficient use of distribution centers since they were so spread out. Would have to spend more on distribution costs and given the slow speed of transportation did not enable Walmart to lower its prices. Walmart also faced a problem with lack of an information technology network with suppliers, making purchasing and distribution difficult. Also, consumers in China were very different than those back home, which added pressure to the operational costs and directly threatened its ability to set the price low as possible. People in China did not buy in bulk and that is what Walmart specialized in, so shopping patterns did not fit. Diminished economies of scale and interrupted supply chain meant higher costs in satisfying Chinese consumers. Everything that Walmart thrived in and was able to do to cut costs, they

They turned a small company into one of the largest corporations in the entire world. They have completely redefined what it means to be a big business, and have had many good impacts on society. While this is true, Wal-Mart has not always had the best business practices, receiving many different criticisms over the years. Some criticisms include its relations with people and businesses outside the United States, its role within local communities, and its labor policies and practices. Wal-Mart has always been the superstore that prides itself on lower prices, so much so that it has looked to manufacture in other countries for the cheap labor. Wal-Mart has become so big, that it has stores and plants all over the world. Wal-Mart even does most of its business overseas. “Chinese suppliers, or “partners,” reportedly provide Walmart with about 70 percent of the nearly $420 billion worth of goods that it sells globally each year” (SCHELL). Wal-Mart has even gone as far as to move one of its headquarters to China. Wal-Mart is helping China, and China is helping Wal-Mart. Wal-Mart is bringing in lots of jobs and products for the Chinese people to buy, while China is providing everything Walmart needs to keep growing as rapidly as they are. Wal-Mart is one of the worst offenders of the global sweatshop problem, and because of this they had lots of criticism of their labor policies and practices. Wal-Mart is not a

Wal-Mart’s sheer size gives it unrestrained economic power which allows it to drive down costs in the retail and manufacturing sectors and to enact its own standards with regards to its work force.

Wal-Mart is arguably the most dynamic corporation in the last 50 years in the United States, if not the world. Arising from its beginnings in Bentonville, Arkansas, it has grown to over 4,400 discount stores, super centers and corner markets worldwide. Wal-Mart continues to expand despite public criticism of its labor practices as well as complaints about their treatment of competitors. The many strengths of Wal-Mart, like their low cost production and marketing practices, will aid Wal-Mart as it continues to grow in the retail

     When you talk about Wal-Mart the first thing that you have to remember is that they are the largest retailer in the world. Wal-Mart employs more people in the United States than any other company and is second only to the federal government in the number of employees that they have on the payroll. These are important facts to consider in that due to their tremendous size, Wal-Mart has an enormous

Businesses in the same industry compete against each other to meet their organization goals and sustain competitive advantage over one another. But to meet those goals, it’s important for businesses to analyze their internal and external environment to allow them to come up with new business strategies beneficial to the business. Firms can use SWOT as a starting point. SWOT is a basic technique that can be used by business owners to analyze their business and industry condition (Dess, G., Lumpkin G.T., Eisner, A., McNamara, G, 2013). Using SWOT will help business owners understand the strengths, weaknesses, opportunities and threats of their business. It would help them analyze and come up

SWOT analysis is a popular analysis tool used in different situations that include not just business and marketing but also project planning and personal career development (Chapman 1995-2012). As for the strategic planning, Kenneth Andrews popularized his idea that good strategy means keeping a fit between the external situations a firm faces and the internal capabilities (Hill and Westbrook, 1997). The format the SWOT analysis presented is a 2x2 'internal/external' matrix, in which questions and relative answers can be listed for analysis (chapman 1995-2012). And according to Hill and Westbrook (1997), the output of SWOT analysis comes from meetings facilitated by consultants or managers to contribute the final analysis. Brainstorming can be used for filling in the sections to answer the questions. In addition, similar arguments should be concluded and ranked according to their answers in meetings (Rauch, 2007). As for the newly developed analysis, the TOWS matrix matching the various factors enables companies to stimulate new strategic initiative (Dyson, 2004).

The focus of the SWOT analysis is to identify the key internal and external factors that are important to achieving the objective. SWOT analysis groups key pieces of information into two main categories; internal factors and external factors. The internal factors are the strengths and weaknesses that are internal to the company while the external factors are the opportunities and threats that presented by the external environment. The internal factors are determined by their impact on the company’s objectives. What may represent strengths with respect to one objective may be weaknesses for another objective. The external factors may include technological change, legislation, cultural changes, and changes in the marketplace or competitive position (Wood, 2008).

SWOT analysis is a useful tool for understanding and decision-making for all sorts of situations in business and organization. SWOT analysis can be classified into internal and external factors affecting a company. The Strengths and Weaknesses of the SWOT analysis represent the internal factors that influence the viability of the company. While the Opportunities and Threats, on the other hand, are the external factors that may affect the company's performances. A SWOT analysis provides more understanding of the organization in relation to its internal and external environment so that manager can formulate better strategy in pursuit of its mission.