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Weaknesses are usually just the opposite of strengths. While it is tempting to be charitable or full of worship when analysing a firm, it is essential to get a realistic sense of where their problems lie.
Almost all the companies in the world have their own weaknesses, even the Wal-Mart has some weaknesses too. Although in the earlier, we have comment that Wal-Mart have lot of strengthens by compare with others companies in the world, but it still can't went until the perfect. Since they have the lowest prices in the America, wherever they open up a new store, other stores sales are declining. For information, Wal-Mart has come into small towns and put up a huge retail store and they end up killing all the small town businesses because they are so successful and selling with the cheapest price that small business cant afford to be. There have been many small towns that have turned down the building when the coming of Wal-Mart because they know what it will happen to the business in the small town. Especially small retailers are experiencing huge declines and met the financial problems. Because of this, they are getting bad reactions from some groups. This situation is obstructing the companys future growth.
Community relations problems are bound to exist with a corporation the size of Wal-Mart. Likewise, when a corporation is as successful, many a naysayer will challenge and scrutinize the company. Complaints mainly arise from community groups accusing Wal-Mart of destroying the local retail environment in the downtowns of small towns. Those put out of business by the giant retailer are among its most ferocious critics. The company is accused of monopolistic behavior. It wages aggressive price wars, and uses its power to bully its suppliers (Quinn 8-115)
Another weakness of the company is about ethical behaviour. Some consumer groups believe that the company has some unacceptable actions to lower the prices. This situation is harming the companys name and image. Some of Wal-Mart products brought controversy when an NBC program discovered false labeling in clothing made in abroad marked under "Made in U.S.A".
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Extensive labour relations problems are common at Wal-Mart. These are detailed within other sections of this report. Generally, the company is opposed to unionise labour (Fact Sheet, 001). Wage issues, shift scheduling, and workplace rights abuses are cited by labour groups. This seems to go against its founding principles of respect for employees. The company is also in frequent legal trouble with regulators and union groups in the courts (Quinn 8-115).
Weaknesses
Dependence on suppliers
Size - perhaps too big in many markets
Store layout is crowded - lack of aisle space
Size of store means that it is difficult to quickly find an
item.
Weaknesses
· Wal-Mart is facing stiff competition from old and new rivals like Meijers.
Other public relations problems vary from zoning violation complaints, to itemized complaints from competitors of Wal-Mart using its power unfairly. Censorship, for example, came up as an issue. Wal-Mart publicly believes in Family Friendly products, therefore if a movie or CD contains mature content the company will not carry the product for sale. This has caused much criticism from various groups.
In all, the company strategy is that of growth, expansion, and diversification by finding new areas to expand into within retail and the service industry. It is the number one retailer in the US and in the World as a result. The competition is scared of them. Its customers know its brand, and will shop there because of the price, selection, and size.
In the finances of the Wal-Mart store, cost of sales increased 14% from 15 to 16 due to lower mark-up prices, consistent with Wal-Marts commitment of providing low prices. Although Wal-Marts financial ratios are healthier than those of the industry as a whole, an eleven-year comparison shows a marked decline in the companys profit margins, liquidity and returns on investments. Long-term debt increased from $1.7 billion in 1 to almost $8 billion in 16. Since Sam Waltons demise in 1, stock prices dropped from a high of $4 per share to a low of $1.1 in 16.
In the manufacturing and service, Wal-Marts image as a clean, comfortable, mom-and-pop type of operation has changed drastically since Sam Walton passed away. Every negative connotation that K-Mart has acquired over the years has been applied to Wal-Marts discount stores. The stores are unclean, the shelves are unkempt, and the stock is dusty. Even SAMs Clubs lack the luster that its major competitor, PriceCostco, has. Wal-Mart associates are not nearly as knowledgeable and helpful as the company claims them to be. The company has been concentrating on expanding its Supercenter division at the expense of losing many of its discount stores. Supercenters are Wal-Mart discount stores with large grocery stores attached, all within one massive structure. The food industry has lower profit margins and is much more competitive. In addition, many traditional Wal-Mart stores are shut down when Supercenters are built in neighbouring areas, thereby limiting reliable revenue receipts. About half of the closed stores are leased out, but the remaining stores are simply abandoned. International locations are costlier to operate and generate fewer revenues, yet the company continues its plans for further expansion overseas. Total square footage for all domestic locations increased 5,804,80 from 15 to 16; however, sales per square foot decreased from $6.10 in 15 to $5.1 square feet in 16.
Wal-Mart is, without question, a fabulously run company. It has, however, but one selling proposition price. While thats a pretty good one, the company isnt infallible. Same-store sales have been inching down, to the low single-digits. Costco Wholesale, among others, has effectively competed on price, while offering higher-quality goods.
Wal-Marts store locations arent always the most convenient. The stores can be dark, hard to navigate and not pristine. The lines are long. The apparel is far from hip.
Something a company does poorly, or a characteristic that puts it at a disadvantage. For example, one of Wal-Marts weaknesses could be its inflexibility to respond to changes in the marketplace at the local level.
Human resource
Weaknesses
Employees of Wal-Mart are the largest group of workers without
health care in the United States.
Wal-Mart suffers from high employee turnover.
"The Wal-Mart threat causes some companies to close their doors for fear they can't compete, and that's a defeatist attitude. The critical thing is to have the will to win."
Unified members are facing the prospect of competing against Wal-Mart supercenters for the first time following Wal-Mart's announcement a couple of months ago that it plans to open 40 supercenters in California over the next four to six years - a prospect reflected in opening remarks by Chuck Pilliter, Unified's president and chief operating officer, who said Zaucha's
Some of WalMart's weaknesses lie in their recent entrance into the Asian markets. Since their European competitors have already made their foothold there, WalMart is at a slight disadvantage at gaining customers there. Also the value chain system applied to the American markets needs to be altered for their Asian markets because the tastes of the Asian consumers vary greatly from their American counterparts. WalMart is also reaching the saturation point in the American markets. Their long time presence has lead to use every trick in the book to gain customer satisfaction the old school way, but now with the use of IT they can further increase their customer market by analyzing the market trends of their various locations. Their new IT will give them further insight on what the customers really want and they will be able to focus and selling and advertising the demanded products at the lowest market prices to beat out their competitors. According to the competitive forces model, analyzing WalMart's stance in the Asian markets reveals that the threat of new entrants into the industry is quite possible, since they are trying to sell foreign products to consumers who would prefer the local products. The threat of competitors is quite strong as they have to compete with the European stores who have established themselves there well before WalMart's arrival. However, the new IT will give them the ability to determine which products are in most demand in which locations and then switch the order levels with suppliers accordingly, thus avoiding any losses and in fact guaranteeing a profit.
Even though it seems like Wal-Mart has a lot of strengths, they also have some weaknesses. The first weakness that they are just now facing is that they will not be able to continue to keep the level of grow that they have accomplished steady over the future years. Whenever a company grows so fast that they can build and run ,00 stores in years, people tend to wonder if that growth will be able to still happen. One of the reasons people think that is because Wal-Mart has always been good at succeeding in primarily small, rural communities-away from competitors. That is another weakness. Now where Wal-Mart is opening they are entrenched will competition such as Kmart and Target. Even if Wal-Mart was to try and move into the smaller rural communities, they are not wanted. Here is yet another weakness. Wal-Mart has even been banned in Bath, Maine; Simi Valley, California; and two towns in Pennsylvania. The state of Vermont has completely resisted all plans for a Wal-Mart to be brought into the state because of the fear that all of the local retailer will be forced to shut down. This is a weakness because it is never a good thing to be looked at as negative through the public eye. Word of mouth could possibly spread, and before you know it, three more states dont want to have a Wal-Mart anywhere near them.
The biggest weakness Wal-Mart has to deal with competitors. With K-Mart and the largely growing Target in the same market they are daily trying to improve themselves to stay at the top of the market. They have to find all the advantages they can to be the best company they can be. They must get feedback from their customers to all themselves to learn from what they are doing.
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