Wal-Mart China Analysis

Topics: SWOT analysis, Strategic management, PEST analysis Pages: 9 (3294 words) Published: May 15, 2011
Since China was opened the market in earlier 1980s, a number of foreign supermarket corporation were entered, e.g. Carrefour, Tesco and Wal-mart. Now the Wal-mart has become one of the very important supermarkets in Chinese supermarket sector. This assignment is intends to offer the evaluation for the business and performance of Wal-mart in China in terms of PEST and SWOT models, with critical discussion on the choosing and using of those two analytical models, so that provide the critical analysis and related recommendation to Wal-mart’s strategy in China. Critical evaluation of PEST and SWOT models

Since the corporate strategy has been commonly described as a matrix that provided proper business direction and extent for company to achieve competitive advantage in the business environment (Johnson et.al., 2008), it is fundamental for companies to understand both of the external and internal environment of their business before any strategic development or decision making. In fact, for company which intends to understand the external environment, there are three levels of circumstance existed. The highest one is macro-environment. It is an outer and broadest layer around the business; refers to the overall states, activities and structures in human societies; and superior to the industrial and competitive layers (Thompson, 2001). Scholars such as Porter (1980) has argued that the evaluation on the state or issue of macro-environment is essential as they can impose opportunities, limitations and uncertainties to all the business already existed in or likely to enter a market, and then determine their states of play. In that reason, PEST is a specific tool to deal with the analysis of macro-environment. It is delivering a suit of taxonomic classification for company to explore external situation, which involved four factors: politics, economy, social-demography and technology in a market or global society (Burt et.al., 2006). By using PEST model, it is enables the firms to expediently and particularly explore and assess the contents of wide range of aspects in the macro-environment and any significance on business. Hence, unlike Porter’s five forces only place attention on political factor for potential market entry and some models with no attention on macro-environment e.g. Ansoff Matrix, PEST model is offers a particular means for company to explore the general state of macro-environment. However, on the other hand, PEST model is not designed to analyze the rest of layers of external environment, as well as the internal environment of a business. Moreover, PEST model has been criticized since it analyzes the macro-environment one factor by one factor and incompetent to explore and assess the interrelationship among those factors (Burt et.al., 2006). In that case, compare to PEST model, SWOT model is an improved and more integrated tool, which able to utilize the analysis of PEST but also offer the capability analysis involved both of the internal and external environments. The ‘SWOT’ is refers to company’s strengths, weaknesses, opportunities and threats. It’s pointless for them to exist alone but SWOT model has offered the connections for them to relate with various aspects of internal and external circumstances. In order to implement SWOT model, scholars such as Hussey (2002) and Piercy & Giles (1989) have outlined that the company need to know the shared vision of business, products or service inside the organization; consumer demands and behaviours, competitors’ activities and movements in external environment, and integrated them to the sections of company’s strengths, weaknesses, opportunities and threats. Thus, by undertaking a SWOT analysis, the companies are able to analyze, realize and summarize the overall capacities to sustain or develop certain business or strategy in terms of integrated states of play in both internal and external environment. Compare to other tools such as BCG matrix, Ansoff...
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