Walmart: Pest Analysis
Question 2
Please apply the PEST analysis to the Wal-Marts case study.
"The secret of successful retailing is to give your customers what they want. And really, if you think about it from your point of view as a customer, you want everything: a wide assortment of good-quality merchandise; the lowest possible prices; guaranteed satisfaction with what you buy; friendly, knowledgeable service; convenient hours; free parking; a pleasant shopping experience."
- Sam Walton (1918-1992)
Wal-Mart is the third largest company in the world by revenue and the largest retailer in the world. Its sales for fiscal year 2011-2012 were USD446 Billion with profits of USD16.5Billion. Of its revenue, 28.4% is generated outside of its country of origin of USA. This expansion overseas started in 1991 when it opened its first store in Mexico City and moved into Germany in 1997 with its acquisition of Wertkauf and subsequent purchase of Spar Handels AG+ in 1998. Its failure can be largely attributed to its ignorance of the specific features of the extremely competitive German retail market. (Deloitte, 2013)
In Germany, retail is dominated by the top 5 players which account for 63% of the market share. In contrast, Wal-Mart was only the thirteenth player in the market. The retail scene was such that they were all hard discounters who offered a range of 600-700 products with a large proportion of them being own-brands that were at rock bottom prices contributing to low margins. (DOI, n.d.)
PEST Analysis is a framework of macro-environmental factors used in the environmental scanning component markets. It is a part of the external analysis when conducting a strategic analysis or doing market research, and gives an overview of the different macroenvironmental factors that the company has to take into consideration for the market they are operating in or wish to operate in. It is a useful strategic tool for understanding market growth or decline, business position, potential and direction
Please apply the PEST analysis to the Wal-Marts case study.
"The secret of successful retailing is to give your customers what they want. And really, if you think about it from your point of view as a customer, you want everything: a wide assortment of good-quality merchandise; the lowest possible prices; guaranteed satisfaction with what you buy; friendly, knowledgeable service; convenient hours; free parking; a pleasant shopping experience."
- Sam Walton (1918-1992)
Wal-Mart is the third largest company in the world by revenue and the largest retailer in the world. Its sales for fiscal year 2011-2012 were USD446 Billion with profits of USD16.5Billion. Of its revenue, 28.4% is generated outside of its country of origin of USA. This expansion overseas started in 1991 when it opened its first store in Mexico City and moved into Germany in 1997 with its acquisition of Wertkauf and subsequent purchase of Spar Handels AG+ in 1998. Its failure can be largely attributed to its ignorance of the specific features of the extremely competitive German retail market. (Deloitte, 2013)
In Germany, retail is dominated by the top 5 players which account for 63% of the market share. In contrast, Wal-Mart was only the thirteenth player in the market. The retail scene was such that they were all hard discounters who offered a range of 600-700 products with a large proportion of them being own-brands that were at rock bottom prices contributing to low margins. (DOI, n.d.)
PEST Analysis is a framework of macro-environmental factors used in the environmental scanning component markets. It is a part of the external analysis when conducting a strategic analysis or doing market research, and gives an overview of the different macroenvironmental factors that the company has to take into consideration for the market they are operating in or wish to operate in. It is a useful strategic tool for understanding market growth or decline, business position, potential and direction
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