A common business analysis technique is a SWOT analysis, or analysis of an organization’s Strengths, Weaknesses, Opportunities, and Threats. In marketing, a SWOT analysis is often used to decide whether to launch a new product or to identify ways to improve an existing product. In management, SWOT analyses might be used to assist managers in identifying viable strategies.

As discussed at the beginning of Chapter 16, Wal-Mart has experienced sales growth in 2009 despite a worldwide economic recession. Consumers with less money to spend most likely turned to Wal-Mart because of its lower prices. However, sales growth flattened during 2010, and the company experienced a slight one-year decline in stock price while competitors such as Target achieved a 25% stock price increase.

Polarized viewpoints have surrounded Wal-Mart for many years, as summarized at the beginning of the chapter. Some analysts have been skeptical about Wal-Mart’s long-term prospects. The company faces pressures on its cost structure as it moves into new markets. Unionization attempts may grow fiercer as unions lose membership from the decline of competitors such as traditional grocery stores. Wal-Mart may also need to pay higher prices for land, labor, and other resources as it moves increasingly into urban areas. In addition, Wal-Mart faces potential problems with public opinion. Activist organizations such as Wal-Mart Watch and WakeUpWalMart.com seek improvements in the company’s relationships with employees, communities, and the environment.

Despite these concerns, Wal-Mart continues to enter new markets. Following a six-year battle, the company obtained permission to open stores in Chicago after promising to pay new employees 50 cents more than the minimum wage, give raises after the first year, use unionized labor for store construction, and donate $20 million to neighborhood charities. While some analysts believed that the Chicago agreement would help Wal-Mart gain entrance to other large cities, others did not.

Wal-Mart’s managers face continual challenges as they guide the company into the future.

According to Babson College history professor James Hoopes, “The history of the last 150 years in retailing would say that if you don’t like Wal-Mart, be patient. There will be new models eventually that will do Wal-Mart in, and Wal-Mart won’t see it coming” (Bianco and Zellner, 2003).

REQUIRED

A. What appear to be Wal-Mart’s strengths relative to competitors (i.e., its core competencies)?

B. One of the reasons Wal-Mart is successful is that it takes advantage of its competitors’ weaknesses. Suppose you work for a family-owned variety store in a town where Wal-Mart is currently building a store. What are your company’s weaknesses relative to Wal-Mart?

C. An organization’s opportunities are identified by looking at the external environment and discovering potential new markets, technologies, or other prospects. What types of opportunities does Wal-Mart currently appear to be taking advantage of?

D. What appear to be major threats to Wal-Mart’s future success?

E. Discuss how a balanced scorecard can assist an organization in addressing its strengths.