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Industry Analysis for Wal-Mart company

Each assignment in this course focuses on a different portion of an industry analysis. The activities and discussion questions serve as an introduction to the process of critically evaluating a corporation, one of its direct competitors, and the industry as a whole which constitute a thorough and complete industry analysis. Your MB609 Capstone Project will be a complete industry analysis including a publicly traded company, its industry, and two of its competitors. (Be sure that you keep your textbook from this course as well as all of the projects you write.)

This Industry Analysis project (MB601) is an introductory project to prepare you for the Capstone Project (MB609).  At this time you will only analyze a publicly traded company and its industry (none of its competitors will be analyzed).  To begin this project, select a publicly traded corporation to study. In other words, you should be able to purchase stock in the corporation you select.  The corporation must be large enough for the business and trade press to have written about it, but not so large that the amount of available information is overwhelming making your ability to suggest innovative recommendations for the corporation’s survival and success.  Consequently, make sure that you do not choose one in which any and all potential strategies and recommendations have been discussed at length in the press.  A table of contents and a bibliography listing only those works that you cited in your analysis are required.  Your Stand-Alone Project responses should be both grammatically and mechanically correct, and formatted in the same fashion as the project itself.  If there is a Part A, your response should identify a Part A, etc.  In addition, you must appropriately cite all resources used in your response and document in a bibliography using APA style.  (200 points)  (A 10-page response is required for the combination of Parts A through H.)

First, collect the following documents and information.

1. The corporation’s annual report
2. At least 15 business or trade articles concerning the current status of your corporation and predictions of its future success
3. Information on your corporation’s CEO and Board of Directors
4. Information about the industry in general, including major players, consumers, trends, etc.
5. Next, thoroughly read the information and documents you collected on your company and its industry.

As you read, make notes on the topics listed below, synthesize the information, and analyze the current state of the corporation and its industry.  This synthesis and analysis process is essential to build your conceptual skills which are to be further developed as you proceed through the MBA Program.  It is the goal of an MBA program to build your conceptual skills which are required for management positions which oversee a variety of departments, specialists, and projects.

Following the outline below, write your analysis of your corporation and its industry.

Part A: CEO Profile and Assessment of Effectiveness

1. Profile your CEO’s qualifications (experience, education, etc.) as well as why this person was selected and the circumstances that created the CEO vacancy.
2. Students should relate the CEO’s qualifications as it applies to the type of strategy the company has elected to follow and the type of CEO that typically is successful in achieving that strategy.
3. Discuss the impact that the CEO has made on the organization thus far and why.

Part B: Board of Directors Profile and Analysis:  This section includes a wealth of information regarding the role that the Board of Directors plays in your organization.

1. You should discuss the manner in which the Board of Directors is nominated and selected, the way in which the Board is organized and why, and the way in which the Board utilizes or matches the trends in corporate governance that are listed in the text.
2. You should also evaluate and identify the strengths and weaknesses of the Board of Director’s composition with respect to their affiliation (who they really work for and that company’s relationship to your corporation), diversity, experience in the industry and the company, insiders/outsiders, etc.
3. Also, evaluate the changes in members to the Board in the last five years. If there have been changes, do those changes (new board members with different attributes and affiliations) suggest a change in your corporation’s strategy, target markets, etc.?  Are these changes in any way indicative of a new strategic move?

Part C: Industry Assessment

1. Evaluate your corporation’s competitive position within its industry using Porter’s model: threat of new entrants, suppliers, buyers, rivalry, substitutes, and other stakeholders.
2. You should include a discussion of the other factors considered crucial to the industry’s survival. Suggestions include industry dynamics, industry structure, life cycle, strategic groups, and other elements as necessary.

Part D: Direct and Indirect Competition:  Using the information provided in your text related to competitive intensity and the types of competitor information available, identify the competition with respect to your corporation.  Identify the nature of their competitive relationship – similarity in products, strategy, etc.  At least two (2) competitors for each category should be discussed.

Part E: Internal Strengths and Weaknesses:  Evaluate your corporation using the VRIO provided in your textbook.

Part F: External Opportunities and Threats:  Evaluate your corporation’s competitive environment for opportunities and threats using the TOWS matrix.

Part G: Overall Competitive Position:  Briefly evaluate the state of your corporation’s competitive position within its industry.

Part H: Recommendations

1. Make two (2) recommendations for increasing your corporation’s shareholder wealth in the future. This includes ensuring long term survival as well as meeting and exceeding your shareholders expectations for the generation of their wealth in the short term and the long term.
2. Your two (2) recommendations should be well supported by information contained in your written analysis, and your supporting information should be specifically identified in this section to justify your recommendations.
3. Your two (2) recommendations should be accompanied by your expectations for your corporation and its industry if your recommendations were adopted. Your expectations should include the impact to the industry structure, the likely response of competitors, and both positive and negative consequences should be identified.

Part A: CEO Profile and Assessment of Effectiveness

Before 2019, the chief executive officer, CEO of Wal-Mart company was Greg Foran, who was responsible for the company management for about five years. However, he decided to change his career and pursue a job with an airline, hence leaving a vacancy in the firm’s leadership to be taken by the current John Furner. Furner has been a prolonged high-ranking worker for the Sam’s Club division to become the new and current CEO of the retail giant in the US (Ramadani et al., 2020). Similar to all other organizations, Furner must report to the president and co-CEO, Doug McMillon. Further, Furner has been working for the firm for above 25 years. He began working in the company as an hourly associate and has worked his way up to transition to the store and district manager, chief of merchandising for Walmart China, and finally, the CEO of Sam’s Club in 2017. When the company announced the vacancy for the CEO position, it was a strategic move to hire an employee that had amassed so much knowledge and experience regarding the business.

Presently, the organization applies the cost-leadership approach that places its products at an extremely lower rate than its rivals like Home Depot. As the CEO, Furner is accountable for exemplifying this, which is depicted in his aggressiveness in his leadership technique and revamped up his supply chain to ensure that the company gets the needed products into its different outlets swiftly and cheaply. Also, he has dealt with the pandemic and guaranteed that products were stocked and primarily focused on the pick-ups and online orders without the necessity of increasing the product prices or even increasing the firm’s expenditure for the period. Besides, the CEO that is most effective in following the approach implemented by Walmart is typically the commercial executor that can only be due to data-driven and strive to maintain the product’s cost low while increasing the stock. Overall, the people champion CEO type would also be effective since they aim to please clients, and consumers often prefer low-priced products.

In his years as the company’s CEO, Furner has wholly revamped the supply chain, redesigned the company website to be more effective, and managed the firm through an unprecedented epidemic. Further, he strategized approaches in the supply chain to swiftly get the demanded products, both during the pandemic and even after. The firm’s website was redesigned to have the ‘Amazon-like feel’ and significantly increased the profit margin, particularly for its dot com segment. Therefore, his impact has been positive and firm for the organization as he is perceived as the leader that gets things done efficiently and swiftly (Loeb, 2020).

Part B: Board of Directors Profile and Analysis

Being a member of Walmart’s board of directors is considered a challenging task since the individual must follow a strict nomination process to join the board. The nominees for the position are mainly selected based on their outstanding achievement within their careers, knowledge, board experience, integrity, the ability to make informed and independent decisions, the analytical inquiries, willingness to devote adequate time to the board responsibilities, and their comprehension on the business environment (Walmart, 2022). Further, all the people selected as board members must understand the operational and financial basics of the organization. Although the company uses the size of 10-14 individuals, it is always willing to add more qualified people if it is considered a necessity to accomplish a particular objective. Besides, the company organizes the board into six distinct groups, including compensation, audit, the management development committee, executive committee, strategic planning and finance, technology e-commerce, and nominating and governance conference (Aluchna, 2016).

The individuals within its board of directors include the people working for Next-door, Yahoo!, KPMG international, NBC Universal, and PepsiCo. Although Walmart does not own these firms, the people contribute substantially in terms of their expertise to the board. For instance, KPMG is an accounting firm, which implies that the board member affiliated with the organization, Timothy Flynn, assists Walmart with all the ideas and decisions linked to finance, thus, making his skills an essential asset to the board. On the other hand, PepsiCo, Yahoo!, and NBC aids Walmart in applying different marketing strategies and other valuable insight to the board. Besides, Walmart has selected its board members from huge and most profitable organizations led by individuals who are often willing to share the approaches that are effective for their firms to make Walmart successful.

Walmart has not made significant changes to its board of directors in the last five years. In 2016, the company made an important decision to reduce the number of the board members by three, which was mainly an approach of making sure the company matched the trend that other organizations within the US were doing, which resulted in the board having 12 instead of the initial 15 members (Walmart, 2016). The company opted to have 11 board members losing another person in the following years. Additionally, in 2020, the company re-elected the member, a strategy that resulted in four independent stakeholders’ proposals being denied. As a result, seven independent directors were selected to serve a one-year team, and Walmart picked its four directors to join the board (Souza, 2020). The declined proposals included having the hourly workers join the board and the strategy of reducing the single utilization of plastic bags. However, since the same individuals had been on the board for a prolonged time, there were few changes to the approaches. Though having no changes has not been bad for the company since the profit margin and the client foot traffic to the store and website have significantly increased.

Part C: Industry Assessment

Walmart’s Porter’s model covers the firm’s competitive landscape and the parameters impacting its sector. Hence the analysis mainly focuses on assessing the firm’s position aligned to the forces such as the threat of new entrants, bargaining power of suppliers and buyers, threat of substitutes, and competitive rivalry. Currently, the threat of new entrants is considered moderate to low for the organization due to the numerous barriers to industrial entry being medium to high. Being the market leader in the US and the largest globally, Walmart does not worry about the new firm entering the market. The barriers are economic and technological, implying that the new organization requires high capital to enter that market. The needed technology for establishing a resilient supply chain is also extremely high.

Additionally, the company exploits the economies of scale and passes such advantages to its clients, resulting in a vast client base. Also, its net revenue has been on a constant increase. Therefore, with its huge capital and strong market position, Walmart perceives the component of new entrants as a nonexistent threat. However, the threat of substitution is considered low to moderate for the company due to its robust presence in online and offline markets. Walmart has the power to regulate the market aligned to its wishes. Further, its presence in offline and online markets offers it the flexibility to constantly innovate and guarantees that there is no substantial risk of substitution. Presently, the only great alternative for the offline retail market is the digital delivery system, in which the firm also has a considerable share (Greenspan, 2019). The demand for retailers has remained constant because Walmart offers an inexpensive rate and a better shopping service, making the risk of substitutes very low.

Additionally, the buyer’s bargaining power in both offline and online stores is low since the company offer products at a lower price. It offers services such as an online platform and home delivery. The client’s power to effectively bargain and put considerable pressure on Walmart to reduce further its prices is very low, linked to Walmart being the current market leader, thus being a pacesetter for the market aligned to its requirements. Similarly, the suppliers’ bargaining power is considered low since the firm has complete control over its suppliers, and the suppliers hardly reach the position whereby they can demand favorable terms. Further, Walmart applies a unique supply chain strategy known as vendor-managed inventory, in which the vendors are given the role of inventory management. Therefore, the company perceives itself as a hub for several supply chains; thus, it applies this strategy to meet the requirements of the clients and vendors. Finally, the competitive rival is deemed moderate to high due to a few significant competitors in the industry. Walmart has taken major shares due to its online and offline presence, and due to being the market leader, the firm faces reduced competition. Further, it faces a low competitive risk from the local firms because of its brand image and name, which gives it a huge edge and the local organizations’ inability to match the cost advantages that Walmart experiences.

Due to the recent pandemic, the retail industry is thriving. Walmart and other similar stores are currently perceived as a one-stop shop, whereby clients purchase groceries and equally get additional services such as electronics and restaurants, among others. The retail life cycle represents the transformations that all the corporates within the industry would experience, beginning from the innovation phase, development, maturity, and lastly, the decline stage. However, in some cases, such steps can occur cohesively though typically, they all follow a distinct pattern. Thus, for the company to remain relevant, it should often strive to grow as a firm, making the growth phase, where the clients extremely significant accept the novel business models. Overall, each industry’s life cycle is distinct, though the retail sector is not as competitive as others.