Question

the four components of the general environment for business (economic, sociocultural, technological and political). For this week's journal, search the Internet for an article that discusses a company that is dealing with the challenges one of those environments presents. Write about what the challenge is and reflect on how the company is dealing or could deal with the challenge.

Answer 1

The general environment of an organization refers to a range of factors or forces outside an organization that may influence the performance and operation of a business. When compared to a firm's task environment, the impact of these dimensions is less direct. Key dimensions of the environment that bear on the institution include the economic context, technology context, sociocultural context, political-legal context, and international context. An analysis of all this dimensions are an attempt to understand the conditions outside its boundaries and help to shape how the organization defines itself and how it articulates what is good and appropriate to achieve. Managers of the organization do consider all the aspects of the general environment as the plan, organize, lead and control all the operation of the organization.

GENERAL BUSINESS ENVIRONMENT FOR WALMART

Wal-Mart Stores, Inc is an American public corporation that runs a chain of large discount department stores and a chain of warehouse stores.  In 2010 it was the world's largest public corporation by revenue, according to the Forbes Global 2000 for that year. The company was founded by Sam Walton in 1962, incorporated on October 31, 1969, and publicly traded on the New York Stock Exchange in 1972. Wal-Mart, headquartered in Bentonville, Arkansas, is the largest majority private employer and the largest grocery retailer in the United States. In 2009, it generated 51% of its US$258 billion sales in the U.S. from grocery business. It also owns and operates the Sam's Club retail warehouses in North America. Wal-Mart has 8500 stores in 15 countries, with 55 different names.

The company operates under its own name in the United States, including the 50states. It also operates under its own name in Puerto Rico. Wal-Mart operates inMexico as Walmex, in the United Kingdom as Asda in Japan as Seiyu, and in India as Best Price. It has wholly-owned operations in Argentina, Brazil, and Canada. Wal-Mart's investments outside North America have had mixed results :its operations in the United Kingdom, South America and China are highly successful, while it was forced to pull out of Germany and South Korea when ventures there were unsuccessful.

Overview of Company

Wal-Mart is well-known American company that operating retail stores including grocery stores, Discounts warehouse clubs and combination of general merchandise store. The “Every Day Low Price” strategy makes Wal-Mart different from its competitors. The company sells electronic items, baby & kids clothing, video games, toys, fitness and sports instruments, jewellery, groceries and so many other things. The annual revenue of the Wal -Mart is greater than the GDP of Switzerland. According to Fortune ranking, the and largest company in the world is Wal-Mart by revenues almost $469.2 billion.

Million of Wal-Mart customers witnessed the big reveal at grand reopening across the country.

Wal-Mart are getting an extreme makeover, from the colour, spacing assortment of goods up to changes of merchandise with marks bigger and bolder sign age.

In 2008, “Project Impact “was launched which aims to improve the Wal-Mart shopping experience and increase sales. According to Project roll out schedule 70% of US stores will undergo upgrade by the end 2012 and the remaining renovation will wrap up in to 2014. They launched project impact during financial crisis in US, they take advantage sag economy, and they had low prices to get more customers.

Wal-Mart loads up on hot gadgets such as Apple’s iPhone 4, iPad, 3D TVs in home entertainment to increase stores sales.

Nature of Business

Nature of business refers to the type or general category of business or commerce you are describing. For example, if you work at Microsoft, then the nature of your business is software. If you work at a restaurant, the nature of your business is food services.

In case of Wal-Mart nature of Business is to provide goods and services to customer. It is deal with wholesaler and retailer customers. Wal- mart is multidimensional in it nature of business. You can say customer service or even point out the specific dept.Wal-mart business module is B2B and B2C. There is casual ambiguity and social complexity in the firm resources. The customers will purchase them and then bring in money to the business. It's a commercial enterprise selling retail goods. It deals with online and offline in its own store. Wal-Mart provides large discount department stores and a chain of warehouse stores. Wal-Mart is the buying and selling of products and services by businesses and consumers over the Internet and through other electronic media. This might include procuring goods and services, dealing with customers as well as selling products.

External Environment

1.     Political

Wal-Mart made sure that they knew of the political situation of every country they have operated in and the company has made sure that it has a good position with regards to political issues. Wal-Mart is every time ready to face any problems concerning the political sector. Some times Wal-mart spent money in political issues.

2.     Economic

Wal-Mart is economically stable for the past years. Its economical environment is doing well so they can try to improve their products and able to give best to their clients. It is not only the internal economic situation of the company should be taken in consideration but also consider the economy of the country, Wal-Mart checks first the economic status of the country they are operating in before they decide to open the branch in that country. The economic environment is a major factor in the strategies of discounts retailers. The United States GDP has been growing steadily since 2009 at 3.5% annually.

3.     Social

Wal-Mart makes sure that the products they offer should be accepted by the society where they are operating in. Wal-Mart does not authorize the delivery of some products they know will cause outbursts or complains from different groups in the society. Wal-Mart is maintaining very good relationship with different sectors in the society although some sectors have problems with them. Wal-Mart also participates in social activities that tend to develop a better relationship between them, the clients and the society they are operating in.

4.     Technological

Wal-Mart offered new innovations in its technological aspect and introduced new concepts with regards to its industry. Wal-Mart is using advanced cash register and better performing slot machines. Wal-Mart is using better security system. Since technology rapidly changes Wal-Mart keeps updating to up to date technology and keep an eye on the technology how its changes. If other companies use new technologies to provide services, Wal-Mart has a capability to adopt those technologies.

Influence of External Environment in Wal-Mart

1.     Political

The political factor can negatively affect the Wal-Mart sales and profits becausegovernment can change the rules and the regulations at anytime which can be influenced Wal-Mart directly. For example; the sale of Wal-Mart in February, 2013 was lower than the expected due to delay in income tax refunds. The sale of Wal-Mart globally can be influenced by those issues. Since to decrease working expenditure and gaining more profit Wal-Mart has operated in different countries Such as; Germany, Canada, China, Mexico, UK and India. If these countries face any political instability or any problem, it can reduce the market share of Wal-Mart.

2.     Economic

Raise the price of products and services which cause to push inflation. This affects the performance of the entire company, not only on its relationship with the customers, but also affects the overall system. Purchasing power depends up on the economic condition. The management of Wal-Mart says that economic factor; both domestically and internationally might affect Wal-Mart financial performance unfavorable. In U.S and other countries higher fuel price, energy cost andhigher interest rate, inflation, weak housing market, unemployment rate, higher debt and changes in tax law and overall economic slowdown could affect consumer demand for the services and products selling through Wal-Mart stores. Others factors like higher transportation cost, foreign exchange rate fluctuation, healthcare and insurance, and other economic factors can raise the cost of general and administrative expenses and harmfully effect the operations of Wal-Mart.

3.     Technological

The Internet and e-commerce greatly influence the overall performance of Wal-Mart. Thus, it results the company to launch its online stores which enables the company to be connected with the customers. Just like the employees, as of now, customers are also changing in demands, particularly in the ways of buying and availing products and services. E-commerce or the process of buying and selling goods and services over the internet had opened a new way of connection between the buyers and the sellers.

Findings

• Wal-mart being multidimensional in its nature of business.
• Their key relationship with the suppliers/vendors through application of technological initiatives and their bargaining power as buyers has brought them enormous amount of reputation.
• The Organizational and the Management style at Wal-mart are unique with the decentralization of authority and obsessions with cutting costs have proved to be very successful and consistent with their corporate strategy.
• There are more opportunities that exist for Wal-mart based on their current position in the retail industry and their current strategy.
• Effective utilization of key value chain activities that is consistent with the company strategy that provides competitive advantage.

Recommendations

• Focus on absorbing international markets like India: Rather than competing with the retail giants like Carrefour and Lianhua/Huilan from China, Wal-mart should tap the opportunities in places like India, and developing countries that provides great potential for growth and increase sales in the retail industry.
• Wal-Mart’s global expansion strategy of organic growth rather than acquisition would be a progress as long as Wal-mart evaluates its growth strategy based on the local industry conditions and revise its strategies based on the local competition.
• Store lay outs can be improved with better ambience (brighter lighting like target) and highlight the sale items (both in-store and internet) to attract different types of customers.
• Wal-mart should take better measures to build a good relationship with its employees/associates by providing better wages/benefits. Not only does this build a positive image but also retain its employees.
• The system should be protected from hackers that want to destroy records of supplies.
• Focus more attention on marketing efforts such as promotions and circulars in local journals for more visibility rather than just relying on word of mouth advertising.