PESTEL EL Analysis for Wal-Mart
PESTEL analysis is a marketing and planning tool that a company applies to define essential actions that would activate or elevate its operations. It also reveals effects of the external environment to the business. With continuously changing business environment, many organizations are forced to make a sound decision and think strategically. Generally, there are six factors to analyze in a company’s external environ and they include political factors, economic, social, legal, technological and environmental forces. Below is a comprehensive PESTEL analysis for Wal-Mart.
About Walmart and PESTEL analysis for Wal-Mart
Wal-Mart Stores is an American company that has been in the market over a long haul. It started its operations 60 years ago and it offers a wide range of products in its stores that include a garden center, super market, pharmacy, optical center, photo processing center, and tire and lube express as well as a pet shop. The store also has other smaller shops that include fast food outlet, nail, Walmart Visitor Center and video shops. Wal-Mart boasts of 2,700 super stores in the US and by the year 2001, the organization had become the largest food store in the region.
Despite the success of the store, Wal-Mart is faced with different changes as discussed in this PESTEL analysis for Wal-Mart.
Wal-Mart is currently operating across the globe and in its operations, it has to adhere to rules and regulations set by a host country. In the past years, international operations generated a lot of income for the company. However, it is facing a major challenge from countries such as China as it is forced to acquire its operations with a local company. Therefore, the prevailing political environment, currency regulation, legal and economic constraints, intellectual property rights and tax system affect its operations.
The global operations of the organization have a larger impact on the laws and regulations of a host nation for instance, Indian government. India welcomes foreign investors to run business with a local company and Wal-Mart had to acquire Bharati Airtel and open a retail store in the country. This forced it to shut its operations in South Korea and Germany.
Economic environment in host nations affect Wal-Mart operations. Recently, it has been facing currency devaluations and high inflation rate. In the US, the company is facing a major high interest rate challenge, high energy and fuel cost, unemployment and high inflation rate. These factors affect demand for the products and services offered by the company and its overall profitability.
The company must operate according to local structure of a host nation. It has to focus on age distribution, career attitude, and safety and population growth. Therefore, the success of the company largely depends on how a host country trends socially.
Technology today has a major impact on any business. It includes environmental and ecological factors. The company has to invest in Research and Development activities, modern incentives, and automation and to respond to the rate of technological advancement to remain competitive in the market. Wal-Mart therefore spends a lot of money to maintain its upgrade program.
Being a multinational organization, Wal-Mart has faced environmental challenges because such organizations are often accused of polluting the environment and exhausting natural resources. For instance, the company sold furniture produced from wood and it was heavily criticized for destroying the natural resource. In the long run, it was forced to drop this product line for good thus halting its overall growth.
Host countries have different laws and Wal-Mart is forced to abide by them to run its operations smoothly. It is a powerful effect because of the implications it creates for international companies. It many cases, multinational corporations venture into a foreign market with a less developed legal structure and set operations as a way of avoiding stringent laws in their home nations. Wal-Mart has therefore been criticized for using the loophole to keep its prices low.
An overview of PESTEL analysis for Wal-Mart
From the above PESTEL analysis for Wal-Mart, the company only needs to closely examine its macro environment influences to run its operations smoothly locally and across the globe. As long as it successfully understands its environment, Wal-Mart can address all issues including its Global Responsibility, its growth will not be limited and it will operate successfully.
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