Detailed PESTEL Analysis of Walmart
The PESTEL Analysis of Walmart helps diagnose the six major external factors that somehow influence the decisions regarding the firm’s success by the management and the professionals.
1. Lead-in
The first question that might arise in the reader's mind is what is PESTEL analysis. In brief, the meaning of PESTEL Analysis is studying a few key factors, and this study will help professionals in their future decision-making purpose concerning the company. The said external factors come from the full form of the word PESTEL itself, and they are the political, economic, social, technological, environmental, and legal factors.
The requirement of the PESTEL Analysis of Walmart is very straightforward and discussed in the above sections. The PESTEL Analysis of Walmart will help professionals understand the primary external factors which will help them in the future decision-making process in favor of the company's success. In this article, we will help you understand Walmart PESTEL analysis and how you can use EdrawMax Online to create professional-looking analysis diagrams.
2. About Walmart
2.1 Background of Walmart
Walmart is an American company that works as a multinational corporation in the retail industry. There are a chain of supercentres, grocery stores, and discount department stores under this company. According to the latest statistics, Walmart has Approximately 10,585 stores spread across 24 countries, and these clubs and stores are all under operation in 46 different kinds of names.
If measured according to the revenue system, Walmart can be considered the world's largest company with a very high annual revenue. Walmart has invested in many countries, but its return and reception have been a mix of success and failure. Walmart has seen a whopping success in its business in America, Canada, the United Kingdom, and even China, but it was a complete failure in Japan, Germany, and South Korea. The PESTEL Analysis of Walmart will consider these facts for future reference.
2.2 Overview of Walmart
| Company Name: | Walmart Inc. |
| CEO: | Carl Douglas McMillon |
| Company Type: | Public |
| Year Founded: | 1962, July 2nd |
| Employees: | 2,300,000 as of 2022 |
| Annual Revenue: | US$ 572.8 billion |
| Founder: | Sam Walton |
| Area Served: | Worldwide |
| Headquarters: | Bentonville, Arkansas, USA |
| Operating Income: | US$ 25.9 billion |
3. Walmart PESTEL Analysis
Political Factors:
The political factors are the rules, policies, and regulations that the marketing country and its government follow. There are many points that need to be looked after when it comes to political factors, like fiscal policies, foreign trade policies, tax rules, and more. There might be some other points that can externally affect the company. Thus, the political factors influencing Walmart are as follows:
- Politics is highly stable: Since the level of political stability is high, the respect shown towards the political rules is also high. Thus, organizations such as Walmart do not face any issues.
- Political support is necessary for globalization: Your business can never stand on its own if you go against the politics of the market. Thus, Walmart has to bear the lobbying expenses to expand its businesses in various markets. For example, the firm spent a lobbying expense of $25 million to expand its organization in the Indian market.
- Being Influential in State Politics: Walmart, through its functioning, has become influential in state politics. For instance, they increased the legal age for Gay Rights and Gun licenses to impress their customer and potential customers in 2018. Moreover, they asked their workers to contribute to the “Republicans.”
Economic Factors:
When it comes to the economy, a company needs to put in more effort to maintain its supply-demand ratio. A business cannot run well if either is out of balance. Other factors influencing financial conditions are inflation, interest and exchange rates, and economic growth. For instance, a consumer might change their demand for a particular object based on varied factors. It will lead to the manufacturing company of the said product having some loss. Hence, the economic factors that are directly affecting Walmart are as follows:
- Major economies are stable: Establishing a successful business in such markets gets smoother when the economy is well-off. Walmart primarily operates in the United States with a stable economic structure.
- Developing countries are growing: Developing countries like India are growing economically, so starting a profitable market there will be smoother.
- The United States is facing a decrease in unemployment: A decrease in unemployment ensures economic stability, which is always ideal for a business.
Social Factors:
When it comes to a business, consumers play the most significant role. They typically control the demand and supply chain, and a minute shift in their demand might cause a massive revenue change for the specific company. A consumer's demand might change based on certain key factors, like the change in trends or some, approaching social events, and sometimes even different cultural engagements. By taking note of the social factors, the companies do nothing but keep in mind the social-cultural background of the said market so that they can have the opportunity to do appropriate business. Therefore, the social factors under the influence of which Walmart works are as follows:
- Trend of having a healthy lifestyle: Social media trends are a crucial deal now, so having a healthy lifestyle by eating healthy, exercising, and more is the trend. So, Walmart should have more options for health-friendly products in their stores.
- The trend to show cultural diversity: Showing respect and enjoying the diverse cultural spectrum is trendy. The factor here heavily influences the market and is a crucial external factor that Walmart should consider.
- Lots of migration from rural to urban areas: Shift in living style is the reason behind the shift in demand for certain goods. Thus, the company needs to determine that and do business accordingly.
Technological factors:
Recently, technology has gone through several changes. Some of these changes were for the betterment, but some failed to do much in the market. Companies from different industries use specific advanced technologies to make their business flourish more than expected. To have a successful business, a company must be aware of the latest technologies available in the market, which can directly help them succeed. Sometimes a company's brand value and popularity highly depend on the technology type they use. Thus, the technological factors responsible for the changes in Walmart are as follows:
- Usage of technology for business automation: Business automation means doing repetitive work automatically through technologies, which saves time and resources a lot. Walmart can employ such things to gain sustainability in the market.
- Increase in the number of smartphone users: Increased smartphone users have led to a tech-friendly consumer circle, so to get more customers, the company needs to be tech-friendly too. Today, Walmart has improved its mobile application system. Today its customers can have a smoother shopping experience. For example, Walmart has eliminated the burden of carrying a physical list because now consumers can mark those items they require to purchase from the store with this application.
- Usage of technology to work through big data: Multinationals like Walmart need to take care of their massive data. Hence, using advanced technology is the best option here. Today, Walmart uses fifty robots to track the stocks, prices, and other varied functions.
Environmental factors:
The environment has been getting the brunt of our success and ambition for a long time. But nowadays, companies are trying to become eco-friendly to provide their future generations with a sustainable world. A company must have reusable products to reduce the amount of waste and pollution they produce. The companies should maintain the carbon emission rate, and their main focus should always be sustainability. Mentioned below are the environmental factors that influence Walmart:
- Trends supporting eco-friendly products: Environment-friendly products are the trend now. Thus, impacting millions to keep the environment safe. Walmart should also incorporate such products to increase its business.
- Trends to improve business sustainability: Businesses going green is not a trick anymore. But it is done by the majority to have a beautiful planet to live on and do business on, and this initiative Walmart should also adopt.
Legal factors:
No company would want to do something illegal because that might cost them their whole business as their brand value, reputation, and popularity will face massive repercussions because of their actions. So, every company tries to uphold the legal boundaries of the market they are focused on and functioning. Legal factors are mainly the laws and regulations that every country has. Legal laws like the discrimination law, labor law, safety law, and especially the consumer law should be taken care of at any cost by the company to have a peacefully running successful business. Therefore, you can say the below-mentioned legal factors influence Walmart's operations:
- Regulations looking after the safety of food: There needs to be laws and regulations that ensure that the food provided by Walmart is healthy and safe to consume.
- Regulations taking care of the employees: Employees need laws concerning the work environment, minimum wage, job assurance, and more.
- Changing the tax management ways: It is necessary to make the company system more accountable and simpler. Thus, improvement in tax management ways is advisable.
4. How to Do a PESTEL Analysis in EdrawMax
- Step - 1: Preparation
- Step - 2: Template Selection
- Step - 3: Add Textual Information
- Step - 4: Customize
- Step - 5: Export & Share
If you are using the offline version of EdrawMax, open the tool in your system. If you wish to access remote files, head to https://www.edrawmax.com/online/ and log in using your registered email address. If this is your first time using the tool, you can register with your personal or professional email address. Go to 'Marketing' diagrams under Business diagram type and click on 'PEST Analysis.'
EdrawMax has thousands of free templates. Head to the Template section on the left and type 'PESTEL Analysis' to see all the pre-built PESTEL Analysis templates like Netflix PESTEL Analysis, Amazon PESTEL Analysis, IKEA PESTEL Analysis, and more. Check the template that resonates closely with your business model. Click on 'Use Immediately' to import the template's contents to the EdrawMax canvas. You can start customizing the PESTEL analysis diagram as per your requirements. If you want to draw the PESTEL analysis diagram from scratch, you can click '+.' It will open up the user-friendly canvas of EdrawMax that has several features that ease your efforts in making PESTEL analysis diagrams.
PESTEL Analysis diagram requires you to add Political, Economic, Sociological, Technological, Legal, and Environmental content so that the reader will understand what influences an organization. Use the PEST symbols from the left side and add the content to your PESTEL analysis diagram.
EdrawMax gives you ample options to customize your PESTEL Analysis diagram. From changing the background to adding content, you can customize the diagram in any way you desire. In addition to this, you can go ahead and change the background color, modify the text, add hyperlinks, add multiple pages, add images, and even add vector-enabled texts to your PESTEL analysis diagram.
Once satisfied with your PESTEL Analysis diagram, you can export it into multiple formats, including Microsoft, JPEG, PNG, Visio, HTML, and more. EdrawMax lets you share your PESTEL Analysis diagram on social media platforms, like Facebook, Twitter, Line, etc.
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5. Key Takeaways
The whole article talks about the details of the Walmart PESTEL Analysis And how it is needed to identify the essential factors from outside the company affecting Walmart on a large scale. This article also discusses Walmart's position in the industry and how it can gain a competitive advantage.
When it comes to creating a SWOT analysis of any company, EdrawMax is considered the best tool in the market. From the free templates to symbols, this free SWOT analysis software offers a ton of features that not only help beginners but also provide a highly professional environment for the experts who want to work on complicated diagrams. Go ahead and download EdrawMax today to create a SWOT analysis of your company. You can even download the PESTEL analysis guideWalmart PESTEL analysis template right from the template community and work on the same.
Reference
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Rowland, C., 2022. Walmart PESTEL/PESTLE Analysis & Recommendations - Panmore Institute., [online]. Panmore Institute. Available at: https://panmore.com/walmart-pestel-analysis-recommendations-case-study (Accessed 18 August 2022).
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Team, M., 2022. Walmart PESTLE Analysis | MBA Skool., [online].MBA Skool. Available at: https://www.mbaskool.com/pestle-analysis/companies/18048-walmart.html (Accessed 18 August 2022).
