This document analyzes strategic alternatives for Walmart using weighted matrices. It evaluates backward integration and horizontal integration strategies. Backward integration would allow Walmart to achieve greater economies of scale and provide lower cost inputs by controlling suppliers. Horizontal integration offers economies of scale and market power but could increase dumping. The matrices assign weights and ratings to internal/external factors. For internal factors, Walmart's large scale and brand are strengths, while high turnover is a weakness. Externally, emerging markets and online growth present opportunities, while increased competition is a threat. The analyses indicate backward integration scoring 3.3 vs 3.0 for horizontal integration, so Walmart should focus on backward integration to better control suppliers and costs while addressing labor issues.

1. SRATEGIC ALTERNATIVES
1
Backward
integration
2
Horizontal
integration
Key Factors Weight AS TAS AS TAS
Opportunity
 Retail market growth in emerging markets
 Rising acceptance of own label product
 Trend toward heathy eating
 Online shopping growth
 New location and store types offer Walmart
opportunities to exploit market development
 Adding more brands
 Promote human labor laws
0.09
0.06
0.07
0.08
0.05
0.08
0.04
1
3
-
-
-
2
3
0.09
0.18
-
-
-
0.16
0.12
2
3
-
-
-
1
2
0.18
0.18
-
-
-
0.08
0.08
Threats
 Increasing competition from brick and mortar
and online competitors
 Increasing resistance from local communities
 Rising commodity prices
 The target of competition globally
 Exposing to political problems in the countries
that Walmart operate in
 Anti-dumping law
 Tariff tax
0.08
0.07
0.07
0.12
0.04
0.07
0.08
-
-
2
3
2
4
2
-
-
0.14
0.26
0.08
0.28
0.16
-
-
2
2
2
3
1
-
-
0.07
0.24
0.08
0.21
0.08
Total 1
Strengths
 Scale of operation
 Wide range of product
 International operation
 A focused strategy is place for HR &
0.09
0.09
0.05
4
3
-
0.36
0.27
-
3
3
-
0.27
0.27
-

2. http://www.investopedia.com/terms/b/backwardintegration.asp
http://bizdharma.com/blog/what-is-vertical-and-horizontal-integration/
development
 Huge and loyal customer base
 Offer low price to its customer in retail industry
 Power brand in retail industry
0.06
0.09
0.09
0.08
2
2
4
2
0.12
0.18
0.36
0.16
2
3
2
2
0.12
0.27
0.18
0.16
Weaknesses
 High employee turnover
 Little differentiation
 Negative publicity
 Quality of product
 Simple retail outlet structure
 Reduced profit margin in order to keep price
lower than competitor
 Presence in relatively few countries
worldwide
0.09
0.07
0.05
0.08
0.06
0.02
0.08
-
2
-
3
-
3
-
-
0.14
-
0.24
-
0.06
-
-
3
-
2
-
3
-
-
0.21
-
0.16
-
0.06
-
Total 1 3.3 3.0

3. Two alternative strategies – Firstly, it is backward integration. It means Wal-Mart will
pursue backward integration when it will result in improved efficiency and cost savings.
Backward integration is more efficient and cost effective to rely on independent
distributors and suppliers. Backward integration would help Wal-Mart could achieve
greater economies of scale and provide inputs at a lower cost as an independent
business, so the manufacturer will also the supplier. Secondly, it is horizontal
integration. It means buying businesses at the same value chain in general. Horizontal
integration offers several advantages, including favorable economies of scale,
economies or scope, increased market power and reduction in the costs associated with
international trade by operating in foreign markets. However, it might be a creation of
big dumping. These two strategies are considered by Wal-Mart. Sum total attractiveness
scores of 3.3 versus 3.0 that the analysis indicates the business should do the backward
integration. Wal-Mart should focus on backward integration in order to better control
their suppliers. By doing so, Wal-Mart could reduce the cost of producing goods to
consumer without reduced profit margin in order to keep price lower than competitor.
There for they can try more on create new own brand types of products to make more
differentiation and also rising more acceptance from customer of their own label
products. Consumers will get more for their money as reduced manufacturing costs
reflect prices in stores. Also. Wal-Mart can use backward integration in order to build
relationship with suppliers who manufacture higher quality goods. Consumers today
want low prices, but also want quality product as good as possible. However backward
integration relate to huge amount of human labor. Therefore they also must work on
many new policies with human labor laws to avoid bad labor exploitation and improve
negative publicity.

4. IFE Weight Rate Score
Strengths
Scale of operation 0.09 4 0.36
Wide range of product 0.09 3 0.27
International operation 0.05 2 0.1
A focused strategy is place for HR & development 0.06 3 0.18
Huge and loyal customer base 0.09 3 0.27
Offer low price to its customer in retail industry 0.09 4 0.36
Power brand in retail industry 0.08 3 0.24
Weaknesses
High employee turnover 0.09 3 0.27
Little differentiation 0.07 2 0.14
Negative publicity 0.05 2 0.1
Quality of product 0.08 2 0.16
Simple retail outlet structure 0.06 2 0.12
Reduced profit margin in order to keep price lower than
competitor
0.02 2 0.04
Presence in relatively few countries worldwide 0.08 2 0.16
Total 1 2.77
http://www.strategicmanagementinsight.com/swot-analyses/walmart-swot-analysis.html
http://www.raymondcatala.com/wal-mart-swot-analysis-2/

5. The IEF Matrix provides important information for strategy. In this matrix we will give,
based on the importance of each aspect, weights to all strengths and weaknesses. The
rating will describe the ability of Wal-Mart to react to the strengths and weaknesses. The
weight multiplied by the rating then gives us a weighted score whose total sum
demonstrates if Wal-Mart lies below or above the average of 2.5. The strongest is about
well establishing brand awareness at 0.36 score. With their more than 8,500 stores, Wal-
Mart represents the number one retailer in the world. By providing 15 percent to 25
percent lower prices for grocery products than the average retailer store. Wal-Mart can
support their strong brand attribute of offering “everyday low prices”. As shown with in a
study Wal-Mart is the only retailer in the U.S. that carries two brands which are directly
identified and connected to Wal-Mart by more than 52 percent of all American women.
To establish their brand awareness also through modern networks, Wal-Mart makes use
of social media networks like Facebook. The main point of the weakness in recent years
is about labor at 0.27 score. Labor related lawsuits. Wal-Mart faces labor related lawsuits
every year, which costs millions of dollars for the company. It is criticized for poor work
conditions, low wages, unpaid overtime work and female discrimination. In addition to
litigation costs, corporate’s reputation has been damaged and fewer skilled workers are
willing to work for it. This leads to high employee turnover. The business suffers from
high employee turnover that increases firm’s costs, as it has to train new employees more
often. The overall score is 2.77, which means that Wal-Mart response to
internal strengths and weaknesses is above average. Wal-Mart might know how to use
their strength to expand the scale also the power in retail industry. Besides that, Wal-Mart
needs to change and improve their labor policies to reduce high employee turnover
situation

6. EFE Weight Rate Score
Opportunities
Retail market growth in emerging markets 0.09 4 0.36
Rising acceptance of own label product 0.06 3 0.18
Trend toward heathy eating 0.07 2 0.14
Online shopping growth 0.08 4 0.32
New location and store types offer Walmart opportunities
to exploit market development
0.05 2 0.1
Adding more brands 0.08 3 0.24
Promote human labor laws 0.04 2 0.08
Threats
Increasing competition from brick and mortar and online
competitors
0.08 4 0.32
Increasing resistance from local communities 0.07 4 0.28
Rising commodity prices 0.07 3 0.21
The target of completion globally 0.12 2 0.24
Exposing to political problems in the countries that
Walmart operate in
0.04 2 0.08
Anti-dumping law 0.07 2 0.14
Tariff tax 0.08 3 0.24
ToTal 1 2.93
http://www.raymondcatala.com/wal-mart-swot-analysis-2/
http://blog.cayenneapps.com/2015/04/14/walmart-swot-analysis/

7. The EFE Matrix of Wal-Mart can help its strategist evaluate the market and industry. In
this matrix, based on the importance of each aspect, we weights to all opportunities and
threats. The rating will describe the ability of Wal-Mart to react to the opportunities and
threats. The weight multiplied by the rating then gives us a weighted score whose total
sum demonstrates if Wal-Mart lies below or above the average of 2.5. The opportunity
that keeps the high rate is retail market growth in emerging market at 0.36 score. Retail
markets grew by at least 5 percent on average in emerging markets in the last year,
opening huge opportunities for Wal-Mart’s revenue growth. The business currently
operates in Brazil, Mexico, China and India markets. Wal-Mart should increase its
presence in these markets to sustain future growth. And another high rate is that online
shopping growth 0.32 score. Online retail sector grew by 4.7 percent in the US in 2011,
reaching $197 billion. Wal-Mart being the biggest offline retailer has huge opportunities
to expand its presence in online retail market. In contrast, the high rate of threat is
increasing competition from brick and mortar and online competitors at 0.32
score. Competitors like Target, Costco, Amazon and Tesco (in UK) are putting huge
efforts to eliminate price differences that Wal-Mart enjoys. Except the lower prices, Wal-
Mart does not differ from other low cost retailers and will experience increased
competition from them in the future. And one more high rate factor is that increasing
resistance from local communities at 0.28 score. Wal-Mart superstores have a negative
impact on local retailers and communities. Some of the local retailers are usually forced
to close off when Wal-Mart superstore opens in the area. This affects not only the
retailers but also their families and the community as a whole. The overall score of Wal-
Mart is 2.93. From this it can be concluded that the company’s response to external
opportunities and threats is above average