SAMPLE ASSIGNMENT

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Course/Unit Information
Course Pearson BTEC Level 5 Higher National Diploma
Unit No. and Name Unit 32: Business Strategy
Unit code 32: K/508/0574
Unit Type Core
Batch SRM10-Afternoon Batch-BS

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Student Assignment covering form is an integral part of the assignment document and should be
submitted along with all submissions.

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 SAMPLE ASSIGNMENT

Student Declaration

I, ______________________, hereby confirm that this assignment is my own work and not copied or plagiarized.
It has not previously been submitted as part of any assessment for this qualification. All the sources, from which
information has been obtained for this assignment, have been referenced as per Harvard Referencing format. I
further confirm that I have read and understood the Westford University College rules and regulations about
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3
 Achievement Feedback Summary

Assessor’s Name Prof Zawahir Siddique

Pass Merit Distinction Grades Awarded

LO1 Analyze the impact and influence which the macro

environment has on an organization and its business strategies.

P1 Achieved
P1 Applying appropriate M1 Achieved
M1 Critically analyse the D1 Achieved
frameworks analyse the impact
macro environment to
and influence of the macro
determine and inform strategic
environment on a given
management decisions.
organisation and its strategies.

LO2 Assess an organization’s internal environment and

capabilities.
LO1, 2, 3 & 4
D1 Critique and
interpret information
M2 Critically evaluate the and data applying P2 Achieved
P2 Analyse the internal internal environment to assess environmental and
environment and capabilities of a strengths and weaknesses of an M2 Achieved
given organisation using organisation’s internal competitive analysis to
appropriate frameworks. capabilities, structure and skill produce a set of valid
set. strategic directions,
objectives and tactical
actions.
LO3 Evaluate and apply the outcomes of an analysis using
Porter’s Five Forces model to a given market sector.

P3 Applying Porter’s Five P3 Achieved

M3 Devise appropriate
Forces model evaluate the
strategies to improve
competitive forces of a given M3 Achieved
competitive edge and market
market sector for an
position based on the outcomes.
organisation.

LO4 Apply models, theories and concepts to assist with the

understanding and interpretation of strategic directions available to
an organization.

P4 Applying a range of theories, M4 Produce a strategic P4 Achieved

concepts and models, interpret management plan that has
and devise strategic planning for tangible and tactical strategic M4 Achieved
a given organisation. priorities and objectives.

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 Overall Feedback Summary

Over All Grade Date

[To Achieve a PASS, all P grade descriptors should be achieved; To achieve a MERIT, all P and M grade descriptors should be achieved;
To achieve a DISTINCTION, all P, M and D grade descriptors should be achieved.]
Summative Feedback

Overall feedback on current

work with emphasis on how the
student can improve and achieve
higher grades in future.

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 General Guidelines

Please read the instructions carefully and tick the checkboxes

Complete the title page with all necessary student details and ensure that the signature of the student is
marked in the declaration form.
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Quick reference Checklist for the Students before submitting the assignment:
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5. Harvard Referencing System and Citations are strictly followed

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 Business Strategy: Assignment Task

Assignment title BUSINESS STRATEGY

LO1: Analyze the impact and influence which the macro environment has on an organization and
its business strategies.

LO2: Assess an organization’s internal environment and capabilities.

LO3: Evaluate and apply the outcomes of an analysis using Porter’s Five Forces model to a given
market sector.

LO4: Apply models, theories and concepts to assist with the understanding and interpretation of
strategic directions available to an organization.

Scenario:

You are hired as a Corporate Strategy Consultant by Walmart [American Multinational Retail
Corporation] to plan its entry strategy in United Arab Emirates [UAE]. You have been assigned to
prepare a report that includes the environmental analysis and strategic growth management plan
based on the use of recognized internal and external analytical tools.
The report should include the following:

1. Critically analyze the impact and influence of macro environment in UAE on the strategic
management decisions to be made by Walmart applying the model PESTLE. The Stakeholder
Analysis would be discussed in groups (apart from individual students independently
analyzing in the PESTEL Framework in the assignment report) and presented in the form of
a Group Discussion (to improve the GD skills).

2. Analyze the internal environment and strategic capabilities of Walmart using Value Chain Analysis

3. Critically evaluate the internal environment to assess the organization’s internal structure,
capabilities and skill set.

4. Evaluate the competitive forces in UAE applying Porter’s Five Forces Model for Walmart. Devise
appropriate strategies to improve competitive edge and market position based on the outcomes of
Porter’s Five Forces analysis.

5. Interpret and devise a strategic management plan for Walmart applying a range of theories, concepts
and models like Porter’s generic strategies, Ansoff’s matrix and Bowman’s strategy clock (all three
models are mandatory).

6. In the proposed plan discuss the tangible and tactical priorities and objectives, and thereafter
critically analyze and interpret the relevant information to produce strategic directions, objectives
and tactical action which Walmart can adopt.

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The submission on the LMS is in the form of an individual written report. This should be written in a concise,
formal business style using single spacing and font size 12. You are required to make use of headings,
paragraphs and subsections as appropriate, and all work must be supported with research and referenced
using the Harvard referencing system. Please also provide a bibliography using the Harvard Referencing
System. The recommended word limit is 4000–5000 words, although you will not be penalized for
exceeding the total word limit.

Assignment Overview
This assignment will discuss about the various business strategies an organization will have
to create to enter a foreign market. It will also emphasise how the external environment will
affect the entry of an organization into a new market as well as how the internal strengths and
weaknesses of an organization will affect the same. This report will give an idea of how
companies formulate business strategies for strategic growth management in a new market.
For this assignment, the organization chosen is Walmart and the new market into which it is
entering into is the United Arab Emirates.

Walmart

Walmart is an American based multinational retail company that was founded in

1962.Walmart is one of world’s largest retail corporations and employs 2.2 million people
worldwide. Expanding its operations from the US, Walmart now has numerous branches in
Canada, Central America, Argentina, Chile, China and few other countries. There are above
4000 Walmart stores in the US alone.

Pestle Analysis
PESTLE Analysis is a model used to analytically examine the external or macro
environmental aspects in relation to an organization’s economic performance. It is most
useful when an organization tries to expand its operations into a foreign market or when
starting a new company. It helps in building business strategies for growth management.
PESTLE stands for Political, Economic, Social, Technological, Legal and Environmental as
it is these aspects of the macro environment that will evidently influence an organization’s
performance.

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 Source: (Green, 2018)

• Political: The Political aspects of the macro environment includes the system of
governance followed, their policies, the level of governmental interference in the
economy, political stability of the country, prevalence of corruption, system of
taxation and the country’s stand on foreign trade. In the case of Walmart entering the
UAE, Walmart must consider the following political factors that could affect their
entry into the UAE. The UAE is a federal constitutional monarchy unlike most of the
other democratic countries Walmart operates in. Rules and laws are strictly followed,
and the public sphere does not have a lot of say in the making of these laws and
regulations. The UAE consists of seven emirates, each governed independently. This
will work in favour of Walmart as they can expand into various parts of the country
flexibly. On the down side, the UAE is sometimes part of regional conflicts for certain
political reasons relating to fossil fuel reserves etc. (Bush, 2016).This may pose a
challenge for Walmart to expand further into the GCC. But overall, the UAE is a very
trade- friendly country and has exceptional trade relations with an enormous number
of countries around the world.

• Economic: The economic factors include all those aspects related to an economy and
its performance. This could be the rate of inflation, currency strength, GDP, average
incomes of those who live in the country, rate of unemployment etc. The country’s
economic position will evidently have a huge impact on companies as it will
determine how its consumers will purchase and will also have an impact on how
organizations will charge for their products. The visionary leaders of the UAE are
now investing a lot of money in building infrastructure and job creation thus
encouraging private investment in all sectors and this is a very good opportunity for

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 Walmart to enter the UAE market. However, recently consumer inflation has
increased which will have an adverse impact on the purchasing power of Walmart
consumers. On the plus side, the UAE has a very high GDP per capita rate which
indicates that the consumers in the country are living a high standard of life and this
shows that it will be profitable for Walmart to begin its operation in the UAE as
consumers in the UAE are more or less better off than consumers in other countries.
After all, the UAE is a highly consumerist economy.

• Social: This dimension deals with the factors that make a society what it is. This
ranges from values, beliefs, norms, culture, lifestyle as well as statistical figures such
as population growth, distribution of age groups in the population, distribution of
income in the population etc. This information is very useful when an organisation
markets their products or services. It also helps to create an idea of the workforce of
the population and how they can be motivated to be more efficient. In the UAE,
religion plays an important part. The UAE is an Islamic country and Walmart should
take careful steps to not hurt the religious sentiments of the consumers. Thus, they
should make sure that all their products should be in line with Islamic principles and
values. The UAE is a very diverse community with people from over a hundred
nationalities living together. Thus, Walmart should make sure that it caters to the
needs of every community by selling a wide range of products. The consumer culture
is something that is very evident in UAE and Walmart must take full advantage of
this.

Source: (Thiele, 2018)

• Technological: This dimension refers to the rate of technological advancement in the

external environment. The performance of an organization and the market depends on
these technological advancements. The level of automation, innovation and
advancements in Research and Development and technological awareness prevalent
in the external environment are a part of this dimension. These factors have strong
influence on the decisions of an organization to enter a new market or not, or to start
production operations in a country or outsource production and so on. In the case of

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 the UAE, Walmart does not have to worry about technological factors as the UAE
government has invested huge amounts of money to make the country more
technologically advanced. In fact, the UAE is the number one digitally advanced
economy in the whole of the Arab world and comes in the top 20 worldwide (Maceda,
2018). The UAE is using technology to transform governmental activities, help
businesses and make society itself more technologically aware. Thus, Walmart must
take full advantage of these schemes of the government that use technology to help
businesses function smoothly. Also, Walmart uses the RFID technology for
identification of its products. This technology is not used by most retail corporations
in the UAE such as Lulu which will be a major competitor when Walmart enters the
UAE. Thus, Walmart will have a competitive edge because of this technology.

• Legal: This dimension pertains to the rules and laws in the external environment that
the organisation has to follow. These laws could range from labour laws,
discrimination laws, laws related to the wellbeing of the employees of the
organisation, health and safety rules that an organisation must follow. To know what
is legal or not legal is critical for an organisation to survive in an external
environment. In the case of UAE, Walmart will have to take extra precaution when it
comes to paperwork and documents as the UAE government is very particular and
strict when it comes to these formalities. Thus, hiring a legal advisor for Walmart in
the UAE is a good idea. The Department of Economic Development (DED) is the
entity in UAE that awards businesses a trade license. The DED has various rules and
regulations that Walmart will have to follow. But overall, legal measures when
starting a business in the UAE is very limited and easy, in fact the UAE comes 31st in
rank in the World Bank’s Ease of Doing Business 2016 Report and comes first in the
GCC (Sen, 2016).

• Environmental: This dimension of the analysis covers all factors related to the
environment of the market being considered, such as climate, strategic geographical
location, environmental laws and regulations that an organization has to follow,
prevalence of pollution and other environmental hazards. The UAE has strict waste
management rules that Walmart will have to follow. Also, the UAE’s climate is
mostly hot and humid around the year so therefore Walmart will have to make sure
that their employees do not exert themselves too much in such temperatures. On the
plus side, the UAE offers one of the most strategic locations ever as it connects to
various countries in Asia, the Middle East, and Africa in less than 5 hours. Thus,
Walmart can easily expand into nearby emerging economies once they land
themselves in the UAE.

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Value Chain Analysis

The model we are using to understand Walmart’s internal capabilities is Porter’s

Value Chain Analysis. Value Chain Analysis is a business tool that is used by
businesses to identify those internal activities that add value to its products and
services and helps it to identify which activities of the organisation needs to be
improved for better and smooth functioning of the organisation. It helps the
organisation find its internal capabilities and weaknesses. This information is critical
when formulating business strategies. This model consists of two type of activities
namely, primary and support activities.

Source: (Jurevicius, 2013)

Primary Activities; Primary activities are those functions of the organization that
have a direct effect on the value of their product. In Porter’s Value Chain Analysis,
five primary activities have been identified:

• Inbound Logistics: This includes all those operations dealing with the
obtainment, storage and internal distribution of inputs. Thus, the
organization’s relation with their suppliers become very important because if it
is problematic such operations will not function smoothly causing delays and
various other mishaps. In the case of Walmart, inbound logistics is extremely
important as half of all their products sold in the US comes from suppliers
outside of US (Dudovskiy, 2016).Firstly, Walmart took a strategic decision in
the 80’s to remove traders from its supply chain and become more directly
connected to the manufacturer. This was a great move by Walmart. Secondly,
Walmart makes sure to keep healthy relationships with all their suppliers and
in turn gets products for very low prices giving Walmart a competitive edge in
cost leadership. These two strategies are essential for Walmart if they start

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 operating in the UAE. It will give Walmart a massive competitive edge against
other local competitors such as Lulu, Union Co-op, and Carrefour etc.

• Operations: This dimension includes all those functions an organisation has

to do to convert the inputs into outputs so that it can be used by the consumer.
Every organization must have a well-equipped operation system for smooth
functioning and better performance. Walmart’s presence in over 20 countries
makes its operation system highly complex as it runs on a global scale.
Walmart splits its operations into three broad sections: Walmart US, Walmart
International and Sam’s Club which are membership-based warehouses
managed by Walmart. In these categories Walmart operates in the form of
supermarkets, digital retail, hypermarkets and so on. Thus, it is safe to say that
Walmart’s operation system is highly efficient. In the UAE Walmart will have
to operate in the form of supermarkets, retail stores, hypermarkets and digital
retail if it needs a competitive edge against local competitors as digital retail
has not worked that well for these competitors.

• Outbound Logistics: This dimension deals with those functions that help
products reach the customers (Harrison, 2019). It mainly deals with inventory,
delivery and distribution that can be externally or internally done. At Walmart,
products are kept at the distribution warehouses and then transported to the
respective stores making sure that storage and inventory costs are kept to the
minimum and helps the distribution process become efficient. Walmart makes
sure that all their stores are always restocked without any delays. Walmart’s
distribution centres are where most of the action related to outbound logistics
takes place and there are over a 100 of them around the globe. When Walmart
enters the UAE, it has the choice of owning their own warehouses for storage
or sharing warehouse space with other retail corporations. Since Walmart’s
competitors in the UAE will be giants like Lulu, Carrefour and Union Coop it
would be more appropriate for Walmart to own their own warehouses rather
than sharing them with others.

• Marketing and Sales: This dimension deals with how an organization

communicates to its customers the benefits of purchasing from them over its
competitors (Tarver, 2019). This is done through promotions, keeping prices
low, offering better quality and service, advertising etc. For Walmart what has
worked the most for all these years is its pricing strategy. Walmart promises
its customers low prices every day and has been doing so for years. Walmart
also markets itself considerably with the help of traditional and digital
advertising platforms. Adding onto the list, Walmart also makes sure that their
customer service is efficient, and this markets Walmart by itself. If Walmart
continues to use these marketing strategies in the UAE, in no time Walmart
will find themselves in a good position in the market as customers in the UAE
look for the same things. Since the UAE is a melting pot of cultures, Walmart
should make sure that they cater to the need of all communities residing in the
country by selling and marketing a wide range of culture-specific products.

• Service: This section deals with those functions an organization has to

perform to make sure that the value of their product bought by the customer is
maintained so that the customer feels like it was worth their money and their

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 needs are satisfied. This is crucial as this indicates whether the customer will
continue purchasing from the business in the future. Walmart’s ‘satisfaction
guaranteed’ policy allows its customers to return any product if it does not
meet their requirements without any questioning. This gives customers more
authority in their shopping experience. Walmart has also in the recent years
paid a lot of attention to customer service and has adopted strategies to
improve it. In the UAE too, if Walmart wants to gain a competitive edge over
local competitors, they must make sure their customer service is impeccable
and customers here are given a flexible exchange/refund policy without
hassles.

Support Activities: Support activities are as the name suggests those functions that support
the primary activities of an organization. Each support activity supports various primary
activities in different ways.

• Procurement: This includes all those activities a business organization does

in order to obtain all those resources it requires for it to function and do
business. Finding suppliers, making a deal with them after negotiations come
under procurement. For a retail corporation like Walmart, procurement
strategies are key. Walmart as mentioned earlier, always makes it a point to
keep good relations with suppliers and tries their best at getting supplies at the
lowest price possible. In return, Walmart assures these suppliers of a long-
term alliance with Walmart. In the UAE, Walmart should continue to deal
with local suppliers with the same attitude. Also, Walmart should try to keep
the supply chain as short as possible eliminating all unnecessary middlemen so
as to cut transportation and distribution costs.

• Human Resource Management: People are one of the most valuable assets
for any business organization. Thus, how company recruits, trains and
motivates their employees becomes very important. Having the right people is
in itself a very good competitive edge. Walmart has had a past of criticism
based on its HR. But in the recent years, Walmart has made it a point to give
extra attention and care when it comes to training, recruiting and paying its
employees. Walmart has a strict minimum wage policy and has put huge
amounts of money to improve their human resource practices and policies.
Walmart has created culture in which its employees have the freedom to share
their thoughts and ideas and there is huge amount of mutual respect between
employees. Employees are promoted strictly on the basis of merit and so far,
Walmart has never been unionized which means that overall the employees of
Walmart feel secure and taken care of. Walmart also makes it a point to make
the workplace more diverse and inclusive by hiring people from various
cultural backgrounds and people with disabilities. In the UAE too Walmart has
to make sure that it hires people from all cultures so that the workforce is more
representative and diverse. Failing to do this will definitely result as a setback
for Walmart. Walmart should also make sure to strictly follow the UAE labour
laws and laws on employee wellbeing.

• Technology Development: This dimension deals with how technologically

advanced a business organization is. In today’s day and age technology is
essential for a business to thrive. It helps protect, process and manage data and

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 makes day to day operations simpler. Walmart has done exceptionally well in
this section by employing technology in stocks management so that stores are
more easily replenished on time. It also succeeded with its ecommerce website
which is doing really well. Walmart has even used artificial intelligence for
inventory management. Thus, technology is definitely an area that Walmart
will have an edge against local competitors in the UAE. Walmart’s RFID
technology is also something that most local competitors have yet to make a
strike on. Also, expanding its ecommerce operations to the UAE can be highly
profitable for Walmart.

• Firm Infrastructure: This section deals with those systems of a business

organization that helps it function and conduct its daily operations (Vliet,
2010). These systems support the organization and includes administrative
activities, accounting and finance, legal works etc. Of course, Walmart being
the global corporation that it is has all this intact. It has a very extensive
management system that looks at all departments closely as well as a firm
human resource management that is growing in importance. The IT sector of
Walmart is also thriving making sure its ecommerce operations are yielding
profit for the company. In the UAE, Walmart should have a firm supply chain
management along with all other systems mentioned above to succeed in the
market and function smoothly.

Internal Structure, Capabilities and Skill Set

Internal Structure; Walmart’s internal structure is along two pathways. It is hierarchical in
nature as well as function based. This means that there is both a horizontal and vertical
division in the organization. The hierarchical aspect of it makes sure that all employees of the
company is subordinate to a superior and reports to them (Lombardo, 2019). The highest
superior is the CEO. Thus, this creates a sort of rank system in which the higher you go the
more authority and accountability you receive. Whereas, in the function- based division the
company is divided into departments based on what each one does. Thus, Walmart has
different departments such as Accounting, Finance, Sales, Marketing, and Human Resource
Management and so on. Over here, rank and position are not the criteria instead your role in
the company plays a part. A similar internal structure is favourable for Walmart when they
enter the UAE.

Capabilities: Walmart’s capabilities can be understood with the help of VRIO analysis.
Walmart being the one of the largest and most successful retail corporation it is, has a number
of capabilities. But without doubt, one of the most important of these is its pricing strategy.
What helped Walmart stay in the game for all these years and in fact on top of the game for
all these years is that they have always kept their promise of everyday low prices. This has
earned Walmart customer loyalty and a unique place in the market. No one can compete with
Walmart on this front. Thus, Walmart should use this strategy when they enter the UAE also.
Secondly, Walmart’s inventory management is highly efficient. Recently the use of
automation and AI in this sector has yielded positive results. This shows that Walmart not
only stays in the game but stays ahead in the game by adapting to various technological
advancements. This is something that will definitely give Walmart a competitive edge over
local competitors in the UAE.

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Skill Set: Walmart is always on the hunt for new skills that is why it has been recently
employing many data analysts for their big data skills. This proves that Walmart adapts to the
needs of now. Though in the past. Walmart has been criticised for its low wages and poorly
effective employment practises; Walmart has been trying to rectify this by investing billions
of dollars in its HR Department especially in the training of its new employees. Walmart’s
training program is very extensive and makes sure to groom employees to the standard that
Walmart expects. In the UAE too, Walmart should be on the forefront when it comes to
hiring skilled employees as this is what will help Walmart get a boost in the retail market.
They should also make sure that their employees are paid duly and regularly.

Porter’s Five Forces Model

Source: (Kumar, 2019)

Porter’s Five Forces Model is a strategic tool that business organizations use so that they can
understand how competitive their external environment is. This information is crucial for an
organization when it formulates business strategies as it gives the organization a glimpse of
how profitable these strategies will be. It also gives guidelines to how a company can secure
its position in a market by adjusting its business strategies. This model has the following five
components:

• Competitive Rivalry: This component deals with the competitive rivals of an

organisation and their relative strength and capabilities. Competitors are other

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 organisations in the same industry who produce similar products and target the same
set of consumers. Thus, for a business, the quality of a competitor’s products, the
value of their service and the strategic measures they take become very important.
Business organisations thus have to keep a close eye at their competitors at all times.
In an environment where there are more rivals, buyers and suppliers have more
choices thus putting more pressure on an organisation to always stay at the top. For
Walmart, the top competitors in the UAE will be Lulu, Union Coop, Spinneys, and
Carrefour etc as they are all huge retail corporations like Walmart. Thus, the pressure
for Walmart will be intense as these organisations have been in the market for a long
time and has thus consolidated their position with consumers. Walmart will have to
come up with many promotions, offer a wide range of products, and offer the best
prices in order to attract UAE customers to shop at Walmart instead of its local
competitors. Here, Walmart’s strategy of promising consumers ‘everyday low prices’
will help Walmart.

• Supplier’s Power: This is the degree of power or authority the supplier has. It deals
with the power of supplier to make decisions about prices. This again depends on how
unique the products that they supply are. If it is unique and valuable, then the supplier
has a high bargaining power when it comes to prices as the organization does not have
many options to procure these products. On the other hand, if the products supplied
are not rare and can be supplied from various other sources, the bargaining power of
the supplier will be low as if the organization is not happy with the high prices of the
supplier, they can easily find another supplier for those products. In the case of
Walmart, the supplier’s bargaining power is low in some cases and medium in other
cases. It is low for most cases as Walmart brings up a lot of opportunities for small
suppliers as whatever Walmart buys from them it buys it in bulk and once a supplier
enters into a partnership with Walmart it is a long term one thus for these suppliers,
Walmart is a door to various benefits that they cannot afford to lose (Pratap, 2018).
Since Walmart is a huge corporation, finding new suppliers for most products and
starting partnerships with them is not problem. On the other hand, some suppliers are
almost as huge as Walmart themselves, thus these suppliers have a higher bargaining
power. When Walmart enters UAE, they are in foreign market thus will need the help
of suppliers to start business and most of these suppliers will be supplying to its
competitors as well thus it will make Walmart a tad bit dependent on suppliers in the
beginning. Nevertheless, Walmart should try their best to negotiate for low prices so
that they maximise their profit.

• Buyer’s Power: This dimension deals with how powerful the buyers of an
organisation are. Can these buyers dictate the prices of the products of the
organisation? It also asks questions like how easy is it for these buyers to switch to the
organisation’s competitors for their needs? Thus, in many cases the pressure from
buyers can be very intense especially if they have more choices in the market for
products that the organisation offers. Thus, it is crucial for any organisation to stay
ahead of the game in terms of prices, quality and service. For Walmart, the bargaining
strength of their buyers has not been very high. This is mainly due to the fact that
Walmart offers the lowest prices ever and makes sure that their buyers always find
shopping at Walmart convenient, whether that is digitally or manually. Thus, though
their customers have an array of choices from its competitors like Tesco and Target
and switching to these organisations can be easily done, Walmart customers are
reluctant to do so. But the case becomes a little different when we consider Walmart

17
 entering the UAE market. This is because Walmart’s potential local competitors like
Union Coop, Lulu, Nesto and Carrefour have been in the market for years and have
been fulfilling the needs of the UAE customers for decades. Thus, changing the minds
of these consumers to switch to Walmart which has just begun can be a little tricky.
Thus, Walmart would have to go out of their way and offer UAE customers the lowest
prices ever and for some products maybe even at loss. Thus, in the beginning of
Walmart’s operations in the UAE the bargaining power of its buyers will be quite
high.

• Threat of Substitutes: This dimension deals with the possibility of a product or

service that fulfils the needs of customers in a different way than how the product of
organisation does. This means that consumers find a different, possibly more
affordable and possibly more sustainable way of doing something that the products of
an organisation used do for them. For example, a person who is addicted to
carbonated drinks may switch to fresh fruit juices to quench their thirst as this is a
much healthier substitute. Thus, the product gets replaced by another product from
another industry. In the case of Walmart, the threat from substitutes is very low. This
is because Walmart provides one destination to fulfil a thousand needs of consumers
by offering a wide range of products like fruits and vegetables to automobile spare
parts. Walmart also gives its consumers a wide range of choices for each of these
products in terms of brand, price and quality. Thus, it is one stop destination for
almost everything. Procuring so many different products under one roof has never
been so convenient. In the UAE too, Walmart should continue keeping its image of
‘one stop destination for all your needs’ and it will be very unlikely that there will be
a threat from a substitute.

• Threat of New Entrants: This section deals with the threat organisations face from
the entry of new businesses in their particular industry or market. This threat will be
strong if the organisation’s industry is one where it is easily possible to enter into and
make a presence in (Jurevicius, 2013). It will also be strong if it easy to start business
with low capital investment. Another kind of threat can come from new entrants who
have the capacity to invest heavily into their business. For Walmart, pressure from
new entrants is moderately high. The retail industry is one where even small
businesses with minimal capital investment can thrive in. Thus, smaller retail stores
than Walmart with a strategic location and proximity can capture consumers from that
locality easily. In the UAE, small grocery stores are always popping up but to
distinguish Walmart from these entrants, Walmart should make sure that they sell a
wide range of products under one roof at the lowest prices. There is also a possibility
of a new organisation entering the UAE market with huge capital investments. For
this scenario, the best possible solution is to distinguish Walmart from them by
offering the best services and the best prices, Plus, Walmart’s expertise in the retail
market can help them have a competitive edge over these entrants.

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 Porter’s Generic Strategies

This model looks into what position an organisation takes to achieve a competitive
advantage in a market. Not all businesses in a particular industry operate in the same
way nor do they target the same set of consumers. They have different strategies and
operate along those lines as they believe that is the best way to maximise profit. In
this model, there are three broad strategies that can be applied to any business. They
are differentiation, focus and cost leadership. In focus there are two variations; cost
focus and differentiation focus.

Source: (Simister, 2011)

• Cost Leadership: As the name suggests, businesses who use this strategy try to
maintain costs as low as possible. This can be done by lowering costs and charging
average prices for their products. Another way to do this is lowering costs and
lowering prices thus attracting a wide set of consumers (Woodruff, 2018).The huge
number of consumers balances out the low cost and low prices resulting in huge
profits for the company. Walmart comes under this category. Walmart’s promise of
‘everyday low prices’ attracts a huge number of customers that makes it possible for
Walmart to sell huge volumes of products resulting in huge profits. Though the profit
margins for each product may be low the huge volumes of products sold balances the
equation.

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• Differentiation: The focus in this strategy is not costs, rather it is the product itself.
What this means is that businesses using this strategy makes sure that their product is
unique and more attractive than that of their competitors. They basically let the
products do the talking for themselves and this attracts a huge number of consumers.
Walmart differentiates itself from its retail competitors by spending heavily in
marketing, technology and advertisement.

• Cost Focus: This is one of the subdivisions of the focus strategy which deals with
niche markets. Cost focus strategy deals with a closed, niche market and offers the
lowest prices possible to that set of customers (Kuijk, 2018). These businesses have a
thorough understanding of what their consumers want and reduces costs accordingly.
Walmart uses this strategy by pricing products at the lowest price ever for a niche
group of people. This group shops at Walmart as they know they will not be able to
find lower prices than anywhere else.
• Differentiation Focus: In this strategy, a business has a deep understanding of what
their niche group of customers want. Thus, they try to perfect their product as much as
they can based on the needs of their customers. They make very unique and premium
products to attract this closed group of consumers. Walmart also differentiates itself
from other retail corporations by making sure that the needs of a niche group of
people who prioritise quality are met by selling luxury brands such as Calvin Klein,
Karl Lagerfeld Paris etc.

Ansoff’s Matrix

This model discusses various opportunities of growth of a business. This model gives
insights into how a business can grow either by entering new markets or by
diversifying their products. This model is widely used by businesses looking to
increase their sales. It consists of the following four strategies:

Source: (Hanlon, 2019)

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• Market Penetration Strategy: This strategy deals with how a business can increase
their sales in a market that it already exists in without creating new products. What
this means is that a business finds new ways of selling their old products to their old
customers. Some strategies to do this would include adjusting opening hours
according to the convenience of customers so as to attract more customers, cutting
prices down, speedy service etc. Thus, the focus is more on how a business can
enhance their service and the customer’s shopping experience rather than focusing on
how to enhance the product itself. This strategy mainly focuses on achieving customer
loyalty. In the case of Walmart entering the UAE, this strategy is not applicable as it
deals with existing markets and not new ones.

• Market Development: This strategy looks into how a business can expand its
operations to new markets using its existing products. In this strategy too, new
products are not created it is just the market that has changed (Wehr, 2018). Thus, the
business must come up with ways to attract these new customers to buy their
products. This can be done by exclusive packaging for the new market, selling
products at a lower price, promotions, strategic advertising etc. In the case of Walmart
entering the UAE, this strategy is applicable as it talks about new markets. When
Walmart enters the UAE, it is very likely that most of the products that they sell are
not new. Thus, it will have to come up with ways to attract UAE consumers to buy
these products from them. Walmart’s strategy of ‘everyday low prices’ will work
here. Another strategy to attract UAE customers is to start Walmart’s ecommerce
operations in the market. Since most of the local competitors like Carrefour and Lulu
have not been that successful in that sector, it will give Walmart a competitive edge
against them.

• Product Development: This strategy deals with bringing new products into the
market that an organisation already operates in. This strategy is frequently used by
organisations to stay ahead of their local competitors. To successfully implement this
strategy, an organisation has to pay a lot of attention to their customer’s changing
requirements and will also have to invest in Research and Development, marketing
and technology. Only then will these new products help a company grow. Since this
strategy deals with existing markets and not new ones it cannot be applied to
Walmart’s entry into the UAE.

• Diversification: This strategy deals with creating new products or services for a new
market. This strategy is filled with risks as the organisation does not have a lot of
knowledge about the new market. Thus, for this strategy to work, the organisation
must do extensive research to develop a clear understanding of the needs of their new
consumers. However, if implemented properly, diversification can turn into a huge
success. In the case of Walmart entering the UAE, there is a lot of scope for
diversification. Since UAE is an Islamic country, all food and beverages sold in the
country must be halal certified (Shahbandari, 2013). Thus, Walmart will have to make
arrangements to procure these halal items including meat from various suppliers and
make sure they are all certified halal. Another strategy is to sell local products that are
made in the UAE. Since the UAE is a melting pot of cultures, it is important to make
sure that products from various countries are sold in Walmart so that people from
different nationalities can find what they need at Walmart.

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 Bowman’s Strategy Clock

Bowman’s strategy clock is a strategic tool that business organisations use to

understand their position in a market. It helps to understand where an organisation
stands in relation to their competitors. It gives us a glimpse of what an organisation
has to offer compared to its competitors and how this gives the organisation a
competitive edge over other competitors in the market (Mulder, 2018). This model
looks at 8 different positions an organisation can take in a market.

Source: (Bhasin, 2019)

• Low Price and low added value: An organisation that takes this position in the
market has only one focus: keeping prices low (Bhasin, 2019).Thus, they may
compromise on the quality of products or services offered. Therefore, customers are
not satisfied, and this position does not really give a strong competitive edge. In the
case of Walmart, some products sold at the store are priced extremely low but are of
minimal quality.

• Low Price: Organisations that keep this position in the market produce their products
in huge volumes and with considerable quality. They also price these products low.
Thus, such products are valued by customers. Though, the prices are low resulting in
low profit margins, the huge volume of products sold balances it out leading to huge
profits for the company. Walmart as an organisation, is an example of this position.

22
 Walmart’s ‘everyday low prices’ promise to its customers makes sure that huge
volumes of products are sold resulting in huge profits for the company.

• Hybrid: This strategy is called a hybrid because it consists of a low-cost strategy as

well as a product differentiation strategy. This means that consumers can buy
products that are more differentiated than others and at a low price (Simister, 2011).
Thus, it is a win-win situation and such products are highly valued. Walmart keeping
up to its promise of ‘everyday low prices’ does price some differentiated products at
very low rates. This encourages more consumers to shop at Walmart.

• Differentiation: Companies that use this strategy focus on delivering the best quality
products to their customers. They price it at average to sometimes high rates. But this
does not affect their sales as they have earned the loyalty of their customers. The
consumers now trust the brand because of their reputation of delivering the best
products and are ready to pay more. Walmart known for its promise of low prices but
that does not mean that they have a low-cost margin for all products because this way
they would never make the huge profits that they are making now. What they do is
price certain products at extremely low rates but sells other high-quality products at
high rates.

• Focused Differentiation: This strategy is used by luxury companies that produce

high end and high valued products and price them at very high rates. Their target
market is a very niche group of people who can afford such high prices as their
priority is quality and don’t mind paying the price for it. Walmart now sells luxury
products from high end companies like Steve Madden, Karl Lagerfeld Paris, Rayban
and Calvin Klein etc.

• Risky High Margins: This strategy is not really competitive and may actually lead to
the failure of a company. This is because this strategy deals with pricing average
quality products at really high rates. Thus, customers will not be satisfied and will
look for options where they can find products with better quality at lower prices. This
strategy does not apply to Walmart as it never charges unusually high prices on any
product.

• Monopoly Pricing: This strategy is for companies that enjoy a monopoly in a market.
What this means is that there is no other company in the market that sells products
that this company sells. Thus, the company enjoys having the entire market to itself as
the consumers don’t have alternative options. Such a company can price its products
however they want as they don’t have competitors to look out for and their consumers
are dependent on them. Walmart is not a monopoly as many other retail corporations
like Tesco, Target and Costco compete with it thus, this strategy cannot be applied to
Walmart.

• Loss of Market Share: Companies that fall under this category are not able to create
products or services that have value in the eyes of consumers. Also, these products are
priced in such a way that they match the price of products of a superior competitor.
Thus, no consumer will be willing to pay the same price for a product that has lesser
value. The company will eventually lose their market share. If Walmart’s ecommerce
branch does not up its game and deliver the best prices to its customers, they will
eventually lose their market share to other digital giants like Amazon.

23
 Strategic Directions, Objectives and Tactical action

Under this section, the discussion is about the overall strategic decisions Walmart will
have to take to enter the UAE market successfully. Walmart will have to set some
priorities before it enters the market so that it has a proper plan in place. Plans and
strategies that are essential for a smooth entry into the UAE market and for the future
growth of the company will be discussed here.

When developing strategies there are three questions one must ask: on what basis are the
strategies going to be created? In which direction are these strategies going? How will one
implement these strategies successfully?

Basis of Choice: One of the most crucial decisions Walmart will have to take is on what
basis their strategic plans will be created. Will Walmart enter the UAE independently as a
Strategic Business Unit (SBU) i.e. a segment of the organisation that is responsible for its
own strategic planning and performance (Spacey, 2017) or will its operations be handled by
the Headquarters at USA? The former option will be more appropriate for Walmart entering
the UAE as it is a new market for the company and its operations should be handled in the
country itself by the group of people who will be recruited for the same. Since Walmart in the
UAE will function as an SBU, a proper strategy must be in place for what position Walmart
will take in the UAE market. According to Porter’s Generic Strategies Model, Walmart can
follow one of the three strategies: Cost Leadership, Differentiation or Focus strategy. Just like
how Walmart uses the cost leadership strategy for its operations in all other markets, Walmart
should continue using this strategy when it starts its operations in the UAE. This strategy
deals with targeting a large set of consumers thus increasing demand and offering these
consumers products at the lowest prices possible. To achieve this, companies must keep their
costs as low as possible and must always be on the hunt for cost reductions in all segments of
the company (Tanwar, 2013). Thus, when Walmart starts their operations in the UAE, they
24
should try to keep their costs to the minimum by avoiding unnecessary middlemen in their
supply chain, using technology efficiently where it can used etc (Scuderi, 2012). If Walmart
can keep up with its promise of ‘everyday low prices’ even in the UAE then they will be
preferred over local competitors like Carrefour, Lulu, Spinneys, Union Coop etc eventually.

Alternative Directions: Out of the four proposed directions Walmart can take namely
Market Penetration, Market Development, Product Development and Diversification, only
two can be applied in the case Walmart entering the UAE. These are Market Development
and Diversification as these two are the only directions that an organisation can take when
entering a new market which is exactly the case of Walmart’s entry into the UAE. Market
Development would require Walmart to sell the same products to the consumers in the UAE
market. Whereas, diversification is Walmart selling new and unique products specifically to
the UAE market. What Walmart should do is a combination of these strategies. It should
continue selling the existing products but at a much lower price than local competitors so that
consumers will be tempted to shop at Walmart for their day to day essential items. But
Walmart will also have to adapt to the external environment by selling only halal certified
food items as this is UAE regulation that Walmart will have to follow. It should also make
sure sell locally produced items in their UAE stores as customers in the country are familiar
with these products and have been using them for years. Another way Walmart can diversify
what they sell is by including a wide variety of culture-specific products like Indian spices,
Japanese sauces, olive oil from the Middle East etc as the UAE is a country made up of
people from all over the world. Thus, doing this will make it possible for Walmart to fulfil
the needs of these ethnic groups too.

Alternative Methods: This section deals with very crucial and enormous decisions that
Walmart will have to take for their entry in the UAE market. An organisation can enter a
foreign market either by internal development or external growth strategies such as joint
development alliances or acquisition. Internal development is when a company relies on its
own resources to achieve growth in a market (Sarkissian, 2018).On the other hand, an
organisation can acquire another business by obtaining a huge share of the company. The
business that is acquired may retain its name or might not. In fact, the very existence of such
a company can be swallowed up by the business that acquired it (Peavler, 2019). Thus, this is
an effective way of eliminating a potential competitor. Another strategy is to form a joint
development alliance with another company or companies. In such an alliance, the
participating companies have mutual aspirations that is achieved by the companies sharing
their resources, expertise, skill or labour (Wroblewski, 2018). For Walmart’s entry into the
UAE, the most appropriate of these strategies is internal development. This is mainly because
Walmart is a huge retail corporation that operates in countries around the world and has been
in the retail market for many decades. Thus, it definitely has the required expertise,
knowledge, skill and plenty of resources to successfully enter the UAE market. It has entered
various other countries in the past successfully and has earned itself a name in the retail
market. Thus, attracting UAE customers to shop at Walmart will not be such a difficult task
as it is a household name that is very popular. And if Walmart is able to pull off the
‘everyday low prices’ strategy, it will eventually achieve sustainable growth in the UAE
market easily.

Conclusion

25
In this report, the importance of business strategies has been thoroughly explained. The case
study was Walmart, a US based retail corporation entering the UAE market. The task at hand
was to propose strategies for a smooth entry into the new market and for this many business
models and strategic tools were used to develop a clear understanding. First, the external
environment was studied using the PESTLE model then the internal environment was
understood using the Value Chain Analysis. This was followed up by a critical analysis of
Walmart’s internal structure, capabilities and skill set. Then the competitive forces in the
market was understood using the Porter’s Five Forces Model. Ansoff’s Matrix, Bowman’s
Strategy Clock and Porter’s Generic Strategies were used to understand what position and
direction Walmart will take in the UAE market. Finally, an overall analysis of the strategic
decisions Walmart will take when entering the UAE was discussed based on choice,
alternative directions and methods. After such thorough analysis, it was understood that the
UAE market is a favourable one for Walmart to enter but that does not mean that when
Walmart starts its operations in the country it will have no competitors. Thus, it was crucial to
propose strategies that would differentiate Walmart from these competitors. It was
understood that the best way to do this was to follow the cost leadership strategy that
Walmart already uses in other markets. It was also perceived that strong supplier relations,
excellent service and modern technology can land Walmart on the top of the ladder easily.
Thus, the importance of business strategy and how important it is when it comes to the
performance of any organisation has been thoroughly understood through the writing of this
report.

26
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