Walmart PESTEL/PESTLE Analysis & Recommendations - Panmore Institute (2024)

Walmart PESTEL/PESTLE Analysis & Recommendations - Panmore Institute (1)

Walmart’s remote environment or macro-environment involves factors that determine the company’s success. These factors are best presented through the PESTEL/PESTLE analysis model. As a retail industry leader, Walmart continues to withstand the potential negative effects of threats in the political, economic, sociocultural, technological, ecological, and legal (PESTEL/PESTLE) aspects of its business. However, this success requires continued evaluation of the retail industry environment. These PESTEL/PESTLE factors also change over time, thereby imposing challenges for Walmart. These changes may present threats or opportunities. The retail company must exploit the opportunities and protect itself from threats. In using the PESTEL analysis, Walmart leaders and managers can determine which factors to prioritize in strategy development.

The external factors in the remote or macro-environment of Walmart, based on the PESTEL/PESTLE analysis, indicate the need for strategic focus on economic, sociocultural, and ecological concerns. Strategic formulation based on Walmart’s mission statement and vision statement is designed to target the trends identified in this PESTEL analysis.

Political Factors

Walmart considers political factors in the retail market, usually pertaining to government policies. In the PESTEL/PESTLE analysis model, politically active interest groups are also significant. The following are the political external factors in Walmart’s remote/macro environment:

  1. High stability of politics (opportunity)
  2. Political support for globalization (opportunity)
  3. Political pressure for higher wages (threat)

The remote/macro-environmental factors show that the retail business must address the threat of higher wages. This is a threat because it goes against the cost minimization essential in Walmart’s cost leadership generic competitive strategy.

Economic Factors

Walmart is under significant pressure from economic changes. Any such change leads to changes in the company’s revenues. Based on the PESTEL/PESTLE analysis model, the following are the economic external factors in Walmart’s remote/macro environment:

  1. Stability of major economies (opportunity)
  2. Continued growth of developing countries (opportunity)
  3. Decreasing unemployment in the United States (opportunity)

All these economic factors show that Walmart should exploit opportunities around the world. Emphasis should be on the fast-growing economies of developing countries, which have increasing demand for goods from retail firms.

Social/Sociocultural Factors

The social or sociocultural factors in the business environment of Walmart influence consumer perception and preferences. In the PESTEL/PESTLE analysis model, the following are the social or sociocultural external factors in Walmart’s remote/macro environment:

  1. Healthy lifestyle trend (opportunity)
  2. Cultural diversity trend (opportunity)
  3. Urban migration (opportunity)

These social/sociocultural factors present opportunities for Walmart. The company can increase its array of healthy products. Walmart can also increase the variety of its products to satisfy various cultural preferences.Moreover, the company can adjust its strategies to exploit increasing consumer demand in cities and surrounding areas.

Technological Factors

Walmart needs to address technological trends. In the context of the PESTEL/PESTLE analysis model, technologies affect the retail industry’s competitive landscape. The following are the technological external factors in Walmart’s remote/macro environment:

  1. Increasing business automation (opportunity)
  2. Business analytics or big data (opportunity)
  3. Increasing mobile device usage among consumers (opportunity)

Walmart can increase its investment in all three factors. In exploiting the opportunity in mobile device usage of customers, the company must boost its online presence. Online marketing and online selling increase Walmart’s revenues.

Ecological/Environmental Factors

The ecological or environmental factors significant in Walmart’s business pertain to environmental conservation concerns. Environmental conservation is now a popular principle. The following are the ecological external factors in Walmart’s remote/macro environment in the PESTEL/PESTLE analysis model:

  1. Business sustainability trend (opportunity)
  2. Environmentally friendly products trend (opportunity)

To attain business sustainability, Walmart must improve operational efficiency. Technological innovation helps improve efficiency in business. Improved policies and standards on products sold at its retail stores can also strengthen the company in addressing these ecological factors.

Legal Factors

Walmart is subject to the requirements of laws and regulations. Based on the PESTEL/PESTLE analysis model, these external factors usually impose limits on retail firms. The following are the legal external factors in Walmart’s remote/macro environment:

  1. Food safety regulations (opportunity)
  2. Employment regulations (opportunity)
  3. Tax law reform (threat)

Tax reform is a potential threat if it leads to higher tax rates. Walmart must take food safety regulations as an opportunity to improve quality standards. Also, enhancing human resource management practices can exploit opportunities concerning employment regulations relevant to the retail business.

Recommendations – PESTLE/PESTEL Analysis of Walmart

This PESTLE analysis of Walmart shows that the company has more opportunities than threats in its remote/macro environment. The external factors present significant opportunities. The firm must take a proactive approach to address threats. However, the company’s efforts must focus on exploiting the opportunities identified in the retail business environment. Based on the PESTEL/PESTLE analysis, Walmart can improve HR management practices, boost investments in technology, enhance quality standards, and expand its business worldwide.

References

Walmart PESTEL/PESTLE Analysis & Recommendations - Panmore Institute (2024)

FAQs

Where can I find PESTLE analysis? ›

Resources for a PESTEL Analysis
  • Wall Street Journal. Available from 1984-present in ProQuest Global Newsstream.
  • New York Times. Available from 1980-present in ProQuest Global Newsstream.
  • US Newsstream. ProQuest. ...
  • Pew Research Center. ...
  • Pew Research Center Global Indicators Database.
Jul 30, 2024

What are the PESTLE factors that you must consider to be able to successfully scan the market before starting your business venture? ›

PEST is an acronym that stands for political, economic, socio-cultural, and technological. These are all external factors your team should consider when making business decisions. You may also see PESTEL which includes environmental and legal, in addition to the four mentioned previously.

How to do a good PESTEL analysis? ›

How to Do a PESTLE Analysis
  1. Brainstorm. Brainstorm ideas for each area of the PESTLE template.
  2. Group. Review responses, and collate ideas.
  3. Rate. Rate the ideas according to likely impact on the organization.
  4. Share. Share the outcomes of the session to relevant stakeholders.

What is a PESTEL analysis and give example? ›

A PESTLE analysis looks at the macro trends in the surrounding environment of a certain business or organization. It examines the political, economic, social, technological, legal, and environmental elements of the operating market that may have either positive or negative effects on your company or organization.

Where to find information for a PESTEL analysis? ›

A good starting point for your research will be to find up-to-date Country Reports that include political, economic, social, technological, legal and environmental indicators. Country Reports can be found on the Statista, Business Source and ABI / Inform databases. Links available on the Business Subject Guide.

What is PESTEL analysis pdf? ›

A PESTEL analysis is a framework or tool used to analyse and monitor the external environment factors which have an impact on an organisation. The result of which is used to identify threats and weaknesses, strengths and opportunities which can be considered or used in a SWOT analysis.

What is a short note on a PESTLE analysis? ›

A PESTLE analysis studies the key external factors (Political, Economic, Sociological, Technological, Legal and Environmental) that influence an organisation. It can be used in a range of different scenarios, and can guide people professionals and senior managers in strategic decision making.

What is the most important factor in PESTLE analysis? ›

Economic factors

This factor includes economic growth, interest, exchange, inflation, minimum wage working hours , unemployment purchasing power and cost of living. These factors determine the economy's performance which can have a significant effect on a business's operation and profitability.

What is one important factor to consider when using PESTEL? ›

As a part of a PESTEL analysis, you will want to identify and analyze political factors that may affect your organization. These can include government stability, political ideology, taxation policies, trade regulations, and government involvement in business.

How do you lay out a PESTEL analysis? ›

Your analysis should consider both the present situation and the likely future developments that will affect the business. With this in mind, you may find it helpful to split your findings under each PESTEL category into current factors and scheduled or predicted future factors.

What do you talk about in a PESTLE analysis? ›

A PESTLE analysis studies the key external factors (Political, Economic, Sociological, Technological, Legal and Environmental) that influence an organisation. It can be used in a range of different scenarios, and can guide people professionals and senior managers in strategic decision making.

How to complete a PEST analysis? ›

To perform a successful PEST analysis, you should:
  1. Analyse oncoming market trends taking into consideration political, economic, social and technological factors.
  2. Determine which trends are a threat to your business.
  3. Determine which trends can benefit your business.

What is PESTLE analysis for dummies? ›

PESTLE is an acronym that stands for six external factors affecting your business: political, economic, sociological, technological, legal and environmental. Each of these can have a profound effect on your business and varying implications, for example, in terms of: duration of impact - short term or long term.

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