Why Walmart’s Diversification into Healthcare Failed: A Case Study Applying Michael Porter’s Three Essential Tests of Corporate Strategy

This case study evaluates Walmart’s effort to diversify into the U.S. healthcare sector using Porter’s three essential tests for corporate diversification: the attractiveness test, the cost-of-entry test, and the better-off test. Drawing upon recent data and strategic management theory, the paper investigates the misalignment between Walmart’s core competencies and the operational demands of healthcare delivery. While the healthcare sector offered growth potential, Walmart’s approach failed to pass Porter’s Three Essential Tests of corporate strategy and was unsustainable. The case study contributes to corporate strategy discussions by illustrating the risks of unrelated diversification by large conglomerates and the importance of Porter’s three essential tests in analysis corporate diversification strategy.