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Can This Be True of Wal-Mart - Case Study Example

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In the paper “Can This Be True of Wal-Mart?” the author discusses a leading chain of the largest retail stores that offers to its customers a range of all grocery items that is food, detergent, coffee. It even sells homeware that is furniture and even electronics and apparel at very reasonable prices…
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Can This Be True of Wal-Mart
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? and Section # of Business Paper Company The of the retailer is Wal-Mart. The headquartersof the company are in Bentonville, United States. The company has four divisions namely Wal-Mart Stores, Wal-Mart Supercenters, Sam's Club, and Wal-Mart Discount Stores. (Walmart Retail Divisions) It is basically a leading chain of the largest retail stores that offers to its customers a range of all grocery items that is food, detergent, coffee. It even sells home ware that is furniture and even electronics and apparel at very reasonable prices. So in all everything is available under a single roof. The idea of very low prices makes it unmatched by the other competing stores nationwide, as it offers good value to its customers for the products. It was initially started to sell products at low price to benefit its customers and save money. Sales/ Profits: (Stock Analysis - Income Statement)for after tax figures. The figures have been taken from the statement below: Strengths/ Weaknesses As we can see from the report that sales revenue has been consistently increasing. Therefore, it is highest from all the previous years. In relation to its competitors, which include large department stores like Kmart, Target, Sears, Canada’s Zellers and Giant Tiger, Wal-Mart is comparatively performing better and earning a higher sales revenue. This is because the sales figure was approximately $446,950 millions compared to the significantly small sales revenue generated by Target, which was $69,865 million and of Sears Holdings, which was $41,567 million. Wal-Mart was second on rank in the retail market while Target was at number 38 and Sears at 65. (Money.CNN). Wal-Mart’s greatest strength is that it offers very low prices to its target customers. It is able to benefit its customers because it obtains the products at cheaper prices because of bulk buying. It is therefore able to pass the low costs to its customers in the form of discounted prices. It focuses on the idea of ‘saving people money so they can live better’ and a low-cost culture to its broad target market. It satisfies its customers completely by fulfilling their needs and by finding out their requirements by implementing technology. It has also located its stores at very accessible places globally, in nearly every neighborhood in the United States. It is expanding globally and the number of international Wal-Mart stores locations has been increasing. There are 4479 stores in the United States and 5651 international stores and the company has planned to expand further.(Wal-Mart Annual Report) Where Wal-Mart benefits from high sales revenue due to the large volume of trading, at the same time Wal-Mart’s weakness is that it is very large company. This is because the company is so large that managerial problems arise and this affects the span of control. Also Wal-Mart keeps apparel of a relatively lower price compared to JC Penny and Kohl’s which makes them preferable when purchasing clothes. Wal-Mart sees a growing online market for its products, through which it can boost sales and give a greater return on investment (ROI). Wal-Mart has been expanding globally and is planning to open approximately nine more stores in Canada as quoted by The Calgary Herald. (TONEGUZZI) However, just because Wal-Mart is the largest retail brand does not mean everything is perfect. There are certain problems faced by every organization and Wal-Mart has some weaknesses aswell. Wal-Mart does sell apparel for people of all ages, that is infants, young children and teenagers and middle-aged people. Even though the prices are lowest, these are cheap quality products imported from China. Customers consider this to be a great deal since they assume that they are being able to but goods at the cheapest price but actually, it’s the same because they are ending up paying a lesser price for a relatively inferior quality product compared to Target and Sears. Also, products like jewelry, salon products and even electronic items are of better quality at Target and not Wal-Mart. I will support my argument with an instance where people have shared their individual experiences over the Internet. Bruce Nussbaum shared his personal experience on Bloomberg Businessweek, he said,“I wanted an inexpensive digital camera for my daughter. After finding one with the basic features I wanted, I went to sears, target and walmart to check prices. All 3 stores sold the camera with the exact same model number. Sears -$119 target -$109 walmart - $99. I bought it at the manufactures online store but when the camera was delivered it DID NOT have all the features that the Sears and Target salesperson had shown me (couldn’t get help at the Walmart store). I contacted the factory store and asked them if perhaps the one I got was an older version of this camera since the model number on the unit was the correct. The customer service agent apologized and said I must have gotten one of the “WALMART” cameras. These units were manufactured just for them with the same model number but with reduced features. So while the price was a little lower at walmart, the value was worse since it was a stripped down version.” (Nussbaum) 2012 Business The Company has been performing well as sales revenue has been consistently increasing. In 2012, it had sales revenue of $466 billion, which is clearly greater than $444 billion. Also the earnings per share rose to $ 5.02 per share from $ 4.49 per share (Businees Week). This shows that it is even more profitable to invest in Wal-Mart shares. However, comparing its performance to its competitors, there might be a threat. Online retailers like Amazon are posing to be a future threat due to the convenience they offer to their customers. Even though Wal-Mart is considered to be the largest retail store chain, many competitors are using various strategies to boost their sales by penetrating into emerging markets. Price Smart applied a thin margin strategy and that increased its sales by 22% last year. (Seeking Alpha- Read, Decide , Invest) Also, Wal-Mart has been facing opposition from some individuals. Therefore, it had to delay the opening of its stores. ‘It had planned to open 6 stores by the end of 2013, but only one store will open out of the six stores that were planned and the remaining have been put on hold’ (htt). According to some latest news, it the company had to face heavy losses due to an allegation that the company representatives bribed officials in Mexico to help them build stores. Wal-Mart had to incur a loss of $157 million during the past year and it is expected that the company will continue to incur further losses. During November 2012, Wal-Mart also earned a bad reputation considering the labor policies. It was relating to the Black Friday sales, as it’s ‘one of the biggest sales in the nation’ (Santo). The workers complained about not being paid for working longer hours and being deprived of health benefits. They held a protest on the Thursday prior to the Black Friday and walked out from work. Infact a ‘Seattle Wal-Mart worker, Sara Gilbert struck on Thursday. Despite the fact she is a customer service manager -- a manager, note -- Gilbert only makes about $14,000 annually. Gilbert says her family remains reliant on food stamps and social services, despite the fact that "I work full time at the richest company in the world," as she said,’ (Santo). Therefore, Wal-Mart is earning a negative reputation because of its policies. Summary Analyzing all the data that I have collected, I draw a conclusion that Wal-Mart is performing well and is continuing to expand its geographical base. It has managed to earn maximum sales revenue over the years and has been able to deliver customer value in the form of affordable prices and providing a range of products, food items, home appliances, furniture and clothing all within one destination. It generates massive revenue, which enables it to give high earnings per share to its shareholders. However, a company that was considered to be the largest leading retail chain has started to face threat from emerging competition such as Amazon and Price Smart. Also, Wal-Mart workers are not permanent workers so even though it employs a large number of people, it is unable to benefit it’s workforce with privilege, such as healthcare or educational and training opportunities. Therefore, Wal-Mart needs to redesign its strategy and understand that just having the greatest sales revenue, expanding over a large geographical base and having giant stores will not be enough for the long run. It has to have a positive reputation among its customers, workforce, its investors and the community to deliver the best quality and build a better customer relationship, as a motivated workforce will result in a superior product. Works Cited Businessweek.com. "WAL-MART STORES INC (WMT:New York Consolidated): Earnings Estimates - Businessweek." n.d.. Web. 6 Apr 2013. http://investing.businessweek.com/research/stocks/earnings/earnings.asp?ticker=WMT. Businessweek.com. "Can This Be True Of Wal-Mart? - BusinessWeek." 2013. Web. 6 Apr 2013. http://www.businessweek.com/innovate/NussbaumOnDesign/archives/2007/02/can_this_be_true_of_wal-mart.html . Calgary Herald. "Walmart Canada announces major expansion plans." 2013. Web. 6 Apr 2013. http://www.calgaryherald.com/business/Walmart+Canada+announces+major+expansion+plans/7853745/story.html Fortune 500 2012: Annual ranking of America's largest corporations from Fortune Magazine. "Fortune 500 2012 - Wal-Mart Stores." 2005. Web. 6 Apr 2013. http://money.cnn.com/magazines/fortune/fortune500/2012/snapshots/2255.html Santo, Michael. "Planned Black Friday 2012 strike spotlights Walmart labor policies." 2012. Web. 6 Apr 2013. http://www.examiner.com/article/planned-black-friday-2012-strike-spotlights-walmart-labor-policies Stock Analysis on Net. "Wal-Mart Stores Inc. (WMT) | Income Statement." 2013. Web. 6 Apr 2013. http://www.stock-analysis-on.net/NYSE/Company/Wal-Mart-Stores-Inc/Financial-Statement/Income-Statement Vatalyst. "Why Wal-Mart Beats Its Competitors." 2012. Web. 6 Apr 2013. http://seekingalpha.com/article/562821-why-wal-mart-beats-its-competitors . Walmart Corporate. "Walmart Corporate - Our Retail Divisions." 1996. Web. 6 Apr 2013. http://news.walmart.com/news-archive/2005/01/07/our-retail-divisions. Read More
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