Describe about a Case study of Walmart?
Executive summary:
This report includes the business management process of Walmart. It is an American based multinational retail corporation that offers extensive ranges of products within various countries of world. It also operates its business activities by taking the strategy of merger and acquisition. It operates its business operation within many countries of Europe, Asia by merging some medium company. The Slogan of the company is ‘Save money, live better’. Main motto of this company is to help the customers in order to save the money by purchasing products from Walmart. Innovative thinking and the service of the leadership has helped this company for sustaining the growth within the market. This retail company of America offers extensive ranges of products, like cell phones, electronic products, clothing products, various health related products, equipment for exercising, ornaments, television sets, video games and many items.
Therefore, Walmart has to compete with several companies of retail business in those operating countries. It also operates its effective business activities by taking the advantage of online medium. It offers ecommerce website for operating business activities. . Walmart operates its effective business operation within 11,000 stores under 71 banners among 21 countries of World. Apart from this, there are e-commerce websites within 11 countries. Main aim of Walmart is to help the customers in order to save the money and live more happily. On the other hand, it can be analyzed that financial position of the company is more or less good. The share price of this company is not so high. However, the forward price of Walmart is effective.
However, this company has also offered extensive business operation with different countries. It mainly takes the strategy of mergers and acquisition in order to operate effective business within the global market. At the first year of operation, Walmart has started its first store in America. After that, gradually Walmart opened various stores and other operations in countries of Latin America, Europe. Walmart has also started its effective business operation within the developing countries, like India, some countries of Africa etc. Apart from doing business, this company also engages with different activities of corporate social responsibility within the countries where it operates its business globally. Walmart has taken initiative to help those poor people by operating some activities of corporate social responsibility.
This report contains a detail analysis of Walmart. This is a multinational company that operates its business activity within the international market sector. It is an America based retail corporation that operates a chain of departments and warehouses stores within the international market. This study includes detail analysis of the products of the firms, industry and competitive position of this company within the international market. This report also contains the level of foreign operations of this company within the international market. It also includes the ratio analysis of the financial data.
Walmart is an American multinational retail company. First store of this company was opened Rogers (1962). Sam Walton is the founder of this company. Main motto of this company is to help the customers in order to save the money by purchasing products from Walmart. Innovative thinking and the service of the leadership has helped this company for sustaining the growth within the market. Walmart has operated its business within many countries of world. It is a multinational company. It offers huge ranges of different products through retail outlets as well as online medium under the product branding strategy. Slogan of the company is ‘Save money, live better’.
Figure 1: Logo of the company
(Source: www.walmart.com, 2015)
Firstly, it has opened its store in United States. However, it has expanded its business within the international level. It also operates its effective business within online medium by using e-commerce websites. Customers can also access the Walmart stores from cell phones. It has become an International business company in the year of 1991. It operates its business within 26 countries outside United States. It also has 6,100 stores at international level. Therefore, the international business scenario of Walmart is increasing gradually. Apart from doing business, this company also engages with different activities of corporate social responsibility within the countries where it operates its business globally. This company always tries to meet the needs and demands of the customers of different countries as because every country has different value and choice and socio economic condition. Walmart also operates business within some third world countries. Therefore, Walmart has made the initiative to meet the expectations and demands of the countries (Diva-portal.org, 2015).
This retail company of America offers extensive ranges of products, like cell phones, electronic products, clothing products, various health related products, equipment for exercising, ornaments, television sets, video games and many items. This company serves a huge variety of products within the international market. Walmart stores offer some store brands. Store brands are related to some line of products. As stated by, Toor (2014) store brands can be recognized as a line of products those are branded by the retailer within the brand identity of the company. This can be refereed as product branding or house branding.
There are some brands of products. Therefore, Sam’s choice, Great Value, Equate, Mainstays, Dr. Thunder, Special Kitty, White Stag, George are the name of the brands of Walmart. Therefore, this retail company offers various products under different name. This process can be called as product branding strategy. Walmart therefore offers in-stores and online facility to the customers. Customers can shop from the online store and as well as traditional retail stores of Walmart. This company claims that they help the customers in order to save money by shopping through retail stores, online medium and mobile devices of the customers. Walmart operates its effective business operation within 11,000 stores under 71 banners among 21 countries of World. Apart from this, there are e-commerce websites within 11 countries. Main aim of Walmart is to help the customers in order to save the money and live more happily (Tomlin, 2014).
Moreover, customers have demanded for environmentally responsible products to the Walmart. For this growing demand of customers, Walmart has started to take initiative in order to provide a Sustainable Product Index Program in 2009. The goal of this company is to examine the supply chain and create an index that will help in ranking the products as per the measure of the impacts of environment. The demand of environmental friendly goods has increased within the customers. They are demanding more effective and efficient as well as sustainable products from Walmart. For this reason, This Company has taken initiatives. Customers also have the demand about the information of the entire lifecycles of the product (Walmart.com, 2015).
Walmart operates its effective business within retail sector. This retail industry is the fastest growing market within the competitive market. Especially in United States, United Kingdom the business of retail has been increased a more. The retail industry has also grabbed its position within the countries of third world. Developing countries also are engaging with this retail industry.
As defined by, Ang (2014), retail industry offers all types of products within an umbrella of a company. Customers can find all types of products from this retail sector. At the very beginning, retail business was dominated by the small target store. However, with the changing face of time multinational conglomerates has also taken over the business operation of the company. However, multinational conglomerates of retail have taken initiative in order to set up the huge distribution chains, management system as well as effective and wide marketing plans.
However, segments of retail industry can be categorized by two major divisions. Those are, hard and soft. Hard retail therefore involves electronics, furniture, sporting products etc. On the other hand, soft retail industry involves by clothing, fabrics etc. Walmart is a multinational conglomerate of retail industry and it offers both hard and soft products (Ushakov & Arkhipov,2014).
Every retailer tries to make differences in the strategy of their business operation. Their strategy of business operation is very important in order to sustain within the industry. There are different types of retailers. Some companies operate retail business by operating department stores. Department stores refer to very large stores who offer wide variety of products and services. Some companies also offer huge variety of products and services by giving discount on products. This is the main competitive factor of these types of companies. There can be Demographic types of retail business. Demographic retailers focus only upon a particular segment of product or service (Cox et al. 2013). Therefore, Walmart operates business by operating sale by departmental store and discount store.
Walmart has achieved a good position within the competitive market. Walmart has achieved a secured place within the market. Market share of Walmart was 65.4% in 2012 within the U.S market of retail industry. Target and Kmart are two main competitors of Walmart in the retail sector of America ().
The market share of Walmart has increased a lot. On the other hand, e-commerce market share of Walmart has also been increased. Main competitors of Walmart are Kmart, Target in American market. These two supermarket chains of United States also offer products and services at a very low cost. Therefore, Walmart has to compete with these retail companies in order to sustain within the competitive market sector.
However, in U.K market sector, main competitors of Walmart are Tesco, Asda, Sainsbury’s etc. The retail industry is increasing within the retail market of United Kingdom. Therefore, Walmart has to compete with several retail companies in U.K. Therefore, Walmart can be stated as the largest retailer of the world. However, the online activity and ecommerce of Walmart is also increased a lot. Therefore, Amazon is positioned first in the process of operating business through online activity. Therefore, Walmart is following Amazon for operating the online activity within the market. Therefore, Walmart also has competed in the ecommerce activity within different market share of several retail companies.
However, Walmart has maintained a secured position than other retailers within the market. Walmart has tried to maintain its effective warehouse operation of its own. Walmart has also situated its stores in small areas and towns. At the very beginning of its journey Walmart has situated different stores within some areas where no competitors have entered. Walmart operates some discount stores. Those discount stores provide products at 10-15% lower than other traditional as well as conventional stores of the exiting market (Bhandarker, 2014).
Therefore, (Brijs (2013) analyzed that, the process of store-operation of Walmart is also very effective rather than other competitors of the market. Walmart has maintained a structure of sales that offers $300 sales per square fit. On the other hand, the amount of sales per square fit is $209 of Target and $209 of Kmart.
Walmart therefore spent 1.5% for the information system of discount stores. It is comparatively higher than other competitors of the market. Walmart therefore utilizes effective technology in order to decrease the inventory cost. This process also helps Walmart to increase the sale within the competitive market. Therefore, diversification of the products of Walmart is very effective that helps to sustain in the competitive market.
As stated by, Hill et al. (2013) Walmart has an impressive attributes as well as track record for sustainable growth. It offers an accurate balance sheet. The share price of this company is not so high. However, the forward price of Walmart is effective. DRAG analysis of Walmart therefore shows the growth rate of this company. The share of Walmart will be high by 20-25%. On the other hand, the share of Walmart stores stays effective for all time.
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Wal-Mart Industry Analysis |
|
|
Industry Beta |
0.98 |
|
Stock Beta |
0.45 |
|
10 Year EPS Std Dev |
7.5% |
|
Industry Score |
3/3 |
Figure: Drag analysis of Walmart
(Source: Stoichev, 2014, pp-309)
Therefore, Walmart serves a lot as an effective retail store. The shares of Walmart always exhibit the below-average beta.
Figure : Beta analysis of Walmart
(Source: Yang & Chen, 2014, pp-23)
On the other hand, Joshi & Pande (2014) argued that, in the fiscal year of 2014, Walmart could not achieve earnings per share.
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Wal-Mart Competitive Position Analysis |
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Gross Margin |
24.8% |
|
Operating Margin |
5.5% |
|
Return on Assets |
7.6% |
|
Return on Invested Capital |
12.9% |
|
Competitive Position Score |
2/3 |
Figure: Analysis of Competitive position of Walmart
(Source: Pantano, 2014, pp-340)
1.6. Level of foreign operations:
At the very beginning, Walmart has located its first store in United States. Gradually, this company has taken the initiative to operate at foreign as well as international level. At the year of 1995, Walmart has located its stores in three over populated countries of Latin America. Mexico, Brazil and Argentina were three countries where Walmart has grabbed the position within the market. In Mexico, Walmart has started joint ventures also. In the year 1996, Walmart entered into the market of China. In 2009, this company also opens 40 new outlets in various states of China. In 2006, Walmart has opened approx 73 stores within 36 cities. However, Walmart has begun its operation in Europe by 1998. In Europe, Walmart had to face some troubles in this region in order to operate most effective business ().
Here, Walmart has faced trouble for poor location. Walmart had to compete with large supermarket of Europe, like Aldi, Lidi etc. However, Walmart has overcome these troubles by taking strategic decision.
On the other hand, Walmart has acquired ASDA Group PLC for entering the market of United Kingdom. For this case, Walmart has taken the strategy of merger and acquisition. It had to compete with major chains of supermarkets in U.K. In 2002, it has also taken the initiative of mergers and acquisition in order to enter into the Japanese market. Walmart has only one store in India. Therefore, it has been shown that, Walmart often takes the strategy of mergers in order to operate business within global sector ().
Conclusion:
This report has discussed the process of business management of Walmart. Walmart is an American retail conglomerate that operates a chain of departments and warehouses stores within various countries of World. Therefore, this report has analyzed the condition of retail industry as well as position of the company within the market. This report has also discussed about the financial position of Walmart.
Reference list:
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