Business
One of the most interesting and attractive aspect for the investors is the growth signals of any business. In the business of retail marketing or a distribution business like a Walmart, the factor which must attract the current and new investors is the future plans of Walmart. On the basis of their financial performance, in the future, Walmart will be in a strong position to reinvest their earnings to capture new markets. Walmart can easily deploy their display centers or stores at any favorable place. This capacity of Walmart ensures that Walmart can sustain and progress in the future. When the management of the company has the future investment plans, then it is highly probable that the investors maintain their trust in the company. ("Wal-mart's future: Growth," 2013)
Another tactic of Walmart management is to enhance the sales of the goods via the Internet. These days, most of the customers are buying the product of their needs from the internet. The customers are becoming more cost conscious and compare the prices of different products available online. In these circumstances, the Walmart’s system of online sales is accurate and up to date. The interface of their website is very friendly for the customers who are interested in buying the products. As compared to the competitors, Walmart is trying to maintain good customer satisfaction rate to maximize the profits. This tactic of the management is another signal for the investors that Walmart will generate greater profits in the future. ("Wal-mart's future: Growth," 2013)
The dividend is the reason why an investor invests in any business. In the last decade, the dividend per share has increased every year. In the year 2003, the dividend per share paid was $0.30 and in the year 2013, the dividend per share paid is $1.59. Moreover, at any point in last ten years, the dividend per share paid never decreased from the previous year. This means that the Walmart is making good profits and the management is taking care of their shareholders. Dividend signals of any organization show that the company is making profits and good for making investments. Moreover, it is expected that the dividend per share will increase from $1.59 to $1.88 in the year 2014. ("Dividends")
According to the fortune 500, the Walmart has reclaimed the number 1 spot in the year 2013. However, it is important to state that the Walmart’s top competitors in the fortune 500 are Exxon, Chevron and ConocoPhillips, which are related to the oil industry as compared to the business of Walmart. Therefore, it is not accurate to compare the two businesses who are working in different sectors. Ranking on the fortune 500 are entirely based on the financial statistics of the businesses. The competitors for Walmart are ‘Target’ and ‘Sears Holding’, which are ranked at number thirty six and seventy one respectively. If we compare Walmart with the competitors of the similar industry, then the Walmart is the best option to invest for the investors. ("Wal-mart's future: Growth," 2013)
Walmart’s future earnings will increase because they are investing in the countries like China, Mexico and Brazil. The important thing to consider is that all these countries have a high rate of population. The main products at Walmart are of the use of daily life routine. Therefore, the investments in such countries will enhance their sales automatically. Moreover, the management of the Walmart is more interested in investing in foreign countries because within the United States of America, one Walmart store is becoming a loss maker for another Walmart store due to poor location selection. Therefore, the investments in the other countries will capture new markets and it will reduce the competition between the nearby Walmart stores. This approach of the management of Walmart is another signal, which shows that the management of the Walmart is interested in capturing new markets in the future. ("Wal-mart's future: Growth," 2013)
As compared to the other companies in the list of fortune 500, Walmart is facing higher level of translation risk. The translation risk arises when any company converts the earning from overseas company into their home country’s currency at the time of preparing financial statements. Most of the times, the business suffers the translation or transaction risk. Similarly, Walmart is facing the same currency exchange risks. As the motive of management is to maximize the branches of Walmart, these risks must be ignored from the investor’s point of view. Currency risks normally reduce the business profits and investors must consider the growth in profits because the currency risk is out of the control of the management of the Walmart. ("Wal-mart's future: Growth," 2013)
Employee management at Walmart is under massive criticism from last few years. Walmart employment strategy after the recession is very defensive and not efficient. Walmart management is focusing on deploying new stores all over the world, but at the same time, they are not hiring the staff accordingly. The staff at Walmart is either short or not well trained which is diverting their clients to other competitors. The main reason for employee mismanagement is that the staff is not motivated and the salaries are lower than the staff of other competitors. Therefore, the employees of Walmart are seeking employment in other retail stores for better salary package and job satisfaction. Moreover, the defensive strategy of Walmart after the recession is creating uncertainty in employees regarding their job safety. (Ungar, 2013)
Supply chain management of Walmart is their strongest feature as compared to their competitors. Management of Walmart always search, for those manufacturers, who can provide them with the best product at the best rates. Moreover, the management ensures that the supplier can meet the deadlines properly. Walmart always considers those suppliers who are producing their products in bulk. By hiring or contracting large suppliers, the management of the Walmart ensures that the supply chain of the products must remain under control. Furthermore, for the shipments of the products, Walmart uses their own shipment centers, which reduces the cost of normal shipment and transportation costs. At the shipment centers, staff checks the products and send to the respective Walmart store in time. ("Walmart’s keys to")
The Walmart is using the best technology available to determine the demand of the products. With the help of softwares, the management of the Walmart analyzes the sales and the demand of different products. By doing so, the management can reduce the holding cost of different products. Moreover, by identifying the products in demand, management can order the products at the right time. The supply chain management of the Walmart is accurate and effective. Therefore, it is highly probable that the Walmart will not suffer financial problems due to their supply chain management. However, the management must reconsider their employment strategy. ("Walmart’s keys to")
References
Dividends. Retrieved from http://stock.walmart.com/stock-information/dividends-stock-splits/
Walmart’s keys to successful supply chain management. Retrieved from
http://www.usanfranonline.com/wal-mart-successful-supply-chain-management/
Ungar, R. (2013, April 17). Walmart pays workers poorly and sinks while costco pays workers
well and sails-proof that you get what you pay for. Retrieved from http://www.forbes.com/sites/rickungar/2013/04/17/walmart-pays-workers-poorly-and-sinks-while-costco-pays-workers-well-and-sails-proof-that-you-get-what-you-pay-for/
Wal-mart's future: Growth or decline?. (2013, April 9). Retrieved from
http://seekingalpha.com/article/1330591-wal-marts-future-growth-or-decline
