This investigative report gives an overview of the business operations of the world’s largest retailer – Wal-Mart, Inc. Walmart is an American-based multinational retailer that includes chains of large discount department stores and warehouse stores around the world. Today Walmart holds the operations in 27 countries under 69 different names, but uses the same management strategy of “law price” and same corporate culture. The report gives a concise view on company’s history and background, financial situation and marketing strategy. Later on, the report analyzes the latest news and reports on the retailer’s activity and concludes with a logical answer to a question whether Wal-Mart is a good place for employment.
History and background
In 2011, after the two consecutive years of the winning position, Walmart took a second place in Fortune 500 Global. Walmart is the world’s largest retailer, being #1 in the US, Canada and the United Mexican States. In addition, it employs approximately 2.2 million workers being the biggest private employer among the multinational companies. In the US, Walmart runs more than 4000 stores of different size and target, including more than 3000 supercenters, 610 Sam’s Club warehouses, and a number of smaller format stores.
The 48% of the shares belong to Walton family; thus, Walmart is truly family-owned entrepreneurship. Besides, Walmart is in the top of the list for companies showing the highest market capitalization rate, thus is among the most valuable companies.
The company was created in1962, when Sam Walton founded his first shop. The company was incorporated with the headquarters in Bentonville, Arkansas in 1969. It has begun its trading at NYSE in 1972. Today Walmart includes 10130 stores in 27 different countries. The company operates under 69 names. For example, it runs under the Walmart name in 50 states of the US and the Puerto Rico, whereas in Mexico – it trades under Walmex, in the United Kingdom – as Asda, in Japan – as Seiyu and under the name BestPrice in India. The business units are also located in Canada, Brazil and Argentina. Even though, Walmart is the world’s largest retailer, the history of the business includes a negative experience, as well. For instance, Walmart’s ventures in South Korea and Germany were unsuccessful. The low price strategy did not work in Germany, whereas the Walmart’s corporate culture was viewed with negative respect by the local community. As a result, the company experienced net losses and had to withdraw its operations from Germany. Nonetheless, according to Hoover’s (Hoover’s Inc.), Walmart stays the #1 retailer being bigger than Europe’s retailers, like Carrefour, Metro AG, and Tesco, combined.
2. Financial situation, management and marketing strategy
2.1. Management and corporate culture
The mission statement of Walmart is the familiar phrase “Save money, live better”. Thus, the company is focused on making a difference in the lives of its customers by enhancing the leadership of affordable goods of a decent quality. The company emphasizes on its rich heritage. The vision of the company is to give the people around the world an opportunity to live better. Generally, Walmart’s mission reflects their business strategy of “low cost” priority. The company uses a generic strategy of cost leadership. The advertisement of the mission through various types of media, mainly TV, radio, newspapers, helps to build an image of the business as of thing that is essential for every customer. The Walmart company hugely relies on its employees, corporate culture and ethics. The corporate rules value diversity and believe that integrity can be reached through social diversity. According to Wal-Mart’s website (Wal-Mart Stores, Inc. ), 36% of their associates in the U.S. are minority and 57% of the employees are women. Besides, Walmart has a distinct recruitment program and exclusive guarantees for veterans and military families. The company promises competitive wage rates, bonus incentive program and 401k.
2.2. Financial performance
The analysis of Walmart’s financial reports allows giving the following conclusions:
Despite the global economic downturn, which finds the reflection in decreased demand, Walmart managed to sustain its growth, mainly due to the increase in revenues outside the U.S. that rose by 13.1% the last year;
The current price of share was recorded at $72.12 as of December 4, 2012. According to Wal-Mart’s website information (Wal-Mart Stores, Inc. ) the lowest price for the past year was $57.18, and the highest was $77.6. Looking at the past year’s trend and 5 last years’ trend (see the Appendixes 1 and 2), we can see the steady growth of the stock’s price. This reflects the positive investors’ attitudes toward company’s activity and overall successful performance.
The price-to-earnings ratio (P/E) is 15.95. This means that for $1 of current earnings investors are willing to pay $15.95. Usually, for many companies the P/E ratio in the range between 10 and 17 may be considered fair value.
The company’s net sales increased by 5.9% showing the best result for the last five years.
Net income per share and dividends per share have also increased by 8.6% and 20.6% respectively.
Profits in percentage to sales declined from 3.6% in 2010, to 3.5% in 2011.
The company shows steady growth, largely due to international operations.
3. News and recent events
The complex view on company’s performance should include not only the official statistical data, but also the news and events that take place in the company, the customers’ and employees’ feedbacks and the auditors’ opinion.
The most recent details regarding Walmart include:
The wave of protests of workers’ who were not satisfied with their low wage rates, overtime work-hours and working conditions (Greenhouse).
The auditors, specifically Ernst & Young LLC, gave an unqualified opinion in their report for Wal-Mart’s performance (Wal-Mart Stores, Inc.). This means that Walmart’s Financial Statements provide a true and fair view in accordance with the relevant financial reporting framework.
The row of corruption scandals that included bribery allegations in Mexico, India and Brazil. The scandals certainly played the focal role in losing the good reputation and sleeping to #2 place in Fortune 500 Global.
Walmart is a leading retailing company in the world. The scale of company’s operations is unprecedented, and by this time, no competitor of comparable size emerged globally. The company has developed an excellent system for recruiting and training the personnel, which contributes to its performance and successful human research management. There are a number of features that make Walmart a good place for work: social and health care benefits, the programs for personal development and training, promotions based on performance, the reliability of the company as a well-reputed employer. Nonetheless, the recent strikes of workers and the company’s reaction to the events put the reputation of Walmart as an employer under the big question.