Wal Mart Capstone Project

Pages: 12 (3190 words)  ·  Bibliography Sources: 10  ·  File: .docx  ·  Level: Master's  ·  Topic: Economics

SAMPLE EXCERPT . . .
(Thomas, 2011) Moreover, Wal Mart needs to train the staff in understanding the different products and offer customers with some kind of warranty. (Roberts, 2012) If this takes place, the employees will be more knowledgeable and can create better value. This will improve the brand image of the firm and increase sales. (Roberts, 2012)

Evaluate Wal-Mart's cash position. Articulate its ability to invest in capital projects in future years.

Wal Mart has the ability to continually generate consistent amounts of cash. The funds are used to invest in other projects that will expand the earnings results. For instance, the operating income generated over the last three years is showing that the firm has realized increases of around $1.5 billion per year to their cash position. The below table is highlighting these trends. ("50 Years of Helping Customers to Save Money and Live Better," 2012)

Wal Mart's Operating Income from 2010 to 2012

Year

Amount

2010

$24.00 billion

2011

$25.54 billion

2012

$26.55 billion

("50 Years of Helping Customers to Save Money and Live Better," 2012)

These figures are showing how Wal Mart has tremendous amounts of liquidity. In the future, this will help the firm to expand its image internationally and the enhance kinds of products / services they are providing to everyone. ("50 Years of Helping Customers to Save Money and Live Better," 2012)

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Analyze the effectiveness of Wal-Mart's inventory or service costing methods. Make a recommendation for improvement in this area.

Capstone Project on Wal Mart Over the Last Assignment

Wal Mart has one the best logistics and customer supply chains in the industry. This occurs by having the stores working directly with different warehouses. In the event that they run out of an item, this system ensures that they are resupplied within a few hours. At the same time, they can evaluate customer trends and what products are most in demand. This helps executives to more effectively understand what the customer wants and offer it to them in large quantities. (Hugos, 2011)

One possible improvement is to have staff members focus on helping to reduce costs. This means bringing them into the process and educating them about the long-term benefits of engaging in this strategy. Over the course of time, this will increase the total amounts of vigilance surrounding rising costs (by: having each employee control their energy usage and waste). This will help them to feel as if they are a part of a team that is willing to do more. (Hugos, 2011)

Evaluate the adequacy or risks of the internal control environment noted in the annual report by management, and internal and external auditors.

The internal controls are helping the firm to continue meeting its various financial goals. This is because different divisions do not let internal or outside influences impact their ability to reach these benchmarks. For instance, the company is currently involved in ligation surrounding wage / gender discrimination and they are the subject of hazardous waste investigation. These issues have not affected the ability of employees to meet various goals. This is sign that the company is adequately accounting for risks. In the future, this protects them against sudden internal or external shocks by having tight controls in place. ("50 Years of Helping Customers to Save Money and Live Better," 2012)

Assess the risk of Wal-Mart related to foreign currency translations, foreign economic events, and international financial reporting standard requirements in order to summarize the risk tolerance level for the company.

The biggest risks that Wal Mart is facing are from changes in foreign currency rates, economic events and rising energy prices. Foreign currency rates will have a direct impact on the total amounts of earnings for the international division (based upon the underlying levels of strength or weaknesses in the U.S. dollar). To protect against this, the company will often engage in hedging. This is when they will buy a call or put option to protect against tremendous amounts of volatility in these markets. ("50 Years of Helping Customers to Save Money and Live Better," 2012) (Roberts, 2012) (Holmes, 2011)

Foreign economic events will have a direct impact on Wal Mart's supply chain and their ability to sell products in different regions. For example, if there was a nationwide labor strike in China. This could have a negative effect on the company's ability to resupply stores with inexpensive merchandise. (Lopez, 2011) (Mentzer, 2001)

At the same time, this will have an adverse impact on the earnings for various stores inside the country. To address these risks, the company has many different divisions. However, their supply chain has never faced these kinds of severe disruptions. This means there is a possibility of these events having a negative effect on the firm's bottom line results. (Roberts, 2012) (Holmes, 2011)

As far as energy costs are concerned, Wal Mart has been using technology and hedging to decrease these amounts. This has helped the firm to adjust with sudden changes in fossil fuel prices. Over the long-term, this has made the company more productive by taking this kind of focus. However, if there are sharp increases in these rates, it will have an adverse impact on the firm. ("50 Years of Helping Customers to Save Money and Live Better," 2012)

Furthermore, Wal Mart is adhering to different international reporting standards. This is helping them to increase the transparency of various operations around the globe. In the future, this reduces risks by providing investors with greater amounts of information about their activities. ("50 Years of Helping Customers to Save Money and Live Better," 2012) (Ingram, 2012)

As a result, Wal Mart is exposed to international events. To address potential challenges, they do have strategies in place (such as hedging). However, the risks from sudden changes in the economic or financial environment could impact the supply chain and customer demand. When this happens, there is a possibility that Wal Mart cannot control costs and will have limited access to select products. ("50 Years of Helping Customers to Save Money and Live Better," 2012)

From reading the annual report and reviewing the Website, determine where the company appears vulnerable for displaying unethical behavior.

The biggest vulnerabilities that Wal Mart is facing are from the lawsuits they are fighting. This is because the wage discrimination case makes the firm appear as if they are only focused on the company's objectives. When it comes to the needs of employees, they are often ignoring their requirements and the challenges they are dealing with. This helps the firm to look like a corporation that is focused on meeting its goals at any costs (including: taking advantage of employees on pay and benefits). ("50 Years of Helping Customers to Save Money and Live Better," 2012)

While the discrimination lawsuit is causing Wal Mart to look as if it is prejudice towards women and having them hold positions of authority. The negative publicity from the case, has the potential to question the operating environment of the firm and if they are involved in illegal activities. In the future, this could adversely affect the company's image and how they are interacting with different stakeholders. ("50 Years of Helping Customers to Save Money and Live Better," 2012)

Evidence of this can be seen with Wal Mart saying, "The company is a defendant in Dukes v. Wal-Mart Stores, Inc., which was commenced as a class-action lawsuit in June 2001 in the United States District Court for the Northern District of California, asserting that the Company had engaged in a pattern and practice of discriminating against women in promotions, pay, training, and job assignments, and seeking, among other things, injunctive relief, front pay, back pay, punitive damages, and attorneys' fees. The company filed a Motion to Dismiss on March 5, 2012. While management cannot predict the ultimate outcome of these matters, management does not believe the outcome will have a material effect on the Company's financial condition or results of operations." This is showing how the uncertainty surrounding the case will cause the firm to spend more resources fighting these claims. This will have an effect on their operations and the image of the organization in the future. ("50 Years of Helping Customers to Save Money and Live Better," 2012)

These vulnerabilities can cause Wal Mart to look as if executives are engaged in a pattern of unethical behavior. Over the course of time, this can create concerns about the practices of the firm. To address these challenges, it is advisable that the company settles these lawsuits and engages in policies that will prevent future litigation. If this kind of approach is taken, the firm will reduce the risks and help to improve their image. This will ensure that they can continue to realize better than expected sales from having a favorable public relations program (which is concerned about the needs of stakeholders). ("50 Years of Helping Customers to Save Money and Live Better," 2012)

From the research conducted in this paper, predict where Wal-Mart will be financially in five (5) years.… [END OF PREVIEW] . . . READ MORE

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