Paper Sample on Walmart: America's Largest Global Retailer & Family-Owned Business

Introduction

Walmart Inc. is an American global organization that runs through superstores, branch and grocery stores. The company's headquarters are at Bentonville, Arkansas, created by Sam Walton in 1962 ("Walmart Corporate," 2020). The company has the largest privately employed persons. The business is family-owned, and Walton's family owns more than 50% of the Walmart holding. Since its start, the company aimed to trade low-price products and get high-volume transactions at a lesser profit margin. The company has several initiatives that influence the company’s profit and influence in the retail market. The company’s stock ticker symbol is NYSE: WMT. Walmart Inc. Sector (GICS) is consumer Staples, and industry (GICS) is foods and stables.

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Products and Target Customers

The company products and services get delivered through operations in comprehensive, wholesale, and entities located in several countries. The products provided by the company include those that are supplied through cash and transfer, home upgrading products, electronics, cafeterias, clothing stores, medicine stores, and convenience stores. Products delivered by Walmart include grocery goods, fitness and wellness goods, showbiz products, hardline goods such as automotive, and home products such as furnishers and small appliances ("WMT 10-K", 2020). Walmart satisfies its customer’s needs through its operations and services. These services get considered as the products that the company creates and supplies. The operations provided through Walmart U.S., Walmart International, and Sam's Club. The products sold in all three segments are similar. The segments also represent the targeted customers for their goods and activities. Walmart U.S. is the leading product or sector in Walmart Inc. that operates through retail stores located in all the United States. Walmart Inc.'s global segment includes setups in 26 nations external of the U.S. ("WMT 10-K", 2020). All the operations get divided into merchandising, wholesale and other components in the business. Sam's Club comprises membership-only store clubs running in 48 states in the U.S. and Puerto Rico ("WMT 10-K", 2020). The club contributes to approximately 15% of the company’s fiscal net sales.

Walmart Inc.'s targeted customers get attained through its operations through the three segments. Generally, the company targets customers that get interested in high quality, low prices products. Walmart U.S. provides merchandise of consumer goods through retail stores. Targeted customers get merchandise and groceries from Walmart Inc.'s supercenters, discount stores, and small units such as groceries ("Walmart Corporate," 2020). The company, through this segment, targets customers that are accessible through e-commerce websites and smartphone applications. Walmart U.S. also deals with financial products and services to customers wishing to transfer money and conduct various transactions. Walmart's international segment targets customers outside the United States, including customers interested in restaurants, drug stores, and convenience stores. The segment has variation in its customer targets according to the countries. E-commerce and mobile applications get unavailable to some countries. Sam's club targets customers that get interested in specialized private services. These include customers interested in merchandise and other business-related items. These products target the median and high-income earners.

Factors Affecting the Demand Curve

A shift in the demand curve gets influenced by factors that determine the amount of the people buy at a given price. Walmart Inc.'s demand curve will shift if the company fails to meet the customers' expectations. Walmart is subject to reputational risks attained through injuries suffered by the customers when they consume or use the products accessed from the company ("WMT 10-K", 2020). The impact of a bad reputation is the decrease in demand for the products by the customers. The customers lose confidence in Walmart's products, leading to a downwards shift in the demand curve. The customers mainly lose confidence in food and non-food products because they do not address the safety concerns of the customers. The mistake gets influenced mainly by the inability of the company to detect, enforce, and collect the damages caused by the products.

Walmart depends on the technology-based systems to allow customers to access information and demand for the products. Failure of the technology-based systems to function effectively affects the capability of customers to order products and services. These negative experiences reduce the company's interaction with the customers and affect the demand for the products offered by Walmart. Failure to provide attractive, user-friendly digital platforms affects the competitive advantage of Walmart. Customers get attracted to competitors with competitive prices and platforms to meet their changing expectations, especially online shoppers (Cleary & Lopez, 2014). Customers' shift to the competitors leads to a shift in the demand curve. Changes in tax and trade laws affect Walmart's cost of operations and may lead to an increase or decrease in product prices. When the tariffs and government regulations lead to an increase in production costs, the customer's demand for products reduces due to an increase in product prices and vice-versa.

Factors Affecting the Supply Curve

Shifts in the supply curve show how the quantity supplied by Walmart changes due to changes in prices. Walmart retail operations face tough participants from other stores and wholesalers. Each of the three Walmart sections contests for customers, products, and services with other companies in various states. The company gets forced to supply more products to ensure that their customers do not have excuses for choosing the competitors' products ("WMT 10-K", 2020). The supply curve may get affected if Walmart fails to improve its alliances with other sectors that directly influence the company's processes. Operations in the United States and outside countries get affected if the company does not create an effective relationship with the governments and the other organizational entities (Mankiw, 2018). These entities determine the rules and policies top affect the cost of operation in their specific countries. Walmart supplies its products according to the cost of production. Supply gets affected by the cost the company incurs in production.

The supply of products may get affected by natural disasters and the changes in climate. These conditions affect how the company conducts its operations by delaying the supply of materials and delivery services to the customers. Despite the prices of the products, Walmart Inc.'s supply reduces due to natural disasters (Williams, 2019). The supply of products also gets affected by catastrophic and pandemic events. For instance, Walmart supplies fewer products to its market due to coronavirus pandemic, which causes people to access the markets less. The supply of raw materials and outsourcing also affects Walmart's capability to increase or decrease its supply. The unavailability of suppliers that can supply the company with materials in global markets affects its capability to meet its product demands. Walmart Inc.'s supply capabilities get affected by the company’s ability to maintain uninterrupted operations. The information systems and other technological systems adapted by Walmart may affect how the company process operations and manage information. The supply of materials depends on the efficiency of technological systems. Ineffective systems lead to a reduction in the production of products and supplies and vice-versa.

Product Demand

Walmart Inc.'s products and services get valued differently in every country. The products demand in one country is different from the other (Ziel & Steinert, 2016). Existing customers in Walmart accept the products despite the price because of the various services they get (Williams, 2019). The variety of products in Walmart attracts customers to increase their demands for those products.

Walmart Profitability

Walmart Inc.’s profitability gets determined through the profits that the company would gain through sales and the opportunity cost. Generally, profitability gets determined through the deduction of the expenses from the money the company makes. The company's profitability gets measured through accounting profit and economic profit (Hillier et al., 2014). Accounting profitability gets determined by deducting the costs of production from the revenue Walmart receives. Large corporations like Walmart Inc. consider and evaluates what the company has collected as revenue and compares it to what it could have made. Therefore, economic profit is determined by evaluating what the company would have made and uses it to determine their profitability and the alternatives needed for strategic planning.

Accounting Profit

Accounting profit is Walmart's net income after the deduction of various costs and expenses such as raw materials and wages from the total sales. The costs deducted from the total revenue to make economic profit include labor costs, raw materials, transportation costs, and inventory required for manufacture, marketing costs, and production costs. Consider Walmart Inc.'s financial reports for the year 2020; the explicit costs include the costs the company pays for all its costs. The profit gets calculated on a quarterly and annual basis and measures the financial performance. For the commercial year ended on January 31, Walmart Inc.'s total revenue was $523,964 million ("WMT 10-K", 2020). The company had incurred an operating income of $ 20, 568 million dollars. The operating costs included the costs of sales, operating costs, and administration costs. The accounting revenue of the company includes:

Accounting profit = Total Revenue- Operating income

503,396 = 523,964 – 20,568

The accounting profit from the previous two years is less than the current profit. Walmart Inc.'s accounting profit improved in 2020. The profitability gets realized through the increase in the total revenues and a decrease in the company's operating income.

Economic Profit

Economic profit is theoretical but can get determined through the differences between the revenues and the costs. The costs, in this case, include the expenses and the cost of capital. Walmart Inc.'s economic profit gets calculated through subtraction of the cost of capital from the Net Operating Profit after Tax (NOPAT) and multiplying the results with the invested capital. The year ending January 31, 2020, Walmart recorded NOPAT of $18,200 million, cost of capital of 4.98%, and invested capital of $167,329 million ("WMT 10-K", 2020).

Economic profit = NOPAT – Cost of capital × Invested capital9, 870= 18,200 – 4.98% × 167,329

Walmart Inc.’s economic profit increased from 2019 to 2020. The profit is also greater than the one received in 2018.

Costs Incurred by Walmart

The costs incurred by Walmart Inc. improve customer experiences as they engage in the company's stores and clubs. The company incurs costs that are variable and fixed. Variable costs increase with the situation in the production sector (Mankiw, 2018). The cost increases when the production output needs to increase. Fixed costs do not change despite the changes experienced in the production output.