Discussion 4
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Institution
Discussion 4
Understanding a company’s operations and performance is critical in identifying areas of success and improvement. Using a case example of Walmart, one can come up with an analysis to gauge the market position. Walmart started as a small discount retailer in America and has over the years expanded into a global retail corporation that operates multiple reseller stores, discount division stores, and grocery stores in 11,438 outlets worldwide. It is considered as the retail giant.
Walmart provides information on its financial statements which can be used to evaluate its success levels and areas that necessitate improvement. The company’s income statements informs on earnings and expenses and show how income is converted into net profit (Agarwal, n.d.). According to information posted on Walmart’s website, net sales increased from $485.87 billion in 2017 to $500.34 billion in 2018. Nets sales then rose to $514.41 billion in 2019 indicating an upwards trend. Total expenses also rose from $471.6 billion in 2017 to $489.8 billion in 2018 and then to $507.2 billion in 2019. On the company’s statement of financial position, assets were $239.83 billion in 2019, an increase from $219.295 billion, and $204.522 billion in 2018 and 2019 respectively. Total liabilities increased from $118.29 billion to $123.7 billion and then to $139.661 billion in 2017, 2018 and 2019 respectively. These financial figures show that a major area of success of Walmart is conversion of sales into profits as the company generated persistent positive net incomes which increased throughout the period.
Walmart, being an international corporation, is affected by various factors which have an effect on its financial statements. The need for Walmart to repatriate earnings held in foreign countries is one of the factors. The fact that different countries have different policies governing repatriation of earnings of global companies back to the corporation affects the financial statements and numbers of the company. Also, availability and cost of goods from suppliers to be retailed by Walmart determines the nature of financial statements of a particular accounting period. Other factors that are found to be of effect include variation in the size of various markets such as e-commerce markets and currency exchange rate fluctuations since it is a worldwide enterprise. Besides, how consumes embrace and respond to Walmart stores, merchandise offerings, and delivery methods affect the sales volume of the company.
Walmart operates under the principles of conscious capitalism. It refers to the moral aspect of a company inspired by values of freedom, compassion, trust, and collaboration (Simpson, Fischer, & Rohde, 2013). The company observes moral business behavior by basing their operations on four principles. These include having higher intentions beyond pure interests, stakeholder orientation, conscious leadership that focuses on ‘we’ as opposed to ‘me’ and a conscious culture of social and moral nature of a company’s operations (Simpson, Fischer, & Rohde, 2013). Walmart, being undoubtedly one of the most influential organizations in the world, honors moral behavior. For example, rather than perceiving hourly employees as a different group from the full-time employees, the company has been offering equal treatment to their employees. By acknowledging that happy employees equal higher productivity, Walmart is able to improve the terms of working for their employees hence enhancing the company’s image to the public.
As a recommendation, Walmart has to employ strategies to ensure continued success and capitalization on opportunities available for improvement. One are of improvement for the company is product expansion. By expanding its product line, Walmart would increase its sales and profits. The reason for the recommendation is that net sales only increased by a small margin, from $ 500.34 billion in 2018 to $514.41 billion in 2019. Minimizing operation cost would also play a huge role in increasing success of the company. By striving to provide as many goods and services as possible, the company would reduce the operational cost. Lower operation costs reflect to higher net profits hence increased success of the company.
References
Agarwal, R. (n.d). Financial Statements: Features, Importance and Limitations. Your Article Library. Retrieved from http://www.yourarticlelibrary.com/accounting/financial-statements/financial-statements-features-importance-and-limitations/61727
Simpson, S., Fischer, B. D., & Rohde, M. (2013). The conscious capitalism philosophy payoff: A qualitative and financial analysis of conscious capitalism corporations. Journal of Leadership, Accountability and Ethics, 10(4), 19-29.
