Wal-mart stores were branded as Walmart since 2008. It is an American multinational corporation that is public and it runs a chain of large warehouse stores and discount department stores. It is ranked as the worlds 18th largest corporation and the largest corporation when ranked by revenue. It was founded by Sam Walton in 1962 and it was incorporated on 31st October 1969. Its headquarters is in Bentonville Arkansas. It is the largest retailer of grocery in the United States. Walmart has eight thousand five hundred stores in fifteen countries.
The chief executive officer of Wal-Mart is mike duke. Mike duke succeeded Mr. Lee Scott as the chief executive officer and president of Wal-Mart starting from February 1st 2009. Before being promoted to become the chief executive officer, Mr. Duke had been working for Wal-Mart at different managerial positions. He held a number of offices that include: vice chairman, executive vice president and CEO and president. On top of that He also serves at one of the directors in the board of directors of the consumer goods forum. The financial director of Wal-Mart is Charles Holley who succeeded Mr. Tom schoewe as the financial director beginning November 30th, 2010. Mr. Holley began working with Wal-Mart in 1994 he currently holds the positions of executive vice president, treasurer and finance.
As the financial director of Wal-Mart, Mr. Holley is responsible for corporate planning and strategy, investor relations, taxing, corporate mergers and acquisitions, treasury operations that includes cash management and capital markets and risk management. Before working with Wal-Mart, Mr. Holley had worked with Tandy Corporation now called Radio Shack as the managing director responsible for its European Memorex division and also served as the director of finance responsible for its international operations. He has also worked with Ernest and Young for over ten years.
For the fiscal year 2011, Wal-Mart had a rock solid financial performance. They improved net sales 3.4 percent to four hundred and nineteen billion dollars and operating income by six point four percent to more than twenty five billion dollars. Despite this great performance, the sales they made in the USA last year does not please the management. It has therefore embarked on implementing a plan that is aggressive and is meant to strengthen their promise to customers by offering a wide range of merchandise variety and appearance that customers find more relevant. It has embarked on policy that will enable it to grow in the US with the means through new formats and super centers like Wal-Mart express in rural and urban markets.
Walmart operates according to their philosophy “every day low price”. Walmart has crowned itself as the industry leader because it has been better at reducing its costs which has made it possible to pass it through savings to customers. It has therefore become a capabilities competitor because it continues to improve its key business processes by centrally managing them and heavily investing in them for the long term payback. It is an industry leader in testing, adapting and applying wide variety of merchandising approaches that are cutting edge. The managers at Wal-Mart are very good at learning very quickly from the successes and failures of their competitors. In some instances, they take ideas from their competitors and modify them to become the best. Wal-Mart has heavily invested in its cross docking inventory system that is unique. It has enabled it to achieve economies of scale thus reducing its cost of sales. By the use of this system, goods are continually delivered to stores within forty eight hours.
A company owned transportation also enables Wal-Mart to transport goods to stores with efficiency. It owns the largest and most sophisticated computer system that uses massively parallel processor computer system that allows tracking of stock and movement. It has put in place measures that will ensure its success by mainly basing on its concentration as a single business strategy which will enable t hem achieve success without relying on diversification to sustain its competitive advantage and growth. It intends to further reduce its prices and costs and customer satisfaction. However though, concentration on a single business could one day lead to total collapse. They have come up with computer systems that allow flexibility and service to customers at all times. They also intend to expand their free trade zone distribution centers and in so doing, saving about five hundred thousand dollars annually (Fisherman, 2006).
They also value their customers so much and they ensure that the customer is satisfied from the moment she enters the store till she finishes her shopping. They are very kind and helpful staff who assist customers and therefore leaving them satisfied and wanting to come again. They have come up with systems that indicate how much of a commodity is being sold at a particular day and hence allowing shipping of the good to a place that is sold much faster in case the sale of the good in that place is not as fast as it is in a different place.
Wal-Mart has also committed itself to provide all the employees with up to date resources that will allow them to develop and achieve their career objectives. They have in place training programs that will enable them to stay ahead of the competition that include distance learning, computer mentor programs and corporate intranet sites. It also commits itself to the communities they serve. It hires its workers locally and hires Hispanics and Africans-Americans.
Among the risks that Wal-Mart faces are in order, markets like India and china are fast growing might be hit harder than the USA by the economic crunch because they mainly rely on export market that is dying, protectionism may make Wal-Mart find itself shut out of some countries, by concentrating on single business strategy they risk from falling terribly because it can be compared to putting all eggs in one basket. Also, more communities are waging wars against Wal-Mart because with its reduced costs, it has led to winding up of smaller businesses that offered similar but wide variety goods.
The company leveraged expenses associated with operation for the fourth quarter and full year and also maintained strong financial position. It ended the year with cash flow of ten point nine billion dollars compared to fourteen point one billion dollars the previous year. Wal-Mart repurchased shares worth three point eight billion dollars during the fourth quarter raising the years total to fourteen point eight billion dollars. Currently, the company has about four point eight billion dollars that are still under the current share repurchase authorization. Underlying EPS was four point zero seven dollars in fourth quarter for 2011 fiscal year which excluded about 0.11$ per share of aggregate tax benefits that was recorded in the fourth and third quarters. The company capital spending for 2011 would range from 13.5-14.5 billion dollars. Fiscal 2011 was closed having spent twelve point seven billion dollars which was below the target forecast of thirteen to fourteen billion dollars. That lowered the guidance by one billion dollars.
Conclusion
I would choose to invest in a company based on its financial performance because it is able to give the impact of the company on the market based on the sales and customer satisfaction. It means that if a company is performing poorly based on financial records, and then the company has no future. Companies that make lots of profits would appear better to invest in because it indicates a higher chance of returns. I would invest in a company based on its financial performance because financial performance can be used to gauge the customers response to the product the company produced hence can be used to forecast on the future of the company.