April 6, 2011
Week 2: Financial Outcomes Paper - Wal-Mart
Financial Initiative Wal-Mart, a fortune 500 company, has thousands of stores in many countries around the world. Michael T. Duke, President and Chief Executive Officer of Wal-Mart Stores, Inc. expresses one financial priority of Wal-Mart as growth. Growth: We will continue to grow around the world. We have many opportunities to grow by opening new stores, entering new markets, making acquisitions, integrating online channels, and developing new, innovative formats to allow people to experience the Walmart brands (Wal-Mart, 2010). Herein, Wal-Mart’s growth initiative, three potential financial outcomes, including …show more content…
The increase of net sales was a result of increased customer traffic, global expansion and an acquisition. Because Wal-Mart is the largest company in the world economist use company sales as a leading indicator to gage the health of the economy (Hart, 2010). In the beginning of 2010 the company’s sales revenues were down, falling 1.4 % by April 30; in the prior year sales were up more than 3 %. The success of the company’s growth imitative is largely connected to the company’s base-- working class consumers. These shoppers have been hit hard by the recession and unemployment. In order for sales to increase the personal income of the stores base must also increase. The company may need to continue to reposition its leverage by decreasing operating expenses and limit global expansion to offset slow sales. If the company continues it growth it will remain the largest company in the world and enable it to continue to lower cost making merchandise more accessible to its consumer base, thereby maximizing shareholder wealth.
Financial Outcome: No Increase or Decrease in Sales The second option to Wal-Mart’s growth initiative is no increase or decrease in sales – flat sales. As mentioned above, Wal-Mart’s sales have experienced a steady