Walmart Company

Walmart Company

BACKGROUND INFORMATION

Walmart Company began business in the year 1945. It was started at Arkansas by Sam Walton and his brother James Walton. The first Sam’s Club was opened in 1983. The company is an international organization and has branches in 27 countries. It has more than 11,300 stores and other websites for shopping. In a week, the company serves more than 270 million customers worldwide. The company works on building trust with its customers and all the shareholders.

The company also wishes to operate with discipline, become digital as well as sharpening its culture. The operations of the company are divided into three segments which are; Walmart International, Walmart U.S, and Sam’s Club. For the U.S and Canadian services, the company’s fiscal year ends on January 31. In the year 2019, the company generated revenues of 514.6 billion dollars. A net sales of 509.3 billion dollars also was registered in that year (Mazouni, 2018). The company’s headquarters are in Arkansas, U.S.A.

Development

According to the last year’s results, Walmart’s company is making some progress. The revenue of the company has increased by 3 percent. In total, the company has grown at a rate of 3.6 percent in one year. Different segments within the organization performed differently; for example, in eCommerce, the sales increases by 40 percent. This is almost double what the company made the previous year in eCommerce. Sam’s Club segment also grew by 3.6 percent in the year.

Many of Walmart’s customers in Mexico have no bank accounts making the services slower and less efficient. As a result, the company launched an app called Cashi, that helps in digital payments and orders. This way, customers just have to deposit their cash to the Chika accounts and then use the app for ordering online and also for payment of bills. This made the work easier in Mexico and also improved security as many problems arise from carrying cash on the streets.

In China, deliveries are done very fast. It takes less than an hour for an order to be delivered in your house or workplace in China. In countries like Japan and Canada, Walmart is partnering with big eCommerce companies such as Rakuten to ensure progress in the delivery of goods and services as well as payment. Grocery deliveries are also being offered.

Walmart Company also targets India as it is one of the countries with the largest population of around 1.3 billion people and an economy of around 3 trillion dollars. However, the eCommerce business in India occupies only 4 percent of the whole economy. For this, the company wishes to invest the eCommerce business in India as there are better chances of success. The company is moving well towards its future as seen in the financial results. The sales of Walmart U.S also have continued to grow over the last decade. Sam’s Club also hasn’t been left behind in these developments as it has increased in both income and income from membership. The company’s financial growth strategies are efficient, strong, and consistent in achieving the long term goals of the company.

Segments

Walmart U.S

This segment of the organization operates in all the fifty states in the U.S and also Puerto Rico. It is the largest segment. Most of the Merchandise are consumer products for consumption by customers. In the year 2019, Walmart U.S had sales of about 330 billion dollars. This is almost 65 percent of the total income made by the whole Walmart organization. Special services are offered in Walmart U.S such as “Grocery Pickup”, “Walmart Pickup” and “Endless Aisle”. These services increase the number of sales each day. The goods and services offered by Walmart U.S are categorized into three types;

1. Grocery.

These consist of deliveries of products such as meat, groceries, beverages, both alcoholic and nonalcoholic, dairy products, bakery products, and pet supplies.

2. Health products and services.

These include pharmaceuticals, clinical services, optical services, and also other medical products.

3. General Merchandise.

These include general products and services in both home and work environments. They are such as electronics, movies, wireless, camera, home furnishing, bedding, houseware and appliances, sporting goods, horticulture, jewelry, shoes, accessories, among other general staff. They also provide financial services as well as fuel services.

Walmart International Segment.

It is the second-largest segment in Walmart Company. This segment operates in 26 foreign countries. There are big subsidiary stores in countries such as India, Japan, Argentina, Chile, Canada, China, the United Kingdom, and Brazil.

It also has other subsidiaries in Africa and Central America. The products and services are divided into three main formats, namely: wholesale, retail, and others. The services are offered in many categories, such as hypermarts, supermarkets, supercenters, warehouse clubs, and eCommerce. In the year 2019, Walmart International made a net of 120 billion dollars. This is about 23 percent of the total income generated by the whole Walmart organization. The currency exchanges in different countries have affected business in this segment. The merchandise delivered is usually a combination of all products and services.

Sam’s Club segment

This segment operates in 42 states in the U.S and Puerto Rico. It is exclusive only to members of the Club. The net sale for the fiscal year 2019 was 57.5 billion dollars. This is 11 percent of the organization’s income. This segment works with lower profits than the other two segments as it is a members-only club. Members are given cash rewards in a strategy that gives 10 dollars for every 500 dollars purchases up to a maximum reward of 500 dollars per year. The cash reward won may be used to redeem for cash or make a purchase. All members enjoy free shipments on most products they purchase.

Members also enjoy discounts while purchasing glasses, contacts, and prescriptions. The segment provides omnichannel experiences to customers. The goods provided are groceries, dairy products, electronics, laundry and home care, beverages, tires, power equipment, floral, bakery, among others.

Financial risks

These are risks that come from the likelihood of incurring losses as a result of investing in companies that are in default on their obligations in finances. The high rise of financial risks has reduced the investors’ motivation to invest in business organizations. The purpose of the investors is mostly to make money. They want to see a very clear plan that has no risks. Economic development is the main goal of every business organization in the world.

Impacts of financial risks

Financial risks are the most likely cause of a to collapse. Once a business organization incurs high losses, it will take a long time to recover from that. This results in late payments of employees, late payments of raw materials providers. Once there is late payment of workers, the shareholders in an organization become less motivated.

Financial risks lead to large debts. The business owners ask for loans from banks and other financial institutions to try and save their businesses, but if this fails, the debts keep on accumulating till the debts are larger than assets.

Recommendations on how to manage economic risks

One of the ways to manage economic risks is cost-cutting and other measures of improvement. Once the market for goods and services that a business organization offers go down, the profit is low and so the executive of the organization should cut some of the non-essential activities and processes that are paid for. This gives financial stability to the organizations before they return to normal.

It is always very important to react to the competitors’ prices so that you are not left selling your products cheap, incurring losses, or too expensive, leading to loss of customers as they move to your competitors. The business executives should stay alert on the changing market and also ensure that the products and services are improved with the improvements of the competitors’ products.

International organizations such as Walmart Company should also restrict investing in countries with risks such as political instability or climate change. This way, you will not have to worry about whether to make the business permanent or not. Once an organization invests in a country and then the country goes to war, there are high risks of losses in the organization. Peaceful countries with a rapidly growing economy are the best to invest in, and no losses will be incurred due to war.

Technological risks

Social media is one of the technological results that has affected the business organizations both positively and negatively. Almost everybody looks for recommendations for products and services from social media. Everyone posts their status and the activities they are doing on social media nowadays. Business organizations also have their social media accounts nowadays that they use for marketing their goods and also view comments from their customers. The organizations also use these platforms to inform their consumers in case of new products or services, or even when there is a change in the product’s constitution. Technology may help an organization move forward or collapse, depending on how it is used.

Impacts of technological risks

Let us take an example; an international celebrity goes shopping at one of the Walmart’s stores. Someone takes a photo or records the celebrity buying products from the store and posts the photos or the short video on their social media account. This will lead to a lot of people buying products from Walmart stores all over the world as they trust celebrities. This is one impact of technological risks in a business organization.

Another impact of technology is mobile connectivity. The internet has changed how the world operates. A good example of this type of risk is when the New York Times Company bought another media company called the Boston Globe in 1993. The company was purchased for almost 1.9 billion dollars today’s money. Later after, the internet changed all the media businesses replacing newspapers with internet feeds. This caused the company to depreciate in its worth 90 million dollars in 2013. That is a very big loss due to technological risks.

Recommendations for managing technological risks

One of the best ways to ensure that your organization does not suffer from technological risks is by good management and updating of technology software and hardware. Every business organization should have an IT department that checks the technology equipment and malwares to make sure they are up to date. This ensures that the organization is updated on the ever-changing technology.

Companies should also have an analytical team that deals with social media to make sure the questions the customers are asking on the social media platforms are answered to. This keeps the customers informed, and they feel like they are part of the organization, making them loyal. The customers also get to suggest what could be done to the products to improve them.

Data storage is also very important. Some of the data include customers’ personal information and has to be protected by business organizations.

Legal and compliance risks

New rules are being implemented each and every day due to the changing business environments in the world today. The rules vary depending on what they wish to accomplish. There are those that are meant to conserve the environment; others are meant to provide fair competition among business organizations, while others are meant to generate money for the government.

Impacts of legal risks

Some organizations have been forced to pay a lot of compensation as a result of failure to follow the rules. Some even go bankrupt while others are shut down by the courts of law. Closure of business organizations due to failure to comply with rules lead to losses being incurred by the investors. Some executives may even go to jail due to failure to follow the law.

Recommendations to manage the legal risks

Legal teams in a business regulation should work on anticipating changes that are likely to happen so that the Walmart Company is always ready to face the new rules with ease. The organization should also anticipate the changes in taxation.

The organization should also ensure that tax is involved in all business decisions made inside. This way, it will be impossible to forget paying taxes and also the company will be prepared.

The company should also ensure cybersecurity activities are well established once they are happening to reduces the loss of data and money in the organization.

Conclusion

Risk management is crucial in every business organization. All companies should come up with all the possible ways to reduce the risks that they are likely to face. This can be done by formally brainstorming on all the possible risks that an organization is likely to face. Possible solutions or contingencies should also be established according to the risks so that it will be easier to face them head-on once they occur.