write a 500 word paper for the Problem definition that Starbucks is experiencing now. Needs to collect real-life data in the report
It was necessary for our group to research the history of Walmart, as we went along calculating the break even analysis, because it allowed us to have a better understanding of how the company operates. We found that Wal-Mart has over 245 million consumers globally, visiting it’s 10,900 retail stores, and ten active company websites globally. Walmart is among the best retailers worldwide when it comes to in-store purchases or online buying activities (DeZyre). Based on the sources of Global Customer Insights (GCI) analysis, its estimated that Wal-Mart intends to reach to about 300,000 social media mentions weekly. Furthermore, the GCI further revealed that Wal-Mart has two million associates, with a further estimation that 500,000 associates get hired yearly. Thus the number of employees working for Wal-Mart tends to exceed the number of consumers that Walmart caters to.
There are many variables which Wal-Mart considers when designing their business strategy decisions, including its customers, employees, and external influences like the government. Things such as economic status, preferences and taste, literacy, and technology advancement levels tend to influence the company’s business strategy in regards to their customer base. Their associates, or employees are also critical determinants of any business success through their business strategies. The management of Wal-Mart is always determined to improve the health and safety of the worker working environment. Wal-Mart has used several ways to motivate its employees by giving workers rewards, recognitions, and even promotions based on their performance. Hence, this has driven the workforce to increase productivity, making the firm achieve its objectives. Finally, the government, through regulations, has influenced Wal-Mart operations. Increased regulations and taxes from the government limit Wal-Mart operations and profits, and this also will impact on the strategy to be adopted by the firm (DeZyre).
This graph shows the revenue breakdown from Wal-Mart’s net sales in 2014. Although revenue for Wal-Mart has continued to grow, their revenue breakdown remains similar in the respective following years.
Originally our group had thought that the scope of our project would include looking at the numbers from Walmart’s domestic segment, their international segment,and the Sam’s Club segment. For all three segments, some factors to consider are the amount of distribution centers relative to their store count and the rising demand as the holiday season approaches. Our approach in conducting this break even analysis was to find the fixed costs, variable costs, and sales revenue in Wal-Mart’s financial statements.
Initially our action plan was catered to determining Walmart’s break even point under various assumptions of variable and fixed cost. We analyzed Walmart’s financial statements including their balance sheet displayed in Yahoo Finance, however, we were unable to find certain metrics we needed for our original break even analysis. We were supposed to find the break even point by dividing fixed costs by the revenue per unit – variable cost per unit. In doing this it would have given us a rough estimate of how much Walmart has to sell in order to simply break even or in other words not lose any money. We already knew that the price of individual items sold were not disclosed, and so we decided to determine the price of each good by dividing sales by total units sold to get a rough estimate of what these goods sold for. However, we ran into an issue with the calculations as we could not find the units sold in terms of sales, thus the adjustment of our calculations will be explained later in this paper.
On another note, in order to produce more accurate results for a company whose revenues are constantly changing, we also wished to test Walmart’s break even point under different scenarios. The logic behind these different tests was due to an observation made from a SWOT analysis for Wal-Mart. In the SWOT analysis, we noticed the strengths of its scale of operations and its international operations. Both Wal-Mart’s domestic and international operations are important to the business thus is made sense for us to use different tests. For example, we tried to base one method off of their regular annual sales, another off of one of their year’s highest sales, and a third one that accounts for their worst year of annual sales. In doing so we hoped to create a more versatile break-even point for higher accuracy. Although we cannot analyze and explain how many units Walmart produced or will needed to sell in order to meet a break-even point for the given scenario, this will still provide meaningful insight into the functionality and flexibility of their operations.