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Wal-Mart
An example of a short-term project that Wal-Mart undertakes is opening a new store. The company regularly opens new stores, and it takes several months from start to finish for the project. New stores have a relatively infinite life, so they are a capital project, but they are short-term in nature before they begin earning revenues of their own. The life span of the project indicates that equity may be more appropriate for this project. For a short-term project, equity typically comes from working capital by way of retained earnings.
For a short-term project at Wal-Mart financing should be done from cash. The financing decision should be made on the basis of a company's ideal capital structure and the cost of capital, but also should be made with consideration for the company's existing balance sheet. For Wal-Mart, the balance sheet has sufficient capital - $7 billion in cash for example -- that the company can finance any operating expense from its existing working capital....
One of the important principles in the financing decision is that the time frame of the financing should match the time frame of the project. This means that projects within the context of everyday operations should be financed through the company's operations.
An example of a long-term project at Wal-Mart is building a new IT system to help route goods through the company's network of warehouses. The project is expected to have a usable life of twenty years. Because the cost of the project will run into the hundreds of millions, it is considered to be a long-term capital project for budgeting purposes. The new IT system is expected to result in direct cost savings for the company.
Financing a long-term project is more challenging. The nature of the long-term project is important as some projects have finite lives while others have relatively infinite lives. However, the firm's ideal capital structure is also something that needs to be considered. Typically, debt…
Wal-Mart is also deemed to be a company that greatly mistreats and discriminates against its employees but there has apparently been no reliable empirical data to back that up (Van Riper, 2008). The article concludes by conceding to some Wal-Mart critics. First, Wal-Mart cites Ohio University professor Richard Vedder, who points out that Bureau of Labor Statistics Data holds that Wal-Mart's wage structure lags behind the retail sector as a
Corporate Mission As the largest mass merchandiser in the world, Wal-Mart's work in supply chain execution, research, and policies defines best practices for the broader high volume retailing industry worldwide. Wal-Mart is comprised of three operating segments including the Wal-Mart stores, Sam's Club and the International Stores. The typical Wal-Mart discount store as 50 departments or more and a few are offering groceries in addition to apparel, fabrics, stationery and books,
Employees and managers have also benefited from Wal-Mart's approach. In addition to job creation, Wal-Mart's wealth and might have allowed it to enrich the lives of its employees. For example, the company subscribes to the principles of respect for the individual, service to customers and striving for excellence, each of which allow employees to feel good about their jobs and lives. The company's suppliers for the most part are also
Bargaining power of customers: Our main question here is whether Wal-Mart customers can walk away from buying a product at Wal-Mart and find it cheaper elsewhere. For the most part, the answer is no. Wal-Mart has built its reputation by providing products at a considerably lower price than its competitors (Is Wal-Mart good, 2005). Certainly, customers can try to find lower prices at other retailers; and the proliferation of the
Foreign Direct Investment Project in South Africa South Africa is a largely free-market economy that encourages foreign investment in private and public sectors. The country is an attractive option for foreign direct investment since it has a transparent regulatory framework, political stability, easy access to raw materials, and a large population. Foreign direct investment (FDI) can be defined as investment made by a business organization or company based in one country
This is a particularly useful metric for retailers, because the fixed assets are typically the stores and land. The greater the degree to which the retailer can convert the stores and land to sales, the implication is that the retailer is a superior merchandiser. For Wal-Mart, the sales/net fixed assets ratio is 3.25. The RMA for this metric holds that 7.3 is "worst." This indicates that Wal-Mart is doing