Walmart Global 500 Company

Introduction

Walmart is a phenomenal company that has beaten the odds in the market and in the financial sphere. Starting with a single store and now with a global footprint, Walmart can easily define success. This post will start by deconstructing the assigned readings and highlight on the risks and other financial perspectives that the company faces.

Theory/Article Deconstruction

            Battersby (2013) starts by acknowledging that many convenience stores fail to grow or expand their ventures due to fear and lack of awareness about financing options available for such undertakings. Battersby (2013) goes ahead to explore the different financing options including, Growth Funding 101, owner’s financing, equity financing, borrowing, and government programs such as the Small Business Administration. Mankis, Harris, and Harding (2017) acknowledge that financial capital is no longer a scarce resource. As such, the article advice business owners to devise strategies that are consistent with this new development, for instance, reduce hurdle rates, focus on growth, and invest in experiments.

Case Study Application

Reading from Walmart’s form 10K, it is apparent that the company faces some risks. Top on the list is strategic risks, which are anchored on macroeconomic factors and competition. Macroeconomic factors include high-interest rates, fluctuating prices of petroleum products, inflation and deflation, and increased cost of essential services such as medical care among others (Walmart, 2018). Competition is stiff, especially when it comes to customers, employees, sites, digital prominence, and products among others. Competitors include physical retailers, specialty stores, hypermarkets, and digital retailers among others (Walmart, 2018). Operational risks include natural disasters, geopolitics, suppliers, risk of failing to meet customers’ expectation, technological disruptions, and information security among others. Financial risks that Walmart faces include foreign exchange fluctuations and volatility of its stock if financial performance is not up to expectations (Walmart, 2018).

Management of the company, through different metrics, demonstrated that the company has been operating in a strong and efficient growth, and has achieved operating discipline, as well as, strategic capital allocation (Walmart, 2018). Returns, as measured using Return on Assets and Return on Investment marginally, declined in 2017 as compared to 2016 (Walmart, 2018). Reasons attributed to this include a decline in operating income and loss in writing off debt. Free cash flows marginally declined due to taxes and other payments, which fell due in the fiscal year 2017 (Walmart, 2018).

The most applicable financial resources for Walmart are its investors and borrowing from highly capable financial institutions (Walmart, 2018). The size of operations of the company is huge enough and as thus, can only be supported by investors or financial institutions. The management report indicates that the company prefers its own internal resources for financing.

Conclusion

            Walmart, just like any business, is exposed to different risks. In this case, the management of the company has to remain adamant and focus on the long-term strategy as advised by Barton, Manyika & Williamson, (2017). This way, the company has managed to stabilize its returns. Sourcing for capital for Walmart has become easy due to its capabilities and trust it has. As such, the company can get financing from investors, financial institutions, and from its internal operations.

References

Battersby, M. E. (2013). Funding your business expansion. Convenience Store Decisions, 24(10), 130–134. 

Barton, D., Manyika, J., & Williamson, S. K. (2017). Finally, proof that managing for the long term pays off. Harvard Business Review Digital Articles, 2–8.

Mankis, M., Harris, K., & Harding, D. (2017). Strategy in the age of superabundant capital. Harvard Business Review, 95(2), 66–75

Walmart Inc. (2018). 2018 Form 10k. Securities and Exchange Commission. Retrieved from https://www.sec.gov/Archives/edgar/data/104169/000010416918000028/wmtform10-kx1312018.htm#sCF91C2A26675577C899B02008235E7C8