Wal Marts Midlife Crisis - Coursework Example

Wal-mart saved U.S. customers $20 billion last year alone. (Bianco et.al, 2002) In other words, the objective of Wal-Mart’s business is to provide the customer an opportunity to save on weekend shopping and direct a part of the income saved to improve lifestyle. According to McKinsey, Wal-Mart’s drive for efficiency was responsible for extremely low rates of inflation in the 90s (Bianco et.al, 2007). Thus Wal-Mart’s strategy makes a win-win situation for all the external and internal stakeholders.

The large volumes of sales, quick turnaround times thus generate more income over investments. Investor remains upbeat as long as the customer is happy and returns to shop at Wal-mart again and again.Wal-Mart protects the rights of the investor by promoting a ‘feel-good’ factor through intense public relations exercises. Little wonder, its stocks are traded at a premium on Wall Street compared to every other retailer. In order to check costs on the ledger, Wal-Mart has halved the growth rate of inventories to 5.

6% from 11.5%. Literally squeezing more productivity out of its 1.3 million store employees for eight consecutive quarters Wal-Mart has capped wages for most hourly positions, converted full-time jobs to part-time ones, and installing a sophisticated scheduling system to adjust staffing levels to fluctuations in customer traffic. As another means to economize, Wal-Mart has cut out middlemen and increasing manufacturing to overseas contracting. One typical method employed by Wal-Mart is to bypass middlemen and buy straight from the manufacturer thus passing the cost advantage to the customer and the investor.

As a result, the net income of Wal-mart has risen by 6.7% and return on equity is at 20%.