Integrative Case 1.1 on WalmartIndustry & Strategy Analysis
a. Apply Porters 5 forces framework to the retail industry
Supplier Power – Medium to low, Walmart purchases huge amount of products
from their suppliers
Th
...
Integrative Case 1.1 on WalmartIndustry & Strategy Analysis
a. Apply Porters 5 forces framework to the retail industry
Supplier Power – Medium to low, Walmart purchases huge amount of products
from their suppliers
Threat of Entry – Medium to High, high capital requirements, precise distribution
system
Existing Rivalry – High, target, Kmart, Walmart is the biggest but also because of
its presence in other countries.
Threat of Substitutes – High, there are tons of substitutes for the products that
Walmart sell, and other stores have been able to create
competition
Buyer Power – Low, customer is already receiving a price that is considered low
b. How would you characterize the strategy of Walmart? How does Walmart create value
for its customers? What critical risk and success factors must Walmart manage
Their strategy consists of wanting to make peoples lives better by helping us
save money. It creates value for its customers by minimizing price of items by placing
large orders that reduce the price per product. They have a high risk of replacement, but
also already has a high successful factor by being known to have the best prices.
Balance Sheet
c. Describe how ‘‘cash’’ differs from ‘‘cash equivalents.’’
I. Cash is literal money in a physical form, cash equivalents can be tbills,
commercial paper, or anything that is highly liquid and can be easily converted to
cash.
d. What are Walmart’s two largest assets on the balance sheet (in dollar amounts)? How do
these assets reflect Walmart’s strategy?
II. Inventory – 44,853, well Walmart has to have huge inventories that they
purchase form the suppliers because there entire business is basically that.
III. Property Plant & Equipment – 178,678, Walmart has hundreds of locations and
this also reflects on their strategy by making their products accessible to
hundreds of thousands of people.
e. Walmart reports accounts receivable net of an allowance for uncollectible accounts. Why?
Identify the events or transactions that cause accounts receivable to increase and decrease.
Also identify the events or transactions that cause the allowance account to increase and
decrease.
Net against it because it is a better representation of A/R in terms of subtracting what
they likely will not collect
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