The Wal-Mart financial accounts presented in April 2009 presented two major strategic objectives the company wishes to achieve in the near future. First, a future expansion plan estimated to cost the company an expenditure of 12.5 to 13.5 billion in the 2010 financial year and a global strategy in enhancing the continued sustainability of customer friendly business globally. In view of the companys stability as expressed by the management and evidence in the stable cash flow, this study suggests that Wal-Mart can include in its strategic plans to launch a new strategic business unit (S B U) that would offer a financial credit to shoppers who are members of Uncle Sams club. The credit facility, for instance, can allow the members to shop 50 more than their cash limit every time they purchase goods worth 1,000. The aim of the credit facility would be to increase sales volume and at the same time enable members to purchase their future planned goods in advance. The reasons behind these strategies should be the companys desire to improve aspects of its stakeholders namely the shareholders, customers and suppliers.
Through expansion, the company hopes to increase the shareholders ROI (Return on Investment) which according to the annual report has grown substantially in the past few years. In strategizing for sustainability, the company aims to maintain its customer friendly prices that have been its unique feature. Through the establishment of the new S B U, the company would cement its reputation as being customer friendly and this would enhance its customer retention and acquisition. The major drive towards Wal-Marts performance globally has been low retail prices, should be maintained if its image is to be sustained globally.
The achievement of these strategies implies a huge financial undertaking and management burden, which are undoubtedly going to affect the financial planning of the company. First, expansion, both physically and in the start of a new credit facility are likely to involve a massive capital expenditure. As such, financial planning must carefully evaluate the correct figures necessary for the expansion as well as cater for miscellaneous expenses that may be hard to estimate. In financial planning, figures are assumed as the best estimates but they are not always exact pointers to the real requirements. The expansion strategy is likely to create a financial strain within the company since a lot of money will initially go out of the business.
This implies that the near profitability may be affected due to an in balanced cash flow. Financial planning in the mean time should therefore cater to reduce massive business expenditures so that normal business operations go on without interruption. In view of the future expansion strategy, much of the income and profits should be restricted within the business by deferring other programs which may not require immediate attention. This implies that the planners may stop some business social expenditures until the expansion program has successfully rolled out. In face of a financial crisis and the effects of fluctuation of foreign currencies, there is need for Wal-Mart planners to carefully measure every expenditure decision if the expansion plan is going to succeed and at the same time pay substantial dividends to the shareholders.
Through expansion, the company hopes to increase the shareholders ROI (Return on Investment) which according to the annual report has grown substantially in the past few years. In strategizing for sustainability, the company aims to maintain its customer friendly prices that have been its unique feature. Through the establishment of the new S B U, the company would cement its reputation as being customer friendly and this would enhance its customer retention and acquisition. The major drive towards Wal-Marts performance globally has been low retail prices, should be maintained if its image is to be sustained globally.
The achievement of these strategies implies a huge financial undertaking and management burden, which are undoubtedly going to affect the financial planning of the company. First, expansion, both physically and in the start of a new credit facility are likely to involve a massive capital expenditure. As such, financial planning must carefully evaluate the correct figures necessary for the expansion as well as cater for miscellaneous expenses that may be hard to estimate. In financial planning, figures are assumed as the best estimates but they are not always exact pointers to the real requirements. The expansion strategy is likely to create a financial strain within the company since a lot of money will initially go out of the business.
This implies that the near profitability may be affected due to an in balanced cash flow. Financial planning in the mean time should therefore cater to reduce massive business expenditures so that normal business operations go on without interruption. In view of the future expansion strategy, much of the income and profits should be restricted within the business by deferring other programs which may not require immediate attention. This implies that the planners may stop some business social expenditures until the expansion program has successfully rolled out. In face of a financial crisis and the effects of fluctuation of foreign currencies, there is need for Wal-Mart planners to carefully measure every expenditure decision if the expansion plan is going to succeed and at the same time pay substantial dividends to the shareholders.
No comments:
Post a Comment