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Example research essay topic: Wal Mart Inventory Turnover - 2,349 words

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... years. This type of strategy allows for current employees to be promoted by relocating to new stores, have increased roles in the success of new locations, and be a part of a winning organization. Also, because of the societal influence that Wal-Mart has, they can improve the quality of life in the areas of expansion. This is a very important aspect of Wal-Mart as discussed with their scholarship and community donations.

The costs of this strategy are very high. Because this would involve constructing new buildings and organizing new distribution networks, Wal-Mart has to plan for this with the utmost attention to detail. This is not a very large problem for Wal-Mart, though, because they have the financing available to do just about anything. The typical store covers over 150, 000 square feet, and requires a lot of planning before the construction begins. Everything has to be organized in a way that everything is in place and operating within the shortest amount of time. We believe that Wal-Mart has this capability and will excel in this strategy.

The length of time for Wal-Mart to implement this type of strategy is typically four months. Wal-Mart has very favorable access to construction companies, local governments, computer systems, and other necessary services needed to expand their operations. This is because of the extraordinary impact that a single Wal-Mart can have on a local area. The sheer size of the stores provides a large boost to local government tax revenues, and Wal-Mart has the incentive of fast turnaround time so that the store can begin adding to their bottom line.

This is a very good strategy for Wal-Mart, and it shows because this is one of their primary strategies that they are currently using. They are following their commitment to expansion by adding additional stores every year and are adding to the economy of the United States by employing hundreds of thousands of Americans. The only negative aspect of Wal-Mart's strategy is that they are inadvertently taking jobs away at the same time. When Wal-Mart moves into a new area, the local shops and stores are generally "forced" out of business because of the superior pricing ability that Wal-Mart has. The advantages of this strategy are increased sales, increased market share, increased capital investments, and customer satisfaction. The disadvantages of this strategy are growing to big too fast, possibility of poor sales in new market area, the expense, increased competition, possible decreased market share, and decreased profit margins.

Product Development Finally, the product development strategy is used to increase sales by improving or modifying present products or services. This strategy has the unique capability of propelling Wal-Mart into higher market sharing places with its other divisions. As discussed earlier, Wal-Mart operates ten distinct divisions under its name. This strategy could be used to launch these divisions into a more mainstream, market leading position. Also, because Wal-Mart does not invest in research and development, they could open this category to finance the opportunities available in their optical, lube, vacation, and auction divisions. The company's culture is very capable of implementing this type of strategy.

We believe that Wal-Mart's employees and management would benefit greatly from this type of strategy. Their marketplace power could very well be large enough to topple even the largest competitors in these business areas with the proper amount of research and development. This opportunity is also in line with the core values of Wal-Mart because they would definitely be able to serve the public well and offer the best possible prices. The costs for this type of strategy could vary a lot. Depending on the scope and direction that Wal-Mart intends to go, it could cost billions of dollars or only a couple million. If they would focus on one division at a time and upgrade the equipment, product offerings, and service this would be a cost that could be easily handled by Wal-Mart.

And, this would also be the best way for Wal-Mart to receive the largest return for each dollar spent. On the other hand, if they went all out and decided to review each division at once, this would probably end with problems. The cost to upgrade and retool all of their divisions at one would easily be in the billions of dollars. The length of time for this type of strategy would be measured in years. The sheer amount of money and equipment that would need to be installed and upgraded would take a lot of time. Also, before any of the decisions to develop the divisions is allowed, Wal-Mart would need to take time to research the demand for such services.

This is a good strategy because it can enable Wal-Mart to increase its market positions. Each of their divisions is a major business in any town. If Wal-Mart would implement this strategy, we are sure that they would succeed and be a major competitor in these markets. The bad part of this strategy is that it will most likely put local businesses out of business. Because of Wal-Mart's extremely efficient distribution system, they would be able to undercut all of the businesses in the same line of work. The advantages of this strategy are increased markets, increased sales, increased incomes, and increased customer loyalty.

The disadvantages of this strategy are that it will take away local jobs, it will be expensive to implement over the entire company. Strategy Selection Wal-Mart would be most successful by pursuing the market penetration strategy. This is the best strategy because it is the easiest and least costly option. Wal-Mart has many advantages to choosing this specific strategy over the other ones.

While most of the advantages overlap between the different strategies, we believe because of the costs of choosing one of the other strategies, this one is the best. Because of the potential for expanding too fast and taking on too much debt, Wal-Mart should not choose the market development strategy. This strategy is a good one, but the results could be very positive or very negative, whereas with the market penetration strategy, the results could be very positive or just somewhat negative. The market penetration strategy is also the simplest strategy for Wal-Mart to implement.

Because of the financial state of K-Mart, Wal-Mart can have an immediate impact on its bottom line just by advertising is those selected markets where both stores exist. Also, Wal-Mart has very distinct advantages as outlined in their internal strengths. Among the most important are the EDLP and Rollback programs. These will allow the market penetration strategy to succeed to the fullest since Wal-Mart can out price any of the local competition. We feel that the product development strategy is also a good strategy, but not the best because of its specific costs. As discussed earlier, the costs to retool and update their equipment can be extremely high in order for Wal-Mart to gain a distinct advantage in their divisions.

Also, they would have to create an entire new marketing campaign for these distinct services. Strategy Implementation Goals One of the major goals that Wal-Mart wants to try and achieve is the key strategy of Wal-Mart wanting to dominate retail markets everywhere. Company founder Sam Walton put in place their products at the lowest possible prices. By selling at the "lowest price, " Walton outlines that the essence of successful discount retailing to cut the price on an item as much as possible, lowering the markup, and earn profit on the increased volume of scales. Another subset of this strategy is the competitiveness of every unit. Each store is encouraged to ferociously compete against all other stores in its customer base until the Wal-Mart store gains dominance over its local competitors.

Wal-Mart is currently ranked as the world's number one retailer and the number one company in the world in terms of sales on the Fortune 500 list. So, the key strategy is to dominate a retail market, and by using its size and volume buying power, the company effectively implements its strategy. Functional Area Impact The market penetration strategy will impact the functional areas of the company in many ways. Among the main functional areas seeing the largest involvement will be the marketing and financing departments.

Management will also have a large role in because of the increase in customers. Production and operations will be involved because of the increased amount of goods that will be needed as the volume of customer's increases. The computer information systems will not have a very large impact on the implementation of this strategy because they are already well-equipped to handle the large volume of customers that may use their website. Management, specifically, will need to make sure to have the stores well stocked and prepared for additional customers. Because of the large number of customers that would have been going to K-Mart that are now going to shop at Wal-Mart and the additional customers that will come to take advantage of any promotions or new sales that Wal-Mart offers, management will have to make sure that they also have the proper number of employees to handle the increase. This procedure of resource allocation will be very important for a smooth transition to the increase in customers.

Management will also need to implement specific types of measurements to calculate the impact of their marketing campaigns. This could be simply an analysis of the day's sales. This would easily determine what the impact of their marketing campaign has been. They may also be able to create some reward-based sales incentives if employees are able to increase services to the new customers. Maybe the customers used to have K-Mart fill their prescriptions, and now an employee refers them to Wal-Mart's pharmacy. Management could reward this with a small bonus.

Marketing will obviously have a large role in the implementation of this strategy. They will need to devise targeted advertisements to the market in order to reach the K-Mart and non-Wal-Mart customers. They will need to have these readily available and placed at the proper times to reach their target audience. This department will also need to be actively reading the market in which they are concentrating to see how well their efforts are working. This can be accomplished through customer surveys, market share readings, and management meetings.

The impact of their marketing department will also be able to be measured through the daily sales reports. If the campaign is successful, there should be a noticeable increase in this number. Production and operations will be integral to this strategy because of the need for more products. Basically, if they are having more people come into the store, there will be more products leaving the store. Because of this, this department will have to plan to increase its shipments of products. This will involve coordinating delivery times, pick-up times, and the adjustment of delivery routes so that it does not impact other stores.

This may even require the construction of a new warehouse or distribution center. Because of the highly integrated distribution system that Wal-Mart employs, these tasks should not be very difficult for Wal-Mart to complete. The finance and accounting departments will have a role in this strategy because of the increased costs associated with the marketing campaign. We do not believe that this will be a very significant increase in costs because of the natural reaction of consumers to the bankruptcy of K-Mart. Although, in order to increase their market of consumers where this is not a factor, the marketing costs will have to be increased. They will also have a role in determining the costs for hiring additional employees and, if needed, the costs for constructing a new warehouse or distribution center.

And again, we do not believe that this cost will be prohibitively expensive. The additional revenues derived from this strategy will be more than enough to compensate for the cost. Time Line We believe that Wal-Mart will be successful with this strategy over a two-year period. Wal-Mart's current market positions in each of their territories should be increased to the highest level after the market penetration strategy has been applied for the two-year period. At that point in time, Wal-Mart will begin experiencing diminishing returns for every adverting dollar spent on the market penetration strategy in their targeted areas. Following the use of this strategy Wal-Mart will be able to reduce their advertising budget in these areas to a market share maintaining level.

Evaluation In order to determine if the market penetration strategy is indeed adding to the success of the company, Wal-Mart will need to take periodic readings from sales figures, department heads, inventory turnover, and customer surveys. This strategy will be fully implemented within days of its selection from management. To find the sales figures we would have to go to the accounting department where all the information on sales should be recorded. The information from department heads will be useful because it will allow us to recognize the problems and what they are doing good in each department. Inventory turnover allows us to know whether a firm holds excessive stocks of inventories and whether a firm is selling its inventories slowly compared to the industry. The inventory turnover is found in the financial ratio, which could also be found in the accounting department.

Finally, customer surveys will help the whole company by getting an outsiders point of view on the company. Up-Date Since 2002, Wal-Mart has maintained its command over the discount retail industry. In mid-December Wal-Mart announced the promotion of John Fleming, Walmart. com's chief operating officer, to president and chief executive officer of Walmart. com. Wal-Mart reported record sales and record earnings in one of the most difficult business environments in recent years.

They had a 12. 3 % increase in sales and a 21. 5 % increase in earnings per share. They reached one of their most important goals, which was to grow at a rate equal to or better than sales. Wal-Mart added 192 Supercenters, and is planning to add 210 more in the coming year.


Free research essays on topics related to: inventory turnover, discussed earlier, wal mart, k mart, market penetration

Research essay sample on Wal Mart Inventory Turnover

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