Walmart Economic Analysis Paper
Wal-Mart
By Melaney Cooper
For GB 550: Economics for Global Decision Makers
Taught by: Professor Ayanou
Economic Indicators for Wal-Mart Organizational success in today’s market requires many different elements. One being able to respond to changes in the business environment. Economic indicators are what is used to indicate how the economy is doing. The Economics and Statistics Administration (ESA) releases 12 monthly and quarterly Principal Federal Economic Indicators collected by its constituent bureaus: the U.S. Census Bureau and the Bureau of Economic Analysis (BEA) (ESA Unknown). These indicators provide data about how consumers are financially spending their money. For Wal-Mart …show more content…
to be able to continue on their path of expansion and organizational success they must be aware of certain economic indicators in the United States, develop strategies as to how they will respond, and ensure they maximize revenue.
Manufacturing Activity Manufacturing levels affects the GDP heavily.
Evaluating manufacturing activity informs that there is an increase in demand. Meaning that people are spending money and that is boosting the economy. This also indicates that people are working and possible getting hired and people are getting paid more. Manufacturing data coincides with retail sales. This is because items can be getting produced and not selling. Signs of a boost in the economy must show an increase in both manufacturing and retail sales. This is an important fact to Wal-Mart because they have production companies for the products in which they sale. In turn depending on the levels of production that affects the prices Wal-Mart is in turn going to sell these products for. To maximize revenue in the future Wal-Mart must be prepared to deal with the rises and falls of manufacturing activities and possibly attain price lock in contracts with their various producers promising work for them without having to deal with the price …show more content…
fluctuations.
Inventory Levels Being able to meet the demand of consumers is really important to maximizing revenue. For example at the end of October, businesses begin to stock up there inventory to prepare for the Christmas season. Not having enough inventory on hand can send consumers straight to the competition. High inventory levels can reflect two very different things: either that demand for inventory is expected to increase or that there is a current lack of demand (Smith). If demand is low then there may be other factors affecting the low level of demand. In order to maximize sales Wal-Mart should be prepared for expected sales increases.
Retail Sales
Retail sales is a very important factor that is a tell-tale sign of what state the economy is in. High retail sales show a positive trend for the economy. When sales improve, companies can hire more employees to sell and manufacture more product, which in turn puts more money back in the pockets of consumers (Smith). Considering that Wal-Mart is a retail store this factor directly relates to this company. To maximize profits in the future Wal-Mart should always be abreast of retail sales in this country and compare their sales with competition. This will allow them to see what areas they are lacking in and how they can improve their sales and continue to assist in boosting the economy.
Income & Wages The income people are making are defining factors in how they are living and what extra money they have to spend. If employers are cutting workers hours or reducing pay rates it’s a sign of trouble, not just for that specific company. This is important because a trend affecting a few outliers may suggest an income problem for the entire country, rather than just the groups it effects (Smith). It is a change that should be evaluated and Wal-Mart needs to know this so they can make changes accordingly. Internally, the company should ensure their workers are still maintain their hours and wages. Externally, Wal-Mart should prepare to take financial loss. This indication informs the public of what people are making. If people have less to spend, they will stick buying necessities and not extras. What could balance this out is lowering the prices on necessities and raising the prices on extras. That way in times of lower income and wages, people will continue to flock to Wal-Mart for their low prices and get more of the things they need for lower prices. Slight rises in items that are considered to be extras won’t matter significantly to those who can afford extras.
Unemployment
Unemployment is a key factor.
This is because the unemployment rate will affect sales. If the unemployment rate is high, consumers will have less to spend. This affects the housing market, stocks, the GDP and most important to Wal-Mart retail stores. If there is a high unemployment rate Wal-Mart could respond by creating jobs for the economy. Even it’s hiring a specific amount of people for part time jobs, it will ultimately boost sales for the company in one way or another while simultaneously boosting the economy. Hiring people now will help maximize revenues in the years to come. Since Wal-Mart is such a massive organization it is nearly impossible to avoid spending with the company. The workers they hire will most likely be shoppers of
Wal-Mart.
Gross Domestic Product (GDP) According to the ESA the GDP is a comprehensive measure of economic health of the nation. It is a representation of the country’s production and includes domestically purchased goods and service by the individuals, businesses, foreigners, and the government. It is a quarterly report. The reason why the GDP matters to Wal-Mart is because as an American business they are a part of that report and its performances affects the GDP of this nation. To respond appropriately to the GDP Wal-Mart should adjust pricing accordingly. As a goal to maximize profits in the future, staying abreast of the GDP will help this company make necessary changes to do so.
References
Smith, K (unknown) List of 16 Major Leading & Lagging Economic Indicators. Money
Crashers: You’re Guide to Financial Fitness. Extracted from http://www.moneycrashers.com/leading-lagging-economic-indicators/ ESA (2014) About Economic Indicators. Economics & Statistics Administration. United States
Department of Commerce. Extracted from http://www.esa.doc.gov/about-economic-
Indicators
By Melaney Cooper
For GB 550: Economics for Global Decision Makers
Taught by: Professor Ayanou
Economic Indicators for Wal-Mart Organizational success in today’s market requires many different elements. One being able to respond to changes in the business environment. Economic indicators are what is used to indicate how the economy is doing. The Economics and Statistics Administration (ESA) releases 12 monthly and quarterly Principal Federal Economic Indicators collected by its constituent bureaus: the U.S. Census Bureau and the Bureau of Economic Analysis (BEA) (ESA Unknown). These indicators provide data about how consumers are financially spending their money. For Wal-Mart …show more content…
to be able to continue on their path of expansion and organizational success they must be aware of certain economic indicators in the United States, develop strategies as to how they will respond, and ensure they maximize revenue.
Manufacturing Activity Manufacturing levels affects the GDP heavily.
Evaluating manufacturing activity informs that there is an increase in demand. Meaning that people are spending money and that is boosting the economy. This also indicates that people are working and possible getting hired and people are getting paid more. Manufacturing data coincides with retail sales. This is because items can be getting produced and not selling. Signs of a boost in the economy must show an increase in both manufacturing and retail sales. This is an important fact to Wal-Mart because they have production companies for the products in which they sale. In turn depending on the levels of production that affects the prices Wal-Mart is in turn going to sell these products for. To maximize revenue in the future Wal-Mart must be prepared to deal with the rises and falls of manufacturing activities and possibly attain price lock in contracts with their various producers promising work for them without having to deal with the price …show more content…
fluctuations.
Inventory Levels Being able to meet the demand of consumers is really important to maximizing revenue. For example at the end of October, businesses begin to stock up there inventory to prepare for the Christmas season. Not having enough inventory on hand can send consumers straight to the competition. High inventory levels can reflect two very different things: either that demand for inventory is expected to increase or that there is a current lack of demand (Smith). If demand is low then there may be other factors affecting the low level of demand. In order to maximize sales Wal-Mart should be prepared for expected sales increases.
Retail Sales
Retail sales is a very important factor that is a tell-tale sign of what state the economy is in. High retail sales show a positive trend for the economy. When sales improve, companies can hire more employees to sell and manufacture more product, which in turn puts more money back in the pockets of consumers (Smith). Considering that Wal-Mart is a retail store this factor directly relates to this company. To maximize profits in the future Wal-Mart should always be abreast of retail sales in this country and compare their sales with competition. This will allow them to see what areas they are lacking in and how they can improve their sales and continue to assist in boosting the economy.
Income & Wages The income people are making are defining factors in how they are living and what extra money they have to spend. If employers are cutting workers hours or reducing pay rates it’s a sign of trouble, not just for that specific company. This is important because a trend affecting a few outliers may suggest an income problem for the entire country, rather than just the groups it effects (Smith). It is a change that should be evaluated and Wal-Mart needs to know this so they can make changes accordingly. Internally, the company should ensure their workers are still maintain their hours and wages. Externally, Wal-Mart should prepare to take financial loss. This indication informs the public of what people are making. If people have less to spend, they will stick buying necessities and not extras. What could balance this out is lowering the prices on necessities and raising the prices on extras. That way in times of lower income and wages, people will continue to flock to Wal-Mart for their low prices and get more of the things they need for lower prices. Slight rises in items that are considered to be extras won’t matter significantly to those who can afford extras.
Unemployment
Unemployment is a key factor.
This is because the unemployment rate will affect sales. If the unemployment rate is high, consumers will have less to spend. This affects the housing market, stocks, the GDP and most important to Wal-Mart retail stores. If there is a high unemployment rate Wal-Mart could respond by creating jobs for the economy. Even it’s hiring a specific amount of people for part time jobs, it will ultimately boost sales for the company in one way or another while simultaneously boosting the economy. Hiring people now will help maximize revenues in the years to come. Since Wal-Mart is such a massive organization it is nearly impossible to avoid spending with the company. The workers they hire will most likely be shoppers of
Wal-Mart.
Gross Domestic Product (GDP) According to the ESA the GDP is a comprehensive measure of economic health of the nation. It is a representation of the country’s production and includes domestically purchased goods and service by the individuals, businesses, foreigners, and the government. It is a quarterly report. The reason why the GDP matters to Wal-Mart is because as an American business they are a part of that report and its performances affects the GDP of this nation. To respond appropriately to the GDP Wal-Mart should adjust pricing accordingly. As a goal to maximize profits in the future, staying abreast of the GDP will help this company make necessary changes to do so.
References
Smith, K (unknown) List of 16 Major Leading & Lagging Economic Indicators. Money
Crashers: You’re Guide to Financial Fitness. Extracted from http://www.moneycrashers.com/leading-lagging-economic-indicators/ ESA (2014) About Economic Indicators. Economics & Statistics Administration. United States
Department of Commerce. Extracted from http://www.esa.doc.gov/about-economic-
Indicators