How much will the program cost (break it down into various aspects) and how much will it render?
For the upcoming year, Wal-Mart is recommended to maintain their sales growth at or above 3 percent. It can be done by driving sales through the comp-sales and also via e-commerce sales growth. It is assumed with no change in currency exchange rates. It is suggested that Wal-Mart add about 1,000 online grocery locations in Wal-Mart US. Moreover, the sales growth in the E-commerce USA is to be moved to about 40% (News.Walmart, 2017).
For these targets, the company Wal-Mart needs to follow the below-mentioned expenditures:
- For remodeling of stores and creating a digital experience in these stores.
- For e-Commerce investments, including those for the sake of enhancing supply chain capabilities.
- The opening of new stores, and investing in fulfillment capabilities.
- Investment in new unit development in the next two years, including 255 new stores for Wal-Mart International, specifically in China and Mexico, and 15 Supercenters and ten new units in Wal-Mart USA.
Does your company have adequate financial and organizational resources to carry out this plan? If not how do you plan on getting the resources (i.e., leverage, stock, M&A, alliances, cash, etc.)?
For these capital expenditures, Wal-Mart would need about $11 Billion in two years (News.Walmart, 2017).
For such type of capital expenditure, Wal-Mart would need to have enough funds. The retained earnings of Wal-Mart in 2017 have been USD 89,354,000, and the profit earned by Wal-Mart in 2017 has been USD 13,643,000 (Finance.yahoo, 2017). However, it is not a very wise decision to fund all of the acquisitions and capital expenditures based on the company funds. The company Wal-Mart can look for financing its capital expenditure individually of debt and equity financing. It can also look for the alliance in areas where the alliance is suitable and profitable. Moreover, Wal-Mart should also look for leveraging on its expenses and keeping its overhead costs lower. It needs to look for the suppliers who are giving the lowest prices for the best services to maintain its “everyday Low Prices on Everything” Policy (News.Walmart, 2017).
References
Finance.yahoo. (2017, December 5). Wal-Mart Stores, Inc. (WMT). Retrieved from Yahoo Finance: https://finance.yahoo.com/quote/WMT/financials?p=WMT
News.Walmart. (2017, October 10). Walmart Highlights Progress on Strategic Initiatives and Outlines Plan to Win with Customers and Shareholders at its Meeting for the Investment Community. Retrieved from News.Walmart.com: https://news.walmart.com/2017/10/10/walmart-highlights-progress-on-strategic-initiatives-and-outlines-plan-to-win-with-customers-and-shareholders-at-its-meeting-for-the-investment-community
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