Explore BrainMass

Wal-Mart: Relevant Cost Drivers and Indirect Costs

Please complete the following:

I. Introduction and Overview:
a. Provide a brief description of Wal-Mart Stores Inc and its history.

b. An overview of the industry and where does Wal-Mart Stores Inc fit within the industry (above or below the industry average, within the industry norm, etc.). Does the Wal-Mart Stores Inc standing in the industry help or hinder its success?

c. What are major concerns or issues that could possibly impact Wal-Mart Stores Inc.?

d. A potential ethical situation faced by Wal-Mart Stores Inc and suggestions on how to deal with the situation

II. Journal Entries:
a. Based on publicly available information for Wal-Mart Stores Inc, can you discern what the cost drivers are for Wal-Mart Stores Inc? If you can, what are they? If not, what cost drivers do you believe are relevant for Wal-mart Stores Inc?

b.Based on Wal-Mart Stores's publicly available financial information and other publicly available information about Wal-Mart Stores Inc operations, determine what sort of indirect costs Wal-Mart Stores Inc has and why.

c. How might increased sales or increased revenue impact Wal-Mart Stores's pricing strategy and market potential?

III. Conclusion and Recommendations:
a. Provide a sound, qualitative conclusion of the information you have gathered.
b. Include any recommendations to help Wal-mart Stores Inc achieve its goals faster or better.
c. Add in any other considerations that you feel are viable to the success of the organization.

Solution Preview

Introduction and Overview
Wal-Mart Stores, Inc. operates retail stores in various formats worldwide. It operates through three segments: Wal-Mart Stores, Sam's Club, and International. The Wal-Mart Stores segment includes supercenters, discount stores, and neighborhood markets in the United States, as well as This segment offers general merchandise, including apparel, domestics, fabrics and notions, stationery and books, shoes, housewares, hardware, electronics, home furnishings, small appliances, automotive accessories, horticulture and accessories, sporting goods, toys, pet food and pet accessories, cellular phones, and cellular service plan contracts. Its stores also offer grocery merchandise, and financial services and products. The Sam's Club segment includes the warehouse membership clubs in the United States, as well as This segment primarily provides hardgoods, softgoods, institutional-size grocery items, and selected private-label items under the Member's Mark, Bankers and Chefs, and Sam's Club brands. The International segment includes various formats of retail stores and restaurants, including discount stores, supercenters, and Sam's Clubs that operate in Argentina, Brazil, Canada, the People's Republic of China, Costa Rica, El Salvador, Guatemala, Honduras, Japan, Mexico, Nicaragua, Puerto Rico, and the United Kingdom.

Wal-Mart was ranked 17 on the 2007 Forbes 2000 list and is known to be the world's largest retailer. In this, I believe that Wal-Mart would be ranked in the top position in the industry and is probably contributing a lot to the success of such industry.

Since Wal-Mart is the largest retail company that sells a variety of products from small cheap items to large expensive ones, it is probably concerned about theft because some customers might try clothing for example and just leave the store wearing those clothes without actually paying for them. Another concern would be a high employees' turnover because from what I have seen at Wal-Mart, most employees are young and usually young people frequently change jobs until they gain enough experience to settle with one employer. Finally, because the company buys its merchandise in bulk, there is a risk of defective merchandise being delivered hence the company should be worried about the number of returns as well as lost sales arising from such a concern.

One of the ethical situations that might be facing the company is employees' theft; this is because many items do not have price tags and the cashiers have to enter the prices for such items manually and when they do that, they might enter a lower price for the items. Unfortunately, this risk cannot be avoided unless a person is assigned to compare prices from the cash register receipt to the price tag on the merchandise which would probably take a long time to do because customers usually buy a lot of items in one visit.

Journal Entries
Appendix B:
The six Business Functions of a value chain are:

1) Research and Development: generating and experimenting with ideas related to new products, services, or processes.

2) Design of Products, Services, or Processes: detailed planning and engineering of products, services, or processes.

3) Production: acquiring, coordinating, and assembling resources to produce a product or deliver a service.

4) Marketing: promoting and selling products or services to customers or ...

Solution Summary

This response provides an overview of the financial strategies of Wal-Mart.