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Walmart's strategies

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The reference organization is Wal-mart.

Please address the following questions:

1. Are there any predictable performance cycles for Wal-mart? If so, what are the periods over which its cycle waxes and wanes? How sensitive do you think Wal-mart is to expansions (upswings) and contractions (downswings or recessions)? Explain. If it is not sensitive, then explain why it is stable as the economy moves up and down.

2. How do you think Wal-mart will adjust to, or cope with, conditions summarized in the most recent issue of the Fed's Beige Book http://federalreserve.gov/FOMC/BeigeBook/2009. Please be specific about the economic conditions that might affect Wal-mart. Does Wal-mart have strategies for coping with these conditions?

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Solution Preview

The most predictable performance cycle is the business cycle. In general retail sales fall as the economy goes in a down turn and retail sales rise as the economy grows but the impact is less severe on a company like Walmart. The primary reason for this less intense impact is that Walmart is based on the idea of charging low prices and more consumers move towards lower prices as the economy goes in a down turn. Thus they may lose some consumers in the sense that the average sales per consumer go down, but they do gain new consumers who partly replenish the loss. In case of an upswing the company loses some consumers to higher end brands, but an average consumer buys more products. I would therefore say that Walmart sales are not too dependent on the state of the economy and has ...

Solution Summary

Walmart's strategies for coping are considered.