Wal-Mart Evaluation and Investment Analysis (Essay Sample)

Wal-Mart Evaluation and Investment Analysis
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Table Contents
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Abstract  PAGEREF _Toc406206291 \h
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Introduction  PAGEREF _Toc406206292 \h
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An Outlook of Wal-Mart  PAGEREF _Toc406206293 \h
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Background of the Study  PAGEREF _Toc406206294 \h
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Objectives of the Study  PAGEREF _Toc406206295 \h
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Scope of the Study/ Methodology  PAGEREF _Toc406206296 \h
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Procedures  PAGEREF _Toc406206297 \h
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Discussions  PAGEREF _Toc406206298 \h
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Summary  PAGEREF _Toc406206299 \h
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Conclusion  PAGEREF _Toc406206300 \h
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References  PAGEREF _Toc406206301 \h
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Abstract
Economic analysts have been intrigued by the ability of Wal-Mart to maintain constant growth in its share prices despite the instability witnessed in the oil prices all over the world (Worstall, 2014). The company is believed to possess unique capabilities responsible for the company’s exceptional performance over the years. The price of commodity oil has been exposed to various major events in the world that have influenced major fluctuations in the prices. Wal-Mart has managed to survive both during adverse and favorable oil prices (Walmart, 2014). This report will demonstrate how the share prices of Wal-Mart have reacted to the prices of oil in the last ten years. It will pinpoint the major events, responsible for the prices behavior for both Wal-Mart’s shares and oil prices. The paper will discuss the issues under the topics, introduction, where it will highlight the general view of the subject matter, including the outlook of the company. It would include the background of the study to identify the reason why the study is important. The objectives of the study would highlight the expectations from the paper, while the scope of the study or the methodology, explaining how the research will be conducted in compiling up the report. Under the procedure, all the relevant information pertaining to the data researched will be highlighted besides construction of the graphs and tables. The discussion part will explain the behavior elucidating from the graphs, which will then be summarized and a conclusion made on about the observed behaviour.
Wal-Mart Evaluation and Investment Analysis
Introduction
An Outlook of Wal-Mart
Wal-Mart is one of the largest companies in the world with the most capital investment and profitability. According to Fortune’s ranking, the firm is the second largest company globally with annual revenue of almost $470 billion (Walmart, 2014). Established in the 1962, the company’s founder Sam Walton helped the entity revolutionize the retail market not only in the U.S, but also all over the world. Today, Wal-Mart owns more than 11,000 stores in 27 countries globally. It has more than 2.2 million employees and associates, serving more than 200 million customers every week. Wal-Mart has amazed the world with how the company has managed to grow and developed to the level it is now, within a short time. The company success is attributable to many factors, the major one being its ability to provide the customers with the products they need at very convenient and customers’ friendly prices. According to the company’s reports, Wal-Mart boasts of having the best prices among all the major retail companies in the world (Walmart, 2014). The firm’s strategy is based on the idea of benefiting from the economies of scale where it sales hundreds of varieties of products most of them being the common and basic products that majority of consumers use on a daily basis. This has given the company an opportunity to push the largest amount of sales ever experienced in the history of retail market. In the years it has been in the retail market, Wal-Mart has been consistent in its plans to expand its market base. With new establishments of retail stores and acquisition of other retail stores, the firm has established itself in major cities all over the world, taking its services closer to the consumers. With prudent leadership and market-driven strategies such as effective advertisements and frequent product promotions, the company has managed to win the hearts of millions of consumers establishing a strong customer loyalty in the retail market.
Like any other business in the world, Wal-Mart’s performance is influenced by different factors some being internal factors while other existing in the external environment of the business. The internal factors are those that depend on the company’s strategies and are implemented by the firm’s leadership or management. The company’s management has done noble work in promoting the firm’s growth and development. For instance, the ability of the company to grow and expand in different regions in the world, have greatly been determined by the ability of its management to pinpoint the available opportunities in many regions, where the company can establish its stores to take advantage of the market. Other ideas pertaining to the operations within the entity are part of the management’s strategic plans that work well to streamline the company towards realizing its vision and mission in the already populated and highly competitive market. Wal-Mart’s performance is also influenced by external environment whose factors, the company has no control over. The external environment is characterized by various events such as political events, economic events, and natural events among others. Such events are performance drivers for many companies in the world.
The issue of a company’s performance is very critical in the market. For instance, performance influences how the company’s stock performs in the stock market, which is essential in demonstrating performance sustainability, a factor that many investors utilize when making the decision on whether to invest in a certain company or not. In its verge to boosts its performance, the company’s activities could also be affected by the events in other markets. In this regard, the commodity market is an example of such major markets that affect other related businesses all over the world. Different commodities relate to different markets. For instance, gold influences various markets in the world, which in turn influence different companies whose scope of activities involves the usage of gold. For Wal-Mart, majority of its operations rotates around oil, and so the major commodity that can have influence in its operations, is the prices of crude oil.
This report seeks to analyze how the performance of Wal-Mart responds to the prices of the commodity oil, in the world market. The paper will focus on the overall performance of the company, how it has managed to promote its growth and development despite the instability within the prices of the commodity oil. An in-depth analysis of the firm’s major decisions pertaining to major events would be considered in order to provide an insight of how the company has managed to perform well irrespective of changing consumer behavior. The paper would employ the use of tables and graphs to provide a clear view of how the company’s stock has been performing in the last ten years, which would be a clear indication of the firm’s performance. The graphs would also be used to compare the company’s stock prices with the prices of the commodity oil, over a period of ten years as a way to study the impact the commodity oil has had on the performance of the company. The result would produce a clear insight of how the company’s events are able to intertwine with the events affecting the prices of commodity oil in influencing the company’s overall performance in the market
Background of the Study
For many years, Wal-Mart has managed to perform in the market irrespective of the adverse influences of the prices of crude oil in the world market. The situation has had the company’s stock prices continuing to rise in major stock markets even at times when the prices of oil are escalating. Analysts have considered the scenario as unique, owing to the fact that oil prices tend to influence the performance of many similar companies. Wal-Mart’s operations are highly dependable on oil. For instance, the goods sold in their retail markets are produced in factories that uses oil to drive the production machines. When transporting the products from the producers to the various retail stores across the U.S and other parts of the world, oil is used up in the process. As a result, any changes in the prices of oil in the world are expected to have an effect in the prices of the commodities in the company’s retail stores. For example, when the prices of oil increases, this is expected to increase the costs of production of various goods sold by the company, and therefore, increasing the prices of such good. In a normal market, increase in commodity prices result to decrease in demand, when other factors are held constant. When demand is high, a company is expected to perform well and vice versa. The variations in the oil prices over years, should have produced a similar trend in the performance of Wal-Mart, if at all no other substantive actions have been taken by the company to cushion the sustainability off its performance. In the last decade, the prices of oil have constantly increased to a historic high. The situation is attributable to various events in the world most of which are in the category...