Strategic Planning Paper
Strategic Initiative Paper
FIN370 – Edward Hastings
Week Three – June 15th 2011
Walmart’s annual report is a comprehensive look at the company's activities throughout the preceding year. Walmart’s annual reports are intended to give shareholders and others, who are financially affiliated, information about the company's activities and financial performance. Also within such a comprehensive report would be plans to attack certain strategic agendas in reference to the company’s long term outlook. Identifying the long-term strategic planning initiative of Walmart will be the focus of this paper. The reader should be able to …show more content…
The cost leadership initiative approach allows Walmart to leverage scale and reduce cost when purchasing from their suppliers. The cost leadership also enables Walmart to sell to their consumers at a lower cost than their competitors, which in return will build their customers base. Cost leadership also gives Walmart the benefit of leveraging operating expenses and improving productivity at a lower rate than sales growth. Global sourcing strengthens cost leadership strategy which helps to drive down the cost of merchandise so that Walmart can pass savings on to their consumers (Walmart 2010 annual report).
Risks associated with cost leadership are changes in interest rate, changes in currency exchange rate, market change and changes in consumers taste. Walmart sources product on a global scale, so if there is a changes in currency exchanges rates the cost of the product will cost more for purchasing, shipping and handling. A change in interest rate can affect the selling price which can result in fewer purchases from consumers. Walmart analyses the potential risk that is associated with the currency exchange rate and the interest rate and use a 10% rate of increase to counteract these market risk. Market change will affect Walmart if the demand for the product is at a slower rate which will make the product