Walmart is one of the most successful and biggest companies in United States, and listed as the largest company of the world in the Fortune Global 500 in 2018. It has over 2.3 million employees, who help in generating the revenue of more than $500 billion. It is the biggest grocery retailer in United States. Walmart started its operations as the small retailing business by the Walton family. And now, it has become such a large enterprise that it has over 10,000 stores across the twenty eight or more countries all around the world. Its success was the hot topic of research and study for various business and financial industry. Its revenues grows every year, which helps it in focusing on different areas of the business (Annual report, 2016).
One of the major method for evaluating the financial performance of Walmart, growth-share matrix like BCG matrix is an effective tool. This matrix was developed for Boston Consulting Group by Bruce D Henderson in 1970. The objective of this tool was to provide assistance to the companies in analyzing business units, mainly product line. This matrix has four main quadrant, Star, Cash cow, Question mark and Dog. And the product line of the companies are categorize in these quadrants. Here is the detailed BCG matrix of Walmart;
Cash Cows
It is necessary for every company to have cash cow items as they bring more cash in the company through sales, but has less market growth. However, potential exist in them for expansion and growth, which will help them in turning into star products. For Walmart, Sam’s club and international segment are the cash cows. As the Sam’s club has membership only, with cash and carry operations, which motivates consumers to visit the club as it also provide the financial service and credit card facilities. The annual fees is very affordable along with the bulk displays and the merchandise of brand name. Its international segment is growing rapidly, as it provides the best value in low cost, and several varieties with best customer services. It is focusing on the Global positioning (Annual report, 2016).
Stars
These are considered as the best category in the BCG matrix, as the products in this category has the highest market share and market growth. The products or services are at the maturity stage in this quadrant. However, if the strategies are not retained properly, it could turn into cash cow. For the Walmart, its supercenters are the star. The supercenters provide almost everything to the consumers such as; pharmaceuticals, groceries, general merchandise, etc. It provides more than 28,000 products to consumers. It adopted the strategy of low cost and high volume (Williams, 2013).
Question Marks
These are the problem child for the company, which need much attention to increase the market share for increasing the inflow of cash as compare to outflow. But it has the high market growth, which means effective product development of differentiation strategy could help it in turning to cash cow or else it will turn into dog. Neighborhood market are the question mark for the Walmart, which needs proper strategies for increasing the market share. It needs to grow, as the profit level reduces from the previous years (Ausick, 2014).
Dogs
These are the breakeven products, whose shutting down of operations will not affect the company. Discount stores are the dogs for the Walmart, as it is not bringing much benefit to the company. Moreover, its number of stores were also reduce in 2014, and many outlets were close till the date. This investment can be used for the stars (Ausick, 2014).
References
Annual Report, 2016. Walmart-Annual report. [Online], Available at: http://s2.q4cdn.com/056532643/files/doc_financials/2016/annual/2016-Annual-Report-PDF.pdf, [Accessed on: 20th August, 2018].
Ausick, P. 2014. Walmart now has six types of stores. [Online], Available at: https://247wallst.com/retail/2014/03/22/walmart-now-has-six-types-of-stores/, [Accessed on: 20th August, 2018].
Williams, G. 2013. BCG matrix of Walmart. [Online], Available at: https://www.coursehero.com/file/14763683/wal-mart-and-bcg-matrix/?justUnlocked=1#/question, [Accessed on: 20th August, 2018)
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