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Managing Boundaries

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Business Analysis Part 1
Javelle Alana Brown
MGT 521
May 15, 2012
Dr. Deborah Retzloff

Business Analysis Part 1 When deciding to invest in something one should first look at how profitable their return on investment may be, which is also referred to as a ROI. By definition investment is the action or process of investing money for profit or material result. Logically when a person decides to invest they are already looking in the future at the profitable gains he/she may receive. In this paper I will take on the role of a mutual fund manager and discuss my decision whether or not to invest in a Fortune 500 company. I will also conduct a SWOT analysis of the company and discuss the parts of the analysis that are most relevant in my decision to invest in the company. Identifying internal and external stakeholders will also be discussed as well as their wants and needs, and what the company plans on doing to see that they are fulfilled. If the research proves that the stakeholder’s needs are not being met, what will the company do to see that they are?

The company that I choose to invest in is Wal-Mart. This company is number 2 on the Fortune 500 list this year. Wal-Mart began in 1962 and was founded by a man named Sam Walton. His idea for his company was to put sales volume before prices. He accepted a slightly lower margin in hopes of driving out competition while achieving an image of lower prices without compromising the quality of his products. His brilliant plan worked! His business started to grow, and in no time he expanded to over 20 stores and reached 12.6 million in sales. By the early 1970’s Wal-Mart had grown to over 100 stores, and began trading stock publicly. By 1975 the total sales for the company had reached an astounding 340 million dollars.

With numbers like these it was certain that Sam Walton was doing something right. His growth and expansion continued, and by the late 1980’s sales had grossed to over 15 billion dollars. Today Wal-Mart is staffed with over 2 million associates, and had fiscal sales of 374 billion in sales worldwide by the end of 2008. Any mutual fund manager can see that those numbers are clearly proving a solid sales strategy. As a mutual fund manager a useful tool to look at is a SWOT analysis. This refers to the internal Strengths and Weaknesses of a firm and the environmental Opportunities and Threats facing the firm.
The technique of the SWOT analysis is based on the assumption that an effective strategy derives from a sound “fit” between a firm’s internal sources (strengths and weaknesses) and its external situation (opportunities and threats). A good fit maximizes a firm’s The technique of the SWOT analysis is based on the assumption that an effective strategy derives from a sound “fit” between a firm’s internal sources (strengths and weaknesses) and its external situation (opportunities and threats). A good fit maximizes a firm’s strengths and opportunities and minimizes its weaknesses and threats. Accurately applied, this simple assumption has powerful implications for the design of a successful strategy (www.yousigma.com).
Strengths
* Wal-Mart is a huge brand and has grown significantly since its inception. It is a fortune 500 company and has held the number 1 spot which is extremely impressive in itself. * Wal-Mart is a strong retailer, and prides itself on being a vital part of the consumer’s life based on their low cost products, the variety of products sold, and the convenience of all their locations they have to service a wide range of customers. * During the last decade, the stock market has seen extreme volatility in ways that haven’t been seen since the Great Depression, and Wal-Mart’s stock has offered great stability. * Research shows that Wal-Mart operates 4200 stores in the US and internationally, and operates 3600 stores in 16 different markets. This global expansion allows Wal-Mart to have markets outside the US to contribute to both their revenue and profitability.
With a company like Wal-Mart that has such a low cost position in the industry, many times these types of businesses will become stronger during down turns in the economy. This is extremely relevant with the economic times that have been seen in the past few years.
Weaknesses
* Since Wal-Mart is a company that offers a wide variety of products like food, clothing, housewares, and electronics it is always a concern that it may not have the flexibility of some of the more focused competitors. * Wal-Mart is the largest grocery retailer in the world, and could possibly experience some weakened spots as it relates to the broad span of control. * Although Wal-Mart is recognized as a global company, it only has a presence in a few countries worldwide.
Opportunities
Wal-Mart has opportunities to expand to open different types of stores and expand on different locations. `
Threats
* Price competition amongst other large retailers * Staying abreast on political issues in other countries that Wal-Mart operates in to avoid

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