Question

Scenario: Imagine you are a business consultant to a firm of your choice. You have been asked to analyze, advise, and create recommendations on how the firm can ensure its future success in its current market.

Work with your instructor to choose a firm that matches the following criteria: a publicly-traded company operating in the U.S. market. Note: A publicly-traded company is a private-sector firm owned by its shareholders/stock holders.

Prepare a minimum 1,050-word analysis of economic data and business data to explain how the core economic principles impact the sustainability of the firm and what actions the firm can take to ensure success.

Address the following: Identify the market structure your chosen firm operates in, analyze your chosen firm's current market share, and identify the firm's local/global competitors.

Analyze the barriers to entry in this market to illustrate the potential for new competition and its impact on your firm's future in the market. Hints: Be sure you review the barriers to entry discussed in the course text.

You might consider presenting the data graphically. Identify and explain trends in current macroeconomic indicators for last three years including: Current stage of the business cycle. Real gross domestic product (GDP). Inflation as measured by the consumer price index (CPI). Unemployment rate. Federal funds rate. Current rate for borrowing funds such as the so-called "prime rate."

Note: A requirement of the Week 1 Influence of Economics on Household Decision Making report was to gather data on the CPI, GDP, and interest rates, so you should consider reviewing the feedback you received on the Week 1 report.

Evaluate trends in demand over last three years and explain their impact on the industry and the firm. Include quarterly (last two quarters) and annual sales (last three years) figures for the product your firm sells.

Create business strategies by analyzing information and data related to the demand for and supply of your firm's product(s) to support your recommendation for the firm's actions. Remember to include a graphical representation of the data and information used in your analysis. Examine available, current data and information, such as pricing and the availability of substitutes, and explain how you could determine the price elasticity of demand for your firm's product.

Assess how the price elasticity of demand impacts the firm's pricing decisions and revenue growth. Apply the concepts of variable and fixed costs to your firm for informing its output decisions. For instance, analyze how different kinds of costs (labor, research and development, raw materials) affect the firm's level of output.

Based on the data gathered and analysis performed for this report, write a conclusion in which you: Create business strategies, including price and non-price strategies, based on your market structure to ensure the market share and potential market expansions and explore global opportunities for your business in a dynamic business environment and provide recommendations. Develop a recommendation for how the firm can manage its future production by synthesizing the macroeconomic and microeconomic data presented.

Propose how the firm's position within the market and among its competitors will allow it to take your recommended action. Recommend strategies for the firm to sustain its success going forward by evaluating the findings from demand trends, price elasticity, current stage of the business cycle, and government policies.

Answer 1

Chosen company :-

The chosen company is Walmart Inc. It is a corporation that operates in the chain of hypermarket and grocery stores and online stores .

Economic principles affecting it's sustainability :-

1) Customer value and service

2) Partnership with its associates

3) Community involvement

​​​​​​Type of market -

FMCG sector - Grocery market

Current market share -

23%

Competitors -

1) Amazon

2) Alibaba

3) Home Depot

4) IKEA

5) E- Bay

Barriers to entry :-

1) Aggressive pricing strategy

2) Highly expanded operations

3) Economies of scale

4) Resilent distribution network speeding up the delivery process.

Current stage of business cycle -

The company is trying for technological advances to stay ahead in competition .

Thus it is going through a phase of innovation.

Real GDP :-

4.5 %( August 2018 data )

CPI :-

Price index including food and energy rose to 1.8% (2018 figures)

Unemployment rate -

Walmart has reduced both labour market discrimination and wage discrimination.

Walmart has a large employee base and specifically hires low skilled workers created huge employment opportunities.

Federal fund rate :-

1) The Walmart benefits a lot from government subsidies including programmes like food stamps , subsidized housing and Medicaid .

2) A Walmart wage problem pointed a 36% chance of hike in Fed funds futures ( 2015 figures )

Prime rate -

25.25%

Demand trends -

Each week over 275 million customers visit more than 11300 stores under 58 banners in 27 countries and e Commerce websites in 10 countries.

Sales trends -

Quarterly :-

Q1 2019- $ 123,925

Q4 2018- $ 138,793

Q3 2018- $ 124, 894

Q2 2018- $ 128,028

Annual -

2019- 514.41 billion US dollars

2018- 500.34 billion US dollars

2017- 485 billion US dollars

Price elasticity of demand

The product in which Walmart deals is highly price elastic .Thus Walmart uses low pricing strategies to attract more and more customers to form a very large consumer base .

Variable and fixed cost -

Variable Cost components - $373B

Fixed Cost component - $ 109B

Variable Cost - 77%

Fixed Cost - 23%

Conclusion:-

Walmart performance has been exceptionally well in the past year .To continue performing well it must :-

1) Continue aggressive pricing strategy

2) Expand in E commerce market

3) Reinvesting a certain proportion of money to expand its operations.

4) Taking over of small stores to get a already setup infrastructure.