STRATEGIC HR MANAGEMENT RESEARCH PAPER OF ALPHA GROUP

(FIRST DRAFT)

HR PLANNING AND STRATEGIC CHANGE FOR WAL-MART

Bouffard, Jason
Fiel, Zachary
Kizil, Cevdet
Pimental, Kristen
Swihart, Jason

Southern New Hampshire University

Strategic Human Resource Management Dr. Annette West
October 29, 2006

CONTENTS

I. Abstract

II. Wal-Mart Employee Selection, Training, and Development

III. Wal-Mart Human Resources Planning

IV. Wal-Mart Performance & Compensation Management

V. Wal-Mart Strategy & Strategic Changes

VI. Wal-Mart: A Strategic and Financial Summary

VII. Recommendations

VIII. Conclusion

IX. References

I. Abstract

The primary objective of this paper is to examine the Human Resources Planning
and Strategic Change for Wal-Mart, the worlds largest retailer. In this context, the
authors analyze the employee selection, training and development of the company as well
as studying the performance & compensation management, strategy evolution and
financial status of the firm. A SWOT Analysis is also included in the authors work in
order to support their financial research of Wal-Mart.
This paper concludes with recommendations and conclusions and the article finds
that the business has a huge growth potential and entry to Middle-East markets such as
Israel can be taken into consideration. According to the authors, Wal-Mart has the
adequate financial strength to take risks on the international markers arena. Additionally,
although the company is very well known with its acquisitions strategy, joint ventures
and strategic partnerships are also recommended as alternative strategies for the firm by
the authors. Finally, despite some unethical issues and concerns about social
responsibility, Wal-Mart still seems to be a good buy for the investors who are interested
in the companys stocks.

II. Wal-Mart Employee Selection, Training, and Development

Wal-Mart has many key factors involved that make it such a successful company.
However, one element they have is one that every company has and this includes
employee selection, training, and development. These three factors together create the
staff that makes the customers returning time and time again. Without the selection, you
wouldnt have the training, thus, you wouldnt have the development so all these things
are needed to make a competitive staff.
Employee selection is an important factor to Wal-Mart when they are hiring their
staff. Diversity is the key thing they think of in hiring someone and choosing someone to
join the multi-million dollar company. Our commitment to diversity remains strong and
as part of our continuing efforts to become a leader in diversity we will, continue to
ensure that our hiring represents the diversity of our communities, and grow the
percentage of women and minorities in our management ranks. (Wal-Mart.com). This is
an interesting fact because one of the main complaints with Wal-Mart today is how they
mistreat and underpay their staff.

Wal-Mart also prides itself not only in diversity, but

also in young employment. It seems as though they like young eager staff. We engage
in job fairs, college recruiting, and internships to increase the diversity of our candidate
pool for open positions throughout the company. We have increased the company's
diversity considerably through our external recruiting efforts. (Wal-Mart.com). That is a
great opportunity for young job hunters to get their feet wet and experience in the
business field.

The next step in the employment process is the employee training and
development. Training is a costly and a very time consuming process in a business.
Companies like Wal-Mart pay their employees to be trained, and they pay the person who
is training, this is like paying double the staff needed. When the hiring process starts and
it comes time to picking out candidates, Wal-Mart makes sure they have the right ones.
They do not want to waste time and money Wal-Mart has just recently come up with a
whole new training and development system that is supposed to be effective and much
more efficient then their old one. Wal-Mart grew its training and development program
the way it grew the corporation: from store level up. (Speizer, P. 2) Wal-Mart is such a
large organization that their training and development needs to be top notch and have
great influence on their staff. An author of Wal-Mart and a worker said, Their training
and development is making a significant commitment and it will be a radar screen for all
other organizations.

The company is using a combination of outside vendors and

systems it has created on its own in the overhaul of training and development. (Speizer,
P. 2) Their new method of training was brought to them by Nike. The process goes
something like this, Each segment is three to seven minutes long and gives the
associates the basic knowledge they need about various products. As new products are
introduced each season, the training is updated and Nike customized the program for each
retailer. Associates are then quizzed at the end of the training and asked for feedback,
which gets sent back to managers and they are able to adjust things if needed. (Marquez,
P. 2) This process is an outstanding format; internet is the new way of communicating
and training. This type of training is called e-training and is definitely shown to be
efficient. Other companies such as Cingular and Nike have taken part in this form of

training as well. Often times when new associates learn new information they have to go
back and ask a lot of questions and this takes away from getting things done. Wal-Mart
decided to eliminate a step and have this broken into the three segments in hopes of
learning while working. Wal-Mart finds that if you learn one thing at a time and you
learn in correctly, you wont forget and you can learn at a faster rate in the end.
Wal-Mart has a reputation of not treating their employees right and not being as
up to date with technology as they could be. Wal-Mart is showing improvement with
their technology by using this e-training. It seems they are beginning to touch base with
their consumers as well as their employees. A lot of businesses have gone global; schools
have started having classes online, and much more. By Wal-Mart having one of the
newest forms of training will definitely increase their knowledge and attract a lot of other
businesses and also stresses how they are staying in tact with the latest trends, which is
imperative in the businesses world. This is a step in the right direction for Wal-Mart and
may make them even bigger than they already are.

III. Wal-Mart Human Resources Planning

Thanks to an onslaught of class-action gender and wage-discrimination lawsuits,

negative press and criticism from unions, Wal-Mart in 2004 embarked on a major
workforce management reorganization.
Wal-Mart, instead of just having 100 executives in its Bentonville headquarters to
watch over everything, developed a plan to hire more than 300 human resources
managers to work in the field.

We had no more than 100 field human resources managers who all worked from
Bentonville. We were more centralized in terms of HR support and we did not have
enough HR support in the field. We have created five divisional HR leaders, 27 regional
HR directors and 342 field HR managers, says Sue Oliver, senior vice president of the
Wal-Mart Stores Division. (Workforce.com)
Wal-Mart also created a five-person team of human resources professionals with
legal backgrounds who are available 24 hours a day seven days a week to handle
supervisors concerns regarding employment matters. (Workforce.com). For example,
store managers can call the team if they need information on how to best accommodate a
physically disabled worker.
Although the companys plan to expand its HR operations looks like a step in the
right direction, critics of Wal-Mart hope its just the first of more measures to come,
claiming that Wal-Mart has needed to provide more HR support and training for its store
managers for some time. By not providing any guidance or HR standards, store
managers were left to their own devices, says Jocelyn Larkin, an attorney representing
1.5 million women in a gender discrimination suit against Wal-Mart. (Workforce.com).
However, Wal-Mart has stated the changes have not come about because of their
critics, but a plan to have HR strategies integrated with the business strategies. As we
think about the three- to five-year time horizon, we know we have to be having the right
talent to secure our future. Our business strategies wont be successful if we dont have
the right talent, and the only way to do that is to make sure that HR is more integrated.,
says Oliver.

One of the biggest criticisms of Wal-Mart is that they do not pay their employees
a fair wage. Most of Wal-Marts critics say if the company paid better compensation and
benefits, they would have an easier job of attracting and retaining talent.
We are doing a good job of addressing both compensation and benefits. We want
to be an employer of choice, and to do that you need to be market-competitive with
wages, whether the workers are hourly or in management, says Sue Oliver, senior vice
president of the Wal-Mart Stores Division. For our hourly associates we have an annual
review process where we take an outside vendor, like Hewitt Associates or the Hay
Group or other compensation firms. They help us analyze by market and by store whether
or not our start rates are market-competitive. (Workforce.com).
After much criticism that Wal-Mart is known for its low wages, Wal-Mart
announced in August 2006 they were raising starting pay at 1200 of its stores by an
average of 6%. The increase was instituted after conducting a wage survey that suggested
increases in wages were needed to remain competitive as an employer. These start rate
changes, combined with our competitive benefits like affordable health care, 401K and
profit sharing, and annual incentives for our hourly associates, make us an even more
attractive employer, which is why people stand in line to apply for Wal-Mart jobs, said
Susan Chambers, executive vice-president of the Peoples Division for Wal-Mart Stores.
One of Wal-Mart's major recruitment goals is to ensure a diverse workforce by
attracting qualified candidates from differing. Wal-Mart's has developed a "People Action
Plan", which sets forth policies for associates, managers, and supervisors to base all
employment decisions on the principles of equal employment opportunity. The plan
requires the recruitment, hiring, training and promotions of all positions in the company,

along with all personnel decisions such as compensation, benefits, training, demotion and
termination, will be done without regard to race, color, religion, gender, national origin,
age, or disability. (Workforce.com).
Understanding that recruiting new talent is vital to meeting the demands of
continuous growth, Wal-Mart conducts job fairs, college recruiting, and internships to
increase the candidate pool for open positions throughout the company.
To help with recruiting for management positions, Wal-Mart directs two
internship programs designed for MBA students. One is a 12-week internship for firstyear MBA students that assign the intern a specific project related to the needs of the
company. The other is a six-month internship that is intended for second-year MBA
students. The program consists of one-month rotations through various divisions that will
prepare student for management positions within Wal-Mart stores.
Wal-Mart believes that promoting from within is more effective because internal
candidates have higher success rates in their new positions due to familiarity with the
corporate culture. Because of this, Wal-Mart has taken up a promote from within
philosophy, citing seventy-six percent of Wal-Mart store management team started at
Wal-Mart in hourly positions. (Esight.org).

IV. Wal-Mart Performance & Compensation Management

Performance management and compensation management have been the center of

controversy for Wal-Mart associates and critics alike. The issue seems to stem from the
large and diverse pool of associates themselves. There are so many stores located

throughout the country and so many employees (an estimated 1.3 million in-store). The
vast range of requirements for pay and benefits is inevitable. Wal-Mart itself realizes the
need for a comprehensive list of options for its employees. Under the Career / Benefits
section of its website, the company boasts having a wide range of choices in our benefits
package. (Wal-Martstores.com). To more easily navigate through these choices, they
have divided the benefits into four categories: My Money, My Career, My Home, and My
Health.
My Money, My Career, and My Home focus on pay, compensation, incentives,
living expenses, education and advancement opportunities within the organization as
managed through performance and compensation. Historically, there has been some
dispute regarding the level of pay in which Wal-Mart starts off its new hires. The range
starting pay is $7 to $12 an hour for store associates, averaging around $10 an hour. The
company does acknowledge the base pay may not be high, but it declares its incentive
programs can offset with financial compensation and recognition of high performance.
(Wal-Martstores.com). There are incentive programs that recognize and pay for team
players based on the performance of the company. They offer discount cards and free
membership to Sams Club. The company even provides financial education to its
employees to help manage their money, debt, credit, and budgets. Another positive
compensation is vacation pay, which can accumulate for associates based on how long
they have been employed with Wal-Mart. This is also an example of the company
promoting itself as a career opportunity, not just a temporary job. The My Career
category describes advancement opportunities within Wal-Mart and describes how they
promote development through training programs, internships, and even shareholders

meetings and company functions. (Wal-Martstores.com). The latter two are ways for
associates to learn more about the company and industry, something that goes beyond a
single store location, product, and pricing. Self development is also important to the
company as they promote their employees continuing with their educations. My Home
describes benefits as including scholarship programs, education reimbursement, and even
a program which partners Wal-Mart Stores, Inc with colleges and universities offering
on-line courses. (Wal-Martstores.com). The company also offers programs to assist with
dealing with personal or work related issues for employees and their family members,
child care discounts, and a program for long-term service in which tenured associates
who leave the company can still be eligible to continue receiving some benefits.
All in all, the company seems to realize the diverse needs of its associates, new
hires, and possible applicants. It outlines and promotes (though, with little detail) how it
recognizes performance and provides financial compensation to those who are eligible
either by need or via an award program. Recently, one set of associates rallied against
increasingly strict penalties for individuals who did not follow the scheduled shifts.
Employees at a Wal-Mart Super Center in Florida protested outside of the store claiming
the establishment was cutting back on full-time hours, capping wages and forcing them
to work increasingly irregular schedules. (Wall Street Journal). The policy itself
penalizes employees per number of unexcused absences and further requires individuals
to call a 1-800 hotline if the absence is due to illness. Critics believe this is another
attempt by the company to deter individuals with chronic health conditions from applying
or further push currently employed associates out of the company.

This situation

exemplifies a public impression of Wal-Marts performance management tactics.

The final category listed under benefits is My Health. This describes the common
array of health benefits such as medical, dental, life, AD&D (Accidental Death and
Dismemberment), and disability insurance. It also offers a few not-so-common benefits
such as business travel accident insurance, Starbridge, which is a medical plan available
to employees who are waiting on their eligibility for coverage or who are temporary
employees, and Aflac Cancer Insurance. (Wal-Martstores.com) Despite what seems to be
a somewhat normal if not diverse collection of healthcare benefits, this category tends to
be at the center of the Wal-Mart compensation controversy. The company is currently
under scrutiny for its new Value Plan healthcare package which promotes lower
premiums, but much higher deductibles. (Wall Street Journal). Again, critics of the
company feel this program is a way to cut health-care related expenses as well as repress
sickly individuals from applying. Wal-Marts retort to this criticism is that it is an option
to benefit those associates with few medical needs by enabling them to save money
through lower premiums.

V. Wal-Mart Strategy & Strategic Changes

First of all, we have to mention in the beginning that Wal-Mart implements

several strategies to succeed in todays competitive business world. In other words, WalMart has a wide range of strategies which were analyzed by us in detail.
One of them is that, Wal-Mart has established a strong retail brand and a
reputation for value of money as a component of its strategies. Moreover, it has
convenience and a wide range of products all in one store. (Marketingteacher.com).

Then, Wal-Mart implements the strategy of aggressive growth. The company has
grown a lot in the recent years and has even experienced global expansion. For instance,
if you can remember the Wal-Marts purchase of the United Kingdom based retailer
ASDA, you will see that our argument is proved.
After that, Wal-Mart involves its use of information technology to support the
international logistics system. This way, the firm can observe how individual products are
performing country-wide, store-by-store at a glance. By the way, IT is also advantageous
for Wal-Marts efficient procurement.
Additionally, Wal-Mart implements a focused strategy for human resource
management and development. The employees are really a key factor for Wal-Marts
business and the company invests time and money in training the workers, as well as
retaining a development team.
Following that, Wal-Mart has a strategy of selling products across many sectors
such as clothing, food and stationary. This strategy of Wal-Mart is also sometimes
criticized by stating that it decreases the flexibility of the company.
Moreover, Wal-Mart has a strategy of keeping the manufacturing costs low in
order to decrease the cost of producing many consumer products. In relation with this
strategy, Wal-Mart implements the outsourcing to low cost regions of the world.
Furthermore, Wal-Mart implements the strategy of cutting wages, cutting health
benefits and cutting pension benefits in order to remain competitive. For example, it was
stated in an article (2005) that Wal-Marts health insurance plans were only covering 48%
of their employees. (Joesschool.blogs.com). Definitely, this implementation is another
Wal-Mart strategy which is widely criticized.

Another Wal-Mart strategy was moving to small towns and setting stores in these
low populated places. This strategy was implemented by establishing stores so that the
distribution centers or warehouses could take care of the customers. This strategy was
really very effective in reducing marketing and advertising costs.
Its also a good idea to mention the distribution strategy of Wal-Mart. The
distribution systems of Wal-Mart did seriously provide one of the greatest competitive
advantages to the company. Flexibility of controlling the distribution is also an important
strategy here. Also, the large-scale of Wal-Marts distribution centers and the technology
implementations should also be mentioned here.
Next, Wal-Mart also has a strategy of targeting the low and middle-income
consumers. To realize this strategy, the prices of goods are always tried to be kept at
minimum and lower than the competitors. In other words, the Wal-Mart model works
aggressively to have the lowest cost product available to the customer. (Qando.net).
In addition, its a known fact that Wal-Mart also uses non-American workers in
order to minimize the costs. Definitely, this is considered to be very unethical and wrong
both worldwide and in the U.S. since Wal-Mart is taking advantage of foreign workers in
sweatshop conditions. (Wal-Martwatch.com). Although this implementation is prohibited,
Wal-Mart was detected to employ these employee in some investigations.
Plus, another strategy of Wal-Mart is that it doesnt seek to create markets by
introducing new products. (Plastic.com). Instead of that, Wal-Mart is known to be a
market follower. According to some authorities, this is an intelligent strategy of Wal-Mart
since it minimizes the risk of failure.

One other strategy of Wal-Mart is to never depend on a single supplier. From WalMarts point of view, depending on a single supplier would be a very dangerous strategy
since it would limit the freedom and flexibility of the business. For sure, this action
would also be dangerous because if that supplier becomes unsuccessful, it would
absolutely affect Wal-Mart.
Besides, its said that Wal-Mart successfully navigated changes in store formats,
product tastes and the make-up of the workforce, and it assembled management talent
over time in its shift to mass market retailing. (Georgia State University, Robinson
College of Business, The State of Business Magazine). Thus, we can also emphasize
these actions as a part of Wal-Marts overall strategy.
To continue with our list of Wal-Mart strategies, we should also stress that the
company has an effective use of logistics management as well as having an effective
inventory control. Also it has the bargaining power over suppliers.
Then, Wal-Mart focuses on operations and execution by providing an overaverage quality at a very lower price. Here, the company gives importance to efficiency,
streamlining operations and supply-chain management.
After that, Wal-Mart also implements the strategy of analyzing customers in great
detail. The match the inventory of the store with the preferences of the clients by
analyzing all sales and they look at sales volume, inventory turnover, packaging, price
points and many other variables by product or group of products in order to create a
profile of the buying habits of the customers at the store/site level. (Marketingprofs.com).
By the way, Wal-Mart is careful about keeping the employee turnover ratio at very
low levels. According to the company, a high employee turnover ratio would seriously

harm efficiency so they try to keep it in minimum as much as they can. For example,
Wal-Marts driver turnover is only 5% a year, compared with an industry average of
125%. (The Economist Newspaper Economist.com).
Going on with Wal-Marts strategies, the firm has a strategy based on having all
items in stock and providing a very good customer service. For example, their regime of
customer service requires them to speak to any customer who comes within a defined
distance. (Guardian News Guardian.co.uk).
Finally, in regards to Wal-Marts international strategy, the company usually
prefers acquisitions when going overseas. For example, the acquisitions in England and
Mexico are very good examples for this statement. At last, the firms appreciated website
is also used as an effective tool to gain advantage in the international arena.
Speaking for the strategic changes of Wal-Mart, we can say that some strategic
changes for the company are observed both in the domestic U.S. market and in the
international markets.
Concerning Wal-Marts strategic changes in the international arena, we can say
that the company is trying to make a more significant entry into the Chinese marketplace
through the acquisition of a Taiwanese-owned supermarket chain called Trust-Mart.
(Fastcompany.com). For this acquisition, Wal-Mart will compete against the French giant
Carrefour SA. Definitely, there are some clear reasons for Wal-Marts mentioned strategic
change. Chinas economy is growing more than 10 percent a year, retail sales surged 12.9
percent in 2005 over the year before, to 6.7 trillion yuan ($847 billion) and by 2002, its
predicted that the market could expand to about $2.4 trillion. (Signonsandiego.com). As
you know, Wal-Mart has been successful in Canada, Mexico and England until this date.

However, they did fail in Hong Kong, South Korea, Japan, Indonesia and Germany since
they could not analyze the culture of these countries as well as the particular market
characteristics. According to some authorities, Wal-Marts this strategic change of strictly
going into the Chinese market will bring success while its just the reverse for some other
authorities.
Following that, another strategic change by Wal-Mart is that the company
executives announced this year they would greatly increase the number of organic
products on their shelves. (Westernfarmers.com). The firms recent introduction of
private labeled organic milk can be provided as an example here.
Then, as another strategic change of Wal-Mart, we can say that the company has
announced environmentally friendly policies. Criticized intensively for violating the
Clean Water Act and causing air pollution, perhaps we should think that this should not
be a surprise strategic change for Wal-Mart. For example, selling clothing made from
organic cotton, cutting energy use at new stores, offering cheaper health insurances to its
employees and promising fuel efficiency were only some of the actions taken by the
company. (Alternet.org). Especially, we must consider the healthcare terms for employees
as a significant strategic change. These changes include reduction in the waiting period
for firm health insurance from two years of employment to one year, helping part-time
employees with the ability to cover their children and offering employees a discount on
healthy foods sold at company stores. (Insiderview.com).
As a result, you can clearly realize that the strategic changes for Wal-Mart are also
numerous which can never be underestimated by the companys competitors.

VI. Wal-Mart: A Strategic and Financial Summary

Wal-Mart was founded with the opening of its first store in Rogers, Arkansas, in
1962. Wal-Mart quickly began to expand and had twenty-four stores reaching $12.6
million in sales in 1967. In the 1970s, Wal-Mart opened its first distribution center and
home office in Bentonville, Arkansas. This distribution center would be one of many that
would help make Wal-Mart the retailing giant that it is today. By 1975, Wal-Mart had
175 stores in operation. In 1983, Sams Club opened it doors. The chain consists of
more than 570 clubs in the US and 100 International locations.
In 1998, Wal-Mart realized that the retailing environment was becoming ever
competitive, and they would need to respond quickly. They began opening Wal-Mart
Super Centers as well as Wal-Mart Neighborhood Markets, both of these, which creates a
one stop shopping experience for customers, which they love. During the 1990s, WalMart became the number one retailer in the world through its aggressive store opening
and pricing strategies. Early in 1995, Wal-Mart started its international division and
began opening stores internationally. Wal-Mart dos not have a formal mission statement,
but their philosophy is, to provide everyday low prices with exceptional customer
service (Wal-Mart, 2006).
Currently the company is doing extremely well in comparison to the retail
industry as a whole. Today Wal-Mart has 1,100 discount stores, 1,900 Super Centers 95
Neighborhood Markets, and 550 Sams Club locations.

Wal-Mart is continuing its

strategy of opening many new stores, which allows it to remain extremely competitive.
In October 2006 alone, Wal-Mart has one Super Center scheduled to open as well as three

Sams Clubs. The following will give the reader a brief financial analysis of Wal-Mart
for fiscal year 2006 (February 30, 2005 through January 1, 2006).

SWOT Analysis

A SWOT analysis is a very powerful tool that can help a company uncover
strengths, weaknesses, opportunities, and threats that may not be obvious until the
analysis is completed. The following is the SWOT Analysis for Wal-Mart.

Strengths
1. Wal-Mart is a powerful retail brand. It has a very good reputation for the low
prices it offers, convenience and the wide variety of products in offers in its
stores.
2. The company has grown at a fast pace over the past few years in the United States
while expanding globally as well.
3. The company can see how individual products are performing at any given
moment store-by-store using efficient Information Technology. This allows for
the Just in Time delivery system to work so well for Wal-Mart.
Weaknesses
1. Wal-Mart is the Worlds largest grocery retailer, which could cause it to become
weak in some areas due to the huge span of control.
2. Since Wal-Mart sells a huge variety of products across many sectors, it may not
have the flexibility that some of its more focused competitors have.
3. The company is global, but it only has a presence in a few countries.

Opportunities
1. Wal-Mart could merge or form strategic alliances with other global retailers. This
would allow them to penetrate other countries.
2. New locations and store types offer Wal-Mart the opportunity for further market
penetration. They could develop mall sites or mom and pop like operations
3. They could still further expand their Super Centers
Threats
1. Because Wal-Mart is a retail leader, the are constantly the target of competition,
locally and globally
2. Being a global leader means that you are exposed to political problems in the
countries, you operate in.
3. Intense price competition is a constant threat for the company. (MarketingTeacher,
2006)

Financial Analysis
Wal-Mart ratios from a five-year average in comparison to the Industry mean:
Ratios
Beta
Quick Ratio
Current Ratio
ROA - 5yr. Avg.
ROE - 5yr. Avg.
Revenue/Employee
Net Income/Employee
Inventory Turnover
P/E Ratio
(Reuters, 2006)

Wal-Mart
.61
.26
.85
8.94
21.27
184,158
6,647
8.03
17.37

Industry Mean
.77
.31
1.18
6.84
16.39
216,978
9,751
6.27
18.72

Wal-Marts beta is lower than the industry average. This means that there is less
risk in investing in this company than the industry. The beta is a measure of a stocks
price volatility in relation to the rest of the market. In other words, how does the stocks
price move relative to the overall market? The closer the beta value is greater to one, the
greater the risk. The Return on Equity (ROE) has a high return on equity. This means it is
capable of generating cash internally. The higher a companys return on equity compared
to its industry, the better, which is the case with Wal-Mart. The Return on Assets (ROA)
tells an investor how much profit a company generated for each $1 in assets. In WalMarts case, they are generating $8.94 in profit for every $1 invested in assets. While the
industry is only generating $6.84 in assets for every $1 invested in assets. Their Price to
Earnings Ratio gives an investor an idea of how much the market is willing to pay for a
stock depending on its earnings. The higher the P/E the more the market is willing to pay
for the companys earnings. The lower the P/E the less the market is willing to pay for the
companys earnings. In Wal-Marts case, for every $17.37 the investor pays for the
company, they can expect to earn $1.00 in return.

The quick ratio was

designed to measure a companys immediate assets against its current liabilities. This
measure gives financial institutions an idea of how much cash can be created against the
current liabilities. Wal-Marts Quick Ratio is lower than the industry. For every $1 in
liabilities, Wal-Mart is able to produce $.26 in cash. The Current Ratio, is another test of
a companys financial strength. This method calculates how many dollars in assets are
likely to be converted to cash in a given year in order to pay debts that may come due
during the same year. Wal-Marts liquidity issue is below 1, which under normal
circumstances would be a concern. Because Wal-Mart is in the retail business most of its

inventory could easily be sold and converted to cash. The Revenue per employees is
lower than industry average and the net employee income is lower when compared to the
industry average. The inventory turnover is above industry average, which means WalMart is turning there inventory over 8.03 times while the industry is turning theirs over
only at 6.27 times in the same time period.
VII. Recommendations
Wal-Mart has a big future in terms of growth potential. They could extend their
global presence by entering the Middle East. In its earlier expansion into international
markets, Wal-Mart followed the strategy of acquiring a chain in the particular country or
setting up a joint venture. This strategy is working very well for them, and they should
continue to pursue it. Wal-Marts concept of purchasing an existing chain has proved
very successful. In 2006, Wal-Marts international operations had retail sales of $62,719
an 11.3% increase over the previous year (Wal-Mart Stores 2006). Wal-Mart has the
resources and finances in place to increase their international presence. They could
penetrate Israel by acquiring Blue Square, which has a corporate culture similar to
Wal-Mart. Wal-Mart needs to continue penetrating markets by creating joint ventures or
acquiring retail companies that have already established themselves. Once they do this,
they can implement their advanced IT systems do continue to deliver their products just
in time to local tastes of the customers.

VIII. Conclusion
Wal-Mart is a huge presence globally. With their current international September
2006 month end reporting growth of 32% increase from the previous year, there is still
plenty of markets for them to penetrate, thus, increasing shareholder value. This is an
excellent company to invest in. At this point, I would invest in the company aggressively
due to their current expansion and earning per share over the next year. Many analysts
predict that Wal-Mart will have earnings of $3.26 per share (Yahoo 2006). In Fiscal Year
2006, Wal-Mart reported sales of $312,427 million dollars. After reviewing the financial
statements of the company, as an investor, I would not hesitate to immediate purchase
their stock.

IX. REFERENCES
Ceniceros, R. (2004). Bias suit against Wal-Mart gets class action status. Business
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