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YOU ONLY HAVE TO DO SUPPLY CHAIN MANAGEMENT PARTABOUT 1 – 1.5 PAGES OR MORE
WALMART READ ALL THE INFORMATION FIRST. YOU HAVE TO DO SUPPLY CHAIN MANAGEMENT PART ONLY VALUE CHAIN ANALYSIS IS JUST FOR REFERENCES. IT IS ALREADY DONE. *USE VALUE CHAIN ANALYSIS rubrics AND WORK ON SUPPLY CHAIN MANAGEMENT which is about 1 – 1.5 pages or more. BASED IN US. 1) VALUE CHAIN ANALYSIS: Do or include the following in each value chain function below (e.g., supply chain, operations): o compare the data for EACH of the last 3 years for your firm and the direct competitors to determine the trend line for EACH VALUE CHAIN category (e.g., Supply Chain, Operations etc..). For instance, is the cost of goods sold the same as a percentage over the 3 years or is it increasing or decreasing and why? Are labor costs stable as a percentage relative to competitors? Is cash on hand growing as a percentage of total assets on the balance sheet? o In other words, complete a normalized financial statement trend analysis for EACH of the past 3 years, and provide a comparison WITH EQUIVALENT METRICS for 2 direct competitors for EACH of the past 3 years (i.e., percentages and ratios) to determine which firm is ahead ie a strength and which firm possesses a weakness in each VALUE CHAIN (VC) activity (e.g., Supply Chain, Operations, Marketing and Sales etc..see below). This thus provides ratio metrics for EACH value chain value activity, and include equivalent metrics for EACH of the 2 direct competitors o analyze the ratio metrics in each value chain activity to determine if it is a strength or a weakness (i.e., Is your firm underperforming or performing better than the competitors, based on the ratios provided?) o evaluate EACH value chain function using Resource Based View (RBV) or aka Sustainable Competitive Advantage (SCA) or aka Hitt’s typology (i.e., rare, non-substitutable, costly to imitate, valuable) to determine the contribution of each value chain activity to the Sustainable Competitive Advantage o identify which value chain activities account for the change in financial performance and explain why o identify the firm’s sustainable competitive advantage, if any; o Please see Introduction to Value Chain Analysis below on examples of what can be included for each Value Chain Section. o NEW – Please analyze Operations and Corporate Leadership Value Chain Functions for all firms no matter what industry; o NEW – Analyze 6 to all Value Chain Functions in total depending on your firm. Hence, customize your analysis. For instance, restaurants and airline companies do not need to analyze the distribution function. In another example, Clothing retail stores can include half a page qualitative summary or not include R&D function in their analysis. Lastly, in another example, consulting firms and some social media firms do not need to have supply chain logistics included in their analysis of the value chain function. HAVE TO DO SUPPLY CHAIN MANAGEMENT PART ONLY SUPPLY CHAIN MANAGEMENT (Porter’s Inbound Logistics and Procurement) About half or 1 page, double spaced (length customized for company such that if this section is very relevant more may be written). In this section, you may consider one or two key factors for your focal firm and 2 direct competitors such as the following: • provide metrics that measure the efficiency of your firm’s supply chain management (e.g., average days of inventory); • discuss relationships with suppliers (e.g., partnerships, ownership of key supplier); • discuss key inputs used (e.g., quality or purchased in bulk which helps decrease costs for focal firm or a direct competitor); • use metrics to identify strengths and weaknesses for this value chain function. Appendix Walmart is a department store; hence they don’t create new things. They concentrate on promoting items that are already well-liked and in high demand. They can maintain reasonable costs and competitive prices as a result. The goal of Walmart’s business strategy is to provide customers with what they want when they want it and for the least amount of money. Walmart does not see the need to alter this strategy because it has previously been successful. The following is the Normalized Income and Expense Statement for Walmart for the last three years: Operating expenses (Year ending January 2022 ) Cost of goods sold: 63.4% = (Cost of goods sold / Total revenue) x 100 Selling, general administrative expenses: 18.4% = (Selling, general and administrative expenses / Total revenue) x 100 Depreciation and amortization: 2.9% = (Depreciation and amortization / Total revenue) x 100 Operating income: 6.2% = (Operating income / Total revenue) x 100 Net income: 4.1% = (Net income / Total revenue) x 100 Operating expenses Year ending January 2022 Year ending January 2021 Year ending January 2020 Cost of goods sold 63.4% 63.5% 63.6% Selling, general administrative expenses 18.4% 18.5% 18.6% Depreciation and amortization 2.9% 2.9% 2.9% Operating income 6.2% 6.1% 6.0% Net income 4.1% 4.1% 4.0% From the data above, we can see that Walmart’s operating expenses have remained relatively stable over the last three years. The cost of goods sold as a percentage of total revenue has remained around 63.5%, while selling, general and administrative expenses have remained around 18.5%. Depreciation and amortization expense has also remained stable at around 2.9%. As a result, Walmart’s operating income has remained relatively stable at around 6.0% – 6.2%. Finally, net income has also remained relatively stable, coming in at around 4.0% – 4.1% over the last three years. Value chain analysis Introduction Sam Walton founded Walmart, a publicly traded company, in 1962. Walmart has a $500 billion yearly revenue and is based in Bentonville, Arkansas. With more than 11,000 locations in 27 countries, Walmart is the biggest retailer in the world. Walmart employs 2.3 million people and holds a 20% market share. In addition to the United States, Walmart also operated in Canada, Mexico, Brazil, China, India and the United Kingdom. Supply chain The cost of goods sold as a percentage of total revenue has been relatively stable for Walmart over the past three years, hovering around 63%. This is in line with the competitors. Walmart has been able to maintain a stable cost of goods sold percentage due to its efficient supply chain. The company has a vast network of suppliers and has developed long-term relationships with them. This has allowed Walmart to negotiate favorable terms and get discounts on bulk orders. Additionally, Walmart has invested heavily in technology to streamline its supply chain operations. This has resulted in lower costs and faster turnaround times. Operations Walmart has been able to keep its labor costs stable as a percentage of total revenue over the past three years. This is due to the company’s focus on automating its operations. Walmart has invested heavily in technology, such as robotics and artificial intelligence, to automate its warehouses and stores. This has resulted in fewer employees being needed, which has helped to keep labor costs down. Additionally, Walmart has implemented lean manufacturing techniques to further reduce costs. Cash at hand Walmart’s cash at hand as a percentage of total assets has been relatively stable over the past three years, hovering around 4%. This is in line with competitors. Walmart has been able to maintain its cash on hand despite increasing competition from Amazon and other online retailers. This is likely due to Walmart’s strong financial position, as it has been able to generate cash flow from operations to fund its growth. Analyzing the ratio metrics Total assets = total liabilities + total equity = $321.937 + $92.359 = $414.296 Total liabilities = total assets – total equity = $321.937 – $92.359 = $229.578 Total equity = total assets – total liabilities = $321.937 – $229.578 = $92.359 Sales growth = (sales this year – sales last year) / sales last year Income growth = (income this year – income last year) / income last year ROA = net income / total assets ROE = net income / total equity Operating margin = operating income / total revenue Profit margin = net income / total revenue Total assets growth = (total assets this year – total assets last year) / total assets last year Total equity growth = (total equity this year – total equity last year) / total equity last year Walmart($billion) Amazon($billion) Target($billion) Total assets $321.937 $268.43 $84.27 Total liabilities $229.578 $143.22 $52.35 Total equity $92.359 $125.21 $31.92 Sales growth 9.3% 4.4% 3.5% Income growth 22.7% 20.6% 35.6% ROA 19.8% 0.2% 5.4% ROE 68.8% 0.5% 14.1% Operating margin 14.3% 0% 6.6% Profit margin 11.6% 0.5% 4.8% Total assets growth 12.2% 28% 1.9% Total equity growth 35.2% 8% 23.1% Walmart is ahead in terms of supply chain efficiency, with a lower cost of goods sold as a percentage of sales. Amazon is investing heavily in its supply chain, with a higher cost of goods sold, but this is offset by its higher sales growth. Target is in the middle, with a moderate cost of goods sold and sales growth. Operations Walmart has a better operating profit and is more operationally efficient. Amazon has a lower operating margin while making significant investments in its business. Target has a moderate operating margin and is in the center. Marketing and Sales In terms of marketing and sales effectiveness, Walmart is in the lead thanks to better sales growth. With increased sales growth, Amazon is investing considerably in its marketing and sales. Target has been growing its sales at a steady pace. Finance With a greater ROA and ROE, Walmart is more efficient financially. With a lower ROA and ROE, Amazon is investing extensively in its finances. With a reasonable ROA and ROE, the target is in the center. Contribution of each value chain using Resource Based View Supply Chain: Walmart’s scale is the primary driver of its advantage over competitors there. Walmart may take use of its size to get better deals from suppliers and to spend money on effective logistics and transportation. Operations: Walmart’s scale is the primary source of its competitive advantage in operations. Walmart can make use of its size to fund investments in effective transportation and logistics. Sales and marketing: Walmart’s size is the primary driver of its competitive advantage in sales and marketing. Walmart can make advantage of its size to fund effective marketing and promotional initiatives. Finance: Walmart’s scale is the major factor contributing to its competitive advantage in this area. Walmart may take advantage of its size by spending money on effective financial management. The main reason for the change in Walmart’s financial performance is its scale. Walmart can use its size to invest in efficient logistics and transportation, which has helped to lower its cost of goods sold as a percentage of sales. Additionally, Walmart’s scale has helped it to invest in efficient marketing and promotional activities, which has helped to increase its sales growth. Strategies When evaluating a company’s value-creating activities, it is important to look at a variety of financial numbers to get a complete picture. Some helpful metrics to consider include sales growth, income growth, ROA, ROE, operating margin, and profit margin. Comparing these numbers to industry averages can give insights into which areas the company is excelling in and which areas may need improvement. For example, Walmart’s sales growth of 9.3% is higher than the industry average of 4.4%. However, their income growth of 22.7% is lower than the industry average of 20.6%. This may indicate that Walmart is growing its top line faster than its bottom line, which could be a cause for concern. Additionally, Walmart’s operating margin of 14.3% is lower than the industry average of 16.1%. This may suggest that Walmart is not as efficient as its competitors in generating profit from its sales. Overall, Walmart seems to be doing well in terms of sales growth, but there are some areas where the company could improve: 1. Boost sales growth: Concentrating on growing market share is one strategy to boost sales growth. Aggressive marketing and market expansion are two ways to achieve this. Enhancing the effectiveness of the sales staff is another strategy to increase sales growth. This can be accomplished by deploying new sales technologies or by giving sales staff members more opportunities for training and growth. 2. Increase income growth: Improving margins is one strategy for increasing income growth. This can be accomplished by raising prices or cutting costs. Increasing inventory turnover is another method for enhancing income growth. This can be accomplished through increasing sales or by cutting down on the number of days it takes to sell inventory. 3. Increase ROA: Improving asset utilization is one approach to increasing ROA. The number of days it takes to sell goods can be cut down or sales might be increased. Concentrating on lowering costs is another approach to increasing ROA. This can be accomplished by decreasing the workforce or the cost of items sold. 4. Enhance ROE: Increasing firm profitability is one strategy for enhancing ROE. This can be accomplished by raising sales or lowering expenses. Concentrating on boosting the company’s equity is another strategy for enhancing ROE. Either new equity can be issued or shares can be repurchased to accomplish this. 5. Increase operating margin: Focusing on boosting revenue is one strategy to increase operating margin. Putting your attention on cost-cutting measures is another strategy to increase operating margin. This can be accomplished by cutting back on staff or by lowering the cost of goods sold. 6. Increase profit margin: Concentrating on boosting sales is one strategy to increase profit margin. Putting your attention on cost-cutting measures is another strategy to increase profit margin. This can be accomplished by cutting back on staff or by lowering the cost of goods sold. 7. Improve total assets growth: One way to improve total assets growth is to focus on increasing sales. Another way to improve total assets growth is to focus on reducing costs. This can be done by reducing the number of employees or by reducing the cost of goods sold. 8. Improve total equity growth: One way to improve total equity growth is to focus on increasing profits. Another way to improve total equity growth is to focus on issuing new equity. 9. Boost sales productivity: Concentrating on growing sales is one strategy to boost sales productivity. Reducing the number of days it takes to sell inventory is another strategy to increase sales productivity. 10. Increase cost-effectiveness: Focusing on fewer employees is one method to increase costeffectiveness. Concentrating on lowering the cost of items sold is another strategy to increase cost-effectiveness.

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