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Strategic Initiative Paper

1260 words - 6 pages

Strategic Initiative Short-term liquidity and long-term profitability are essential objectives for a successful business. The modest beginnings and impressive 50-year growth of Walmart Stores, Inc. are an example of such practice. Walmart Stores, Inc. reflects decades of continued positive return for investors in its annual report and presents a five-tiered strategic plan. The Walmart Store, Inc. 2012 Annual Report lists these initiatives as ―1) Developing our people; 2) Driving the productivity loop; 3) Winning in Global ecommerce; 4) Reinvigorating our customer-focused culture; and 5) Leading on social and environmental issues (p. 3). This essay will focus on two initiatives driving the ...view middle of the document...

4). In this example the management of Walmart takes a long-term two-year initiative of expense cuts and applies the savings to short-term price point initiatives. The company’s sales increase, the expenses are lower, and the long-term objectives of the company are realized.
Reinvigorating Our Customer-Focused Culture
Another initiative tied to growth and expansion is revisiting the focus on the Walmart customer. Again, long-term financial strategies are tied to the short-term investments of the daily customer experience. As the Walmart Stores 2012 Annual Report states, ― Our Global Customer Insights group is developing world-class analytics to identify customer trends and support merchandising and marketing decision-making within the business (p. 5). The company is looking ahead and dealing with today’s customer with tomorrow’s shopping habits in mind. This is a clear indicator that the company uses short-term tactics to support long-term goals. The funding for the analytics programs happens today and the result supports financial initiatives in the future. These initiatives may include expansion into new markets, new store designs, and different pricing structures to meet the demands of the customer moving forward. Expansion is a long-term goal supported by short-term revenue increases.
Investopedia (2012) defines return on investment (ROI) as ―A performance measure used to evaluate the efficiency of an investment or to compare the efficiency to a number of different investments. This measurement looks at the gain on the investment minus the cost of
the investment divided by the cost of the investment. The yield from the investment is the determining factor in pursuing one investment over another, or not making the original investment. For instance, Walmart may want to expand into a market with a new store that will cost $25,000,000 to build. The expected yearly sales revenues for the first year are $26,000,000. Clearly, the ROI is positive. However, the company may also choose to refurbish an existing building for $21,000,000 and realize a larger profit margin in the first year. The company may use the increased profit to invest in the company’s stock portfolio or make further expansions. Here another short-term tactic supports a long-term goal. Keeping with the initiative of expansion and making a bigger presence in urban areas, Wal-Mart looks at the high costs of doing business in those markets. Many of these locations are smaller in size and have forced Walmart to rethink their product lines in these new locations. There is a price of doing business in urban areas and ―retailers are now willing to come into cities on the cities’ terms – with all the zoning headaches, high rents, and odd architecture (Clifford, 2012). The expansion into the cities will affect the strategic planning of Wal-Mart. They must consider union wages, new product...

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