201320 Spring 2013 BUSI 400-B03 1 Berenice Martnez Gutirrez

Individual Case Analysis 1

I. McDonalds Financial Ratios
1. Current Ratio 2. Quick Ratio 3. Debt-to-Total-Assets Ratio 4. Debt-to-to-Equity Ratio 5. Long-Term Debt-to-Equity Ratio 6. Times-Interest-Earned Ratio 7. Inventory Turnover 8. Fixed Assets Turnover 9. Total Assets Turnover 10. Accounts Receivable Turnover 11. Average Collection Period 12. Gross Profit Margin 13. Operating Profit Margin 14. Net Profit Margin 15. Return on Total Assets 16. Return on Stockholders Equity 17. Earnings Per Share 18. Price-Earnings Ratio 19. Sales Growth 07-08 20. Dividends per share growth 1.39 1.34 0.36 0.76 0.76 12.78 211 1.16 0.83 25.26 15 days 36.73% 27.39% 18.34% 15.15% 32.23% B-3.83 D-3.76 16.24 3.23% 8.33%

II. Case 6: Wal-Mart Stores

1. What strategies would you recommend to current CEO Mike Duke? Although Wal-Mart is clearly doing a wonderful job at leading the discount retail market, it could be doing more to offset the competition. Target, its largest competitor, is also taking the low-prices approach, and it has reached the point at which their prices are now at times lower than WalMarts. Bloomberg Businessweek performed a research study in late 2012, which concluded that Targets prices were 0.46% lower than its Save Money, Live Better rival. (Tuttle, 2012). Low prices are the main reason why the lower-income clientele preferred Wal-Mart despite its obvious shortcomings (mediocre service, plain atmosphere, and usually long lines among others). Target, on the other hand, is known for its welcoming

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Individual Case Analysis 1

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201320 Spring 2013 BUSI 400-B03 2 Berenice Martnez Gutirrez

ambience, trendy and chic products (especially home dcor), and decent customer service. It usually attracts a slightly higher-income customer base that enjoys the aforementioned commodities, which are certainly not found in Wal-Mart. Targets efforts at competing with the all-time low-price champion could potentially lure in some of Wal-Marts clients, even if only seasonally. My suggestion is to counterbalance Targets attempt by making improvements in the overall scene of the Wal-Mart stores. Though its simplicity is what allows them to keep prices low, simple adjustments that brighten their displays, improve accuracy on their price tags, add a cashier or two on a busy night, or improve employee training and job satisfaction is what could keep Wal-Mart shoppers in an unanimous decision to return. 2. How can Wal-Mart benefit from Internet retailing? Simply stating that the present shopping experience has taken a new turn into cyber-land is an understatement. It is attractive to shoppers especially wealthier ones to make purchases from their comfort of their homes and receive goods at their front door. Wal-Mart can benefit from this, but it must take a step-up in their marketing approach. This is a different client base with different expectations, and low prices alone will not be enough. Web retailers such as Amazon.com are dominating the market with incredibly competitive prices and outstanding customer service. One of their marketing strategies is personalization: a shopper can be viewing a product on a given website, but once they enter amazon.com, they will be presented with an inhouse ad of the same product they just viewed, but of course at a lower price (Habegger, 2012). Online retail makes it easy for shoppers to find the ultimate lowest price for the products they seek without physically going from store to store. Wal-Mart can benefit from this if they can be the online retailer to provide the lowest price, but at the same time remain competitive in terms of service: customer satisfaction will be announced in each products buyer reviews. Wal-Mart shoppers will appreciate the same quality products they find at the retail stores, at the same low prices, but without the inconveniences that the typical trip to Wal-Mart implicates. 3. How aggressively should Wal-Mart expand internationally and where? From a business point of view, Wal-Mart should continue to expand as long as its stores continue to attract shoppers. One way to gage the decision of where to expand is the economical situation of the prospective country and/or city. Wal-Marts low prices clearly attract shoppers that are looking for quality products at bargain prices, so a city in which times are tough could be Wal-Marts best choice. For example, the recent economic downfall in Japan has made room for Wal-Mart to thrive. Household incomes in Japan have been in a steady decline for the past three years, and the country is filled with shoppers in search for inexpensive products. Wal-Mart in Japan witnessed an increase in net sales of 2% during the second quarter in 2012, and the chain was able to expand for the first time since November of 2008

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Individual Case Analysis 1

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201320 Spring 2013 BUSI 400-B03 3 Berenice Martnez Gutirrez

(Yamaguchi, 2012). Wal-Mart should continue to seek international struggling economies as a target market with certain expansion potential. 4. Should Wal-Mart expand the convenient store concept in China and other markets? Yes, it should, and it already has; though the concept is a work in progress. Personally, I think that Wal-Mart could gain substantial profits from its convenience stores by closing the gap between its customers and the stores accessibility. It is much more convenient for shoppers to visit a convenience store to get that one thing that they need without having to go stand in line at the superstore. The strategy, however, needs to be revised. Wal-Mart recently shut down its Chicago express convenience store (situated right outside the superstore). The smaller store was sabotaging the sales of the bigger one because their product mix included more than just convenience items (i.e. 40-pound bags of dog food) (Sweeney, 2012). Product managers should continue to monitor the remaining 20 small pilot stores and strategically organize their product mix so that they provide enough variety to attract customers looking for a quick shop, yet not so many products to take business away from the big Wal-Mart store. 5. Should Wal-Mart get a foothold in Europe before competitors seize the initiative? No. Europe is highly unionized, and its minimum wage requirements are far beyond what Wal-Mart usually allocates for wages (for example, a $20 an hour equivalent in Denmark) (Meyerson, 2011). Im sure Wal-Mart learned its lesson after its big fail in Germany, where stores are closed on Sundays by law, most major employers are unionized, and pay-scales are set by sectoral labor-management contracts that apply to all large employers (Meyerson, 2011). Furthermore, Wal-Mart faces very serious competition from familyowned local stores who are not subject to the abovementioned regulations, and thus can sell their loaf of bread at 34 cents, whereas Wal-Mart can only lower it to $1.13 (Meyerson, 2011). Wal-Mart may be better off allowing its competitors to venture into Europe first, observe their strategies, and learn from the challenges they will face. In the meantime, Wal-Mart will continue to flourish as the retail giant in the rest of the world.

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Individual Case Analysis 1

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201320 Spring 2013 BUSI 400-B03 4 Berenice Martnez Gutirrez

References:
Habegger, J. (2012). Don't Bring a Knife to a Gunfight. Dealerscope , 54 (2), 24. Meyerson, H. (2011). Which Path for Europe? The American Prospect , 22 (4), A18A19. Sweeney, B. (2012, August 6). Why Wal-Mart shut its South Side convenience store. Retrieved February 10, 2013, from Crain's Chicago Business: www.chicagobusiness.com Tuttle, B. (2012, August 27). Target Battles Walmart for Low-Price Supremacy. Retrieved February 10, 2013, from Time Business & Money: business.time.com Yamaguchi, Y. (2012, November 19). Japan's Pain is Wal-Mart's Gain. p. 1.

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Individual Case Analysis 1

LUO