Sears vs. Wal-Mart
Sears and Wal-Mart are both nationwide retailers, but their similarities are only skin deep. Sears started to lose its dominance in the early 1980s. In an attempt to boost the dwindling market share, Sears started to issue proprietary Sears Card, which gave customers payment flexibilities. A new slogan focusing on the "softer side of Sears", and a revised product mix, were created to appeal to the middle-class female shoppers.
On the other hand, Wal-Mart focused to achieve efficient operations, vertical integrations and high bargaining power, which allowed a low cost approach. The slogan "Always low prices" was realized by Wal-Mart’s ability to deliver high "value for money" to customers across genders. Wal-Mart
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With 41 million active Sears Card accounts, Accounts Receivable Turnover (A/R turnover) is important.
· Wal-Mart employed a low cost strategy, it’s important to assess Wal-Mart’s operational efficiency. Inventory turnover ratio is crucial in its profitability. Return on Asset (ROA) and Working Capital Turnover can measure management effectiveness in asset usages. Cash Conversion Cycle (CCC) shows how long the company’s cash is being tied up by its current operations.
Financial ratios are important in assessing the two companies’ performances. Referring to Exhibit A and B, we see that Sears relied heavily on debt financing. Although its 1997 ROE was high, it had a 300 days cash conversion cycle and a slow A/R turnover ratio. After evaluating various ratios, we concluded that the driving force behind Sears’ profitability was its proprietary card business. For a retailer, a strategy of using flexible payment options to boost sales is not a viable long term solution. The slow A/R turnover and negative operating cash flow cause concerns. On the other hand, Wal-Mart had a quick cash conversion cycle of 91 days, and a working capital turnover of 24/yr (vs.10/yr for Sears). These ratios represent a retail company with sound fundamental strategies, as well as the implementation and execution of those strategies. The financial ratios gave us insights into the companies’ operating and financing strategies, putting the two companies’ annual results into
The auditor must remember that all information collected during the audit needs to be sufficient enough to further the audit process. The information must not only possess the two qualities, relevance and reliability, but it should also test various assertions. For instance, in the audit of Walmart, the auditor should make an attempt to acquire information such as financial statements from the company’s bank, as opposed to acquiring the statements from Walmart’s management. Taking such crucial information from Walmart’s management will put the reliability of that information into question. It is possible that management may manipulate the financial statements, so that they are more appealing to the public and investors. Management may do things
Both Amazon and Walmart are seeking to accomplish the same goal, to become the world’s largest retailer by providing customers with a seamless shopping experience. Both companies have their own strengths, with Amazon being the leader in the online retail space, while Walmart is the clear leader in the brick-and-mortar arena. As more online and brick-and-mortar retailers are eating into the market, both Amazon and Walmart must content with other companies as well as each other. Amazon and Walmart were both created and detonated extraordinary growth due to an innovative push unlike any other in their own respective arenas. “If either Amazon or Walmart is destined to come out on top, it must come from a massive innovation push, a willingness to
Sears is in a very competitive retail environment. JC Penny and Sears have been competitors for many years. They are both currently targeting the teen market to buy their jeans by gearing their advertising toward them. While both JC Penney’s and Sears are considered department stores, Wal-Mart is considered a variety store and this is what sets them apart. Wal-Mart’s marketing strategy focus’s on low prices with a low scale approach, whereas Sears markets toward quality merchandise for women, as well as other quality merchandise. One of the newest campaign slogans ”come see the softer side of Sears” is a marketing strategy that was meant to draw women and has been very successful.
(2) Competitive changes in discount retailing were reflected in Wal-Mart’s decision to change its marketing slogan from “Always the low price--Always” to “Always low prices--Always”.
Wal-Mart’s persuasive tactics are definitely something that a lot of consumers, suppliers, and the general public think might be on the un-ethical side. While it is the consumer that ultimately is asking for these price reductions and such good deals, it almost seems as if the price is never low enough for the big retail monster and who knows if it will ever stop.
With the exception of ROE, most financial ratios and even absolute values bear testimony to Wal-Mart’s recognition as the leader in the retailing industry. The reason behind Sears’s higher ROE can be explained by a comparison of the 3 ratios that constitute the ratio known as DuPont identity that is profit margin, asset turnover and equity multiplier. While both firms had similar profit margins, Wal-Mart’s asset turnover was 2.8 compared to Sears’ 1.1 due to the firm’s effective utilization of assets and lease agreements to facilitate revenue generation.
Wal-Mart is the world's largest retail and departmental store chain. Having business operations in 27 countries with 69 different brand names, Wal-Mart is able to serve a huge number of customers per day. Wal-Mart is the fastest growing and the most successful retail brand in the world. The factors which make it the strongest brand in its industry include large customer base, sound financial strength, strong brand image, and huge supply chain network. Wal-Mart has certain weaknesses in its operations and business setup like low acceptability of certain products, high employee turnover, and less recognition of newly introduced brands. These weaknesses can be overcome by availing attractive opportunities from the market and investing more in the most profitable areas. Wal-Mart faces the biggest threat from its competitors and ever-changing customer preferences.
Wal-Mart is a world-wide active American retail trade company and currently the largest retail company in the world. Beginning in 1962, Wal-Mart has made the transition from a small firm in Arkansas to the largest employer with 3, 800 store units in the United States with record revenues today. But nevertheless, since Wal-Mart launched its online branch, it had to suffer from substantial setbacks from competitors such as Amazon.com or Ebay.
Walmart has had a long-standing presence in America society since the middle of the 20th century, seen as a place to get everything done, Walmart has become a fixation in our
When it comes to retail giants, Walmart stands tallest by a very large margin. In fact, Walmart’s retail sales more than tripled their closest competitor in 2015 (“STORES top retailers 2016,” 2016). Walmart has consistently used the same marketing strategy for many years. Their “Everyday Low Price” strategy is a well-known advertisement moniker and has driven repeat sales to customers for years (Ferguson, 2015). Another familiar sign
The 2 firms had a similar profit margin, major difference exists in COGS and SG&A, while Sears had a higher gross profit margin, high expense (21.17%) is driving the total cost and expense of the two firms to the same level-about 95%.
 Illustrates low prices and at the same time, not portray a cheap image to consumer.
Since 1962 and the beginning of the discount retailer market Wal-Mart has been ahead of the retail game. By 1967 there were 24 Wal-Marts that had grossed 12.6 million dollars. In just 7 years Wal-mart had spread into 9 states. By 1979 Wal-Mart was the fastest store to reach a billion dollars in sales. In 2005 Wal-Mart has 3,800 domestic stores along with 3,800 stores internationally, and had made over 312 billion dollars. As you can see the Wal-Mart empire has grown monumentally. To move into this segment of the market would be tough.
Wal-Mart and Target are both great retail stores to go and find a good bang for your buck shopping experience. After researching both companies, it appears they have the same ideas as a mission, saving the customer money. Wal-Mart Mission statement reads;
In 2011, Walmart's inventory turnover was 11.62 and the industry average was 10.4(stock-analysis). It's fixed asset turnover was 3.88 and the industry average was 3.56, and it's total asset turnover was 2.34 and the industry average was 1.56(Stock-analysis). The values calculated for all three ratios mentioned all resulted in substantially different values in a positive way (Appendix B). Historically the values of each ratio have maintained relatively constant, which in this case is not a weakness. Asset management is a strength for Walmart, which ultimately means that they are maintaining their assets in the correct manner in order to have an efficient way of business.