Wal-Mart stores Inc. is an American multinational corporation in the retail industry operating a chain of department stores, grocery stores, and hypermarkets. It operates in 28 countries with an average of 11620 stores as at 31 December 2015. It operates as Wal-Mart in Canada and the US but adopts different names in various countries to associate with the locals (Dunnett, 2000, p.101). According to Fortune Global 500 List of 2014, Wal-Mart is the largest company in the world in terms of revenue and the largest private employer with approximately 2.2 million employees. The Samsung flat smart screen TV is among numerous products available at Wal-Mart stores retailing for about $200.
GDP growth rate indicates the rate at which the economy is growing, which also determines the performance of products in terms of the sales (Blanchard, 2006, p.75). The rate of inflation and unemployment also indicate the economic performance of the US economy with high rates signaling poor performance. Low economic performance means that the citizens have less disposable income to purchase goods hence a low rate of consumption. This translates into reduction of sales volume for Wal-Mart’s Samsung televisions on which the company relies on for source of income.
GDP growth rate in 2014 was 2.4%, 2.2% in 2013, and 2.5% in 2015 indicating a slow growth. Inflation rate was 0.1% in 2015, 1.6% in 2014, and 1.5% in 2013 indicating a decline hence an improvement in economic performance. Unemployment rate was at 5% in 2015, 6% in 2014, and 7% in 2013 indicating a steady decline in the number of unemployed individuals in the country. The figures indicate an economy that is improving at a slow but steady rate showing that the consumers have increasing disposable income and commodities become more affordable to them (Blanchard, 2006, p.85). This translates into larger sales volumes and revenue for businesses like Wal-Mart, which realizes repetitive sales. The sales revenue increased from $468651 million in 2012 to $485651 million in 2014, which made the suppliers encouraged to supply more and meet the rising demand for commodities.
Monetary and Fiscal Policies
The government has been on the forefront of regulating the supply of money in the economy to control inflation among other economic variables (Blanchard, 2006, p.144). The reducing energy prices and low unemployment rate have increased the level of disposable income hence the increase in taxation and cuts in government spending. Monetary policies keep changing with the government undertaking asset purchases and sales depending on the current economic situation. Policies that reduce the amount of disposable income have a negative impact on companies that rely on sales as a source of revenue. Wal-Mart for instance will realize a reduction in sales of its Samsung televisions during such a situation. The fall in demand lowers the supply level to avoid dilution of prices by the supply exceeding demand, which would result in losses for suppliers.
Macroeconomic Conditions and Company Performance
Profits and sales indicate the performance of a business by portraying the amount of revenue it collects through sale of its products and services (Dunnett, 2000, p.98). Wal-Mart indicates a steady growth in terms of sales revenue over the past 3 years showing that it receives more customers as days go by. Sales revenue in 2014 was $485651 million, $476294 million in 2013, and $468651 million in 2012. This could be due to their attractive deals and quality products that ensure customer satisfaction hence customer loyalty shown through repetitive purchases. Increasing profits over the past 3 years also indicates improving performance in the company’s goods and services.The profits in 2014 were $16182 million, $15918 million in 2013, and $15734 million in 2012.The improving GDP growth rate, reducing inflation, and unemployment rate translate into the company’s increasing profits and sales revenue. The current monetary and fiscal policies may threaten to lower the sales revenue and level of profits since they will reduce the amount of disposable income available to customers. This will make consumers less willing to spend on luxurious products such as the Samsung television, which will then make suppliers reconsider their production volumes. They will have to adjust their supply downwards to match the falling demand and wait for demand to rise in order for them to increase supply.
Macroeconomic factors have substantial influence on the performance of an individual business despite its operation capacity (Dunnett, 2000, p.123). Wal-Mart is a multinational company operating in the US among other markets and its sale of products such as the Samsung flat smart screen television depends on the economic environment. A positive and enabling environment promotes the performance of the company and vice versa.
Blanchard O. (2006). Macroeconomics. New York: Pearson Prentice Hall.
Dunnett A. (2000). The Macroeconomic Environment. London: Longman Publishers.