Running head WAL MART INVENTORY PROPOSAL 1 Wal Mart Inventory Proposal Team A QRB 501 February 27 2012 Terry Feravich WAL MART INVENTORY PROPOSAL 2 Wal Mart Inventory Proposal Wal Mart Inventory Proposal Wal Mart is the largest company in the world by revenue with sales in 2011 reaching 419 billion and employing 2 1 million people worldwide Wal Mart 2002 There are two divisions in Wal Mart The first division is Wal Mart U S The second division is Wal Mart International Wal Mart U S is the subject of this assignment Wal Mart U S operates more than 4 400 retail facilities including Wal Mart stores and Sam s Club warehouses Wal Mart certainly has systems in place for inventory control but those systems can and should be constantly be evaluated for continual improvement opportunities for both customer service and profitability Wal Mart organizational structure is the Griffin and Pustay 2005 say pattern of structural components and configurations used to manage the total organization p 392 This definition also can be summed up as a formal pattern of how people and jobs are grouped in an organization Wal Mart functions in a flat structure and is transiting from a highly centralized store operations model to a more decentralized store operations model With the recent transitions from a highly centralized structure to a more decentralized structure Wal Mart was able to restructure itself in such a way that gave more control and freedom to the stores which connect to the pulse of local communities adjusting and adapting to market changes in a highly flexible way to stay competitive and increase profits for the company However in recent years similar to Wal Mart McDonald s operates within the US and around the world in 109 different countries McDonald s relies on a flat structure and operates in a fully decentralized business model In comparison both businesses operate in a flat organizational structure Both organizations share similar strategies to promote management from within the company Both WAL MART INVENTORY PROPOSAL 3 organizations are involved with the community and hire management that boost the organizations ability to jointly collaborate in projects that improve the quality of life for the people of the community have corporate symbols and use advertising to establish successful brand images Contrast includes targeted audience Wal Mart targets low price consumers at every age McDonald s targets children teenage audiences Within franchising Wal Mart does not franchise thus keeping ownership of all assets while McDonald s leases its name and corporate resources out in franchise agreements taking ownership only in the real estate property This makes people suspect that the company has not been managed to the full capacity While Wal Mart markets to consumers of all ages with a focus objective to provide low prices McDonald s markets toward kids and teenage audiences McDonalds has also had a long history of using franchises as a part of its organizational structure to create the bulk of its revenue This allows McDonald s to lease out its name and resources to private contractors who manage local store chains while gaining a controlling stake in the underlying real estate Wal Mart does not franchise and owns the majority of its real estate assets outright Global Marketing Industry Issues 2008 When observing the sales marketing world of today there are a few names that stand out in both wide range of products and international growth One such organization is Wal Mart Through fierce determination and genius planning Wal Mart has become one of the leading marketing super stores of our time Competition with this big chain has proven a tough battle those who have not survived in the ring are K Mart and other small grocery stores without the needed extensive product selection to make the cut They were not able to manage and control WAL MART INVENTORY PROPOSAL 4 their inventories very well A few industry practices contributed to the problems in inventory faced by companies and their inventory control Wal Mart continues its growth and leader board standings through the inventive structure of its operations managers Focuses are made on how the aisles and merchandise are laid out as well as the way the products are sent to the stores Management over the shipping and receiving function has become aware of the distributors choice of parcel packaging Trying to eliminate consumer costs the company has been asking the distributors to be more sparing with paper and foam wrappings so as to cut back in unnecessary fields which has a direct effect on both the pricing for the wholesale buyers and indirectly on the consumer s fees K G 2008 say In November 2007 Wal Mart Stores released a top to bottom update of its sustainability efforts The overview looked at company initiatives ranging from improving operational efficiencies through packaging and waste reduction to reducing energy usage and promoting the idea to customers to upgrading employee health benefits p 1 While this may seem just a little matter in the scheme of things when thinking about the massive amount of products both coming and going from the company Wal Mart s operations managers are indeed saving the American economy dollar by dollar see Appendix A Wal Mart is said to be one of if not the leader in grocery as well as health and beauty items in the world WAL MART INVENTORY PROPOSAL 5 Wal Mart 2002 say Even though Wal Mart looks as if it s at a saturation point it has nearly 4 000 stores worldwide including 19 under a joint venture in China its prospects for continued growth are promising In September the company announced aggressive expansion plans for 2003 International operations are becoming very profitable Perhaps most important same store sales continue to show strong growth while nearly all its peers grow weaker and weaker p 1 With its expansion at a phenomenal rate every year Wal Mart has maintained its ability and stability within the consumer world Wal Mart writes While Wal Mart has more than 24 billion in debt it generates so much cash that it has no trouble meeting its obligations It has also consistently paid a small dividend its yield is 0 6 that has risen each year for the past decade Its beta is 1 14 And the company s financials are so straightforward that investors have complete trust in its number Wal Mart 2002 Although it has been a ring leader for quite some time Wal Mart is beginning to be impacted by steeper