Running head: ECONOMIC ANALYSIS 1

Economic Analysis of Walmart

Student’s Name

Institution

Economic Analysis of WalMart

ECONOMIC ANALYSIS 2

WalMart is a multinational retail corporation that mainly operates hypermarkets, grocery

stores and discount department. The company was founded by Sam Walton in 1962 but

incorporated later in 1969. Its headquarters are in Arkansas, U.S. Today, WalMart has over

11,000 stores and in 2014 it was the world’s largest company by revenue. The market value has a

approximately $180,879M and sales volume of $485.65B. The company makes over four times

its nearest competitors Carrefour. Additionally, Wal-Mart is among the largest employers in the

U.S.

Wal-Mart’s dominancy in U.S signals trends in aggregate economic conditions and high

sales trend is a key indicator of its performance and would help investors understand future

trends. Similarly, the company has influence on various macroeconomic indicators such as GDP,

interest rates, and inflation. GDP is the total output of products and is restricted by country’s

borders. GDP Consumption makes up a large percentage of GDP which entails the sale made by

Wal-Mart. Fundamentally, if retail sales take a hit in the market, then GDP growth is directly

influenced (Basker, 2005a). However, Wal-Mart has been able to prevail in any type of

environment (Gujarati, Damodar, and Porter (2006). On the other side, Inflation is general rise in

prices of products. Inflation is another indicator of the economic performance of the Retail

Corporation. Increased net sales of the company could be due to inflation other than increased

performance by the companies and as a result, providing misleading information to investors. On

the other hand, sales of the WalMart can be influence interest rates because in the event of

increased rates, people tend to invest and as such end up purchasing few goods from the retail

shops.

Early research on the corporation show that its success emanates from good firm-level

indicators including effective leverage, efficiency, inventory management as well as cost control
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technique (Hays, 2003). Further, the company has received more attention because of its impact

on the spectra of economic factors such as employment, GDP, inflation, interest rate, general

retail business, wages and prices, and local tax revenues among others.

Time series

(In Millions except year and interest rate)

Time Net sales GDP (nominal) interest rate (%)

2004 256,329 47,471 5.39

2005 285,221 50,554 12.85

2006 311,573 53,597 19.78

2007 345,770 56,311 20.09

2008 374,526 57,748 7.72

2009 378,720 58,467 0.72

2010 367,674 59,311 0.43

2011 421, 841 60,458 0.05

2012 446,950 60,111 0.01

2013 469,162 57,006 0.00

2014 476,294 55,187 0.00

Today, Wal-Mart has contributed to the economy of U.S. The company has created

employment s well as producing retail goods to boost the economy. Similarly, the economy of

U.S under which Wal-Mart operates is adopts more of the Keynesian economical theories. In

most cases, the authorities put policies in place to control prices as well as wages. Federal
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government stimulates most of the activities particularly affecting the state at large without

considering the effect the retailers are basis of establishing the economy.

Wal-Mart has faced several changes with monetary and fiscal policy posing major

drawbacks. Generally, fiscal policies have a profound effect on all, especially discount retailers.

They policies put in place do not usually consider the retailers and this has an impact on Wal-

Mart as it operates on the retailer basis. Although it has secured a greater share of the market,

Wal-Mart has to deals with unavoidable policies and market issues such as dumping and

fluctuation of currencies. The company’s effective respond to the casualties has made influencer

of the aggregate U.S economy. It has set high standards, and dampens overall employment levels

in U.S.

References
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Basker, E. 2005a. Job Creation or Destruction? Labor Market Effects of Wal-Mart Expansion.

Review of Economics and Statistics, 87(1): 174-183.

Hays, C. 2003. The Wal-Mart Way Becomes Topic A in Business Schools. New York Times

(July 27): C.10.

Gujarati, Damodar, N., and Dawn C, Porter (2006). Essentials of Econometrics. 4th ed. New

York, McGraw-Hill Irwin.