Segment 1 – Wal-Mart’s Revolutionary Power 1. How much was Wal-Mart’s sales figure quoted in the beginning of the segment? Wal-Mart recorded $256 Billion in sales and is the first company in the world to record such a figure on sales. 2. How many Americans stream into Wal-Mart on a weekly basis?
This was figured out by taking the number of grain produced by each employee, 10 tons, then divided by how many of cars that could be made by the same employee, 4. 10/4 = 2.5. Cost of grain would be the inverted equation, cars per year divided by tons of grain each year, or 4/10 = .4. a) Which country has an absolute advantage of producing cars and grain? Unfortunately, both Japan and U.S. don’t have an absolute advantage when making care, both countries approximately make 400 million cars a year. The US is the leader of the two countries with producing grain, we have a larger output per full time worker.
The number of trucks serving for distribution centers exceeds 3,500. These truck fleets are capable of finishing goods shipment from distribution centers to stores within two days and replenishing inventory every week The company uses the retail last-in, first-out (LIFO) method for the Wal-Mart stores segment. They use the cost LIFO for the Sam’s Club segment and another cost method for the international segment. During the 1999 fiscal year, approximately 84% of the Wal-Mart discount stores’ and Supercenters’ purchases were shipped from Wal-Mart’s 43 distribution centres, nine of which are grocery distribution centres and two of which are import distribution centres. The balance of merchandise purchased was shipped directly to the stores from
“Starbucks Global Take-Over of China” Starbucks changed the concept of drinking coffee; no longer is coffee just a product it is a lifestyle. Through making coffee drinking an experience Starbucks was able to move a domestic product from a simple coffee shop in Seattle Washington to a renowned product globally. Starbucks has come a long way since its first beginnings in 1971. Today, it’s the world’s largest coffee retailer, with over 19,000 locations in more than 60 countries. What sets Starbucks a part within in the company is that the staff, which are known as partners, are responsible for the sale of over 2 billion cups of coffee every year and create what is known as, “the Starbucks Experience”(Krikorian).
The MPB is higher than the MSB and the difference between the two is the negative externality. From a social point of view the MSC should be equal to the MSB (decrease in consumption), reaching an optimum equilibrium in which there is no negative externalities. Moreover we can see the welfare loss provoked by the overconsumption of fast food. The government wants to solve this market failure situation by applying an Ad valorem indirect tax of a 2% on junk food that would provoke a decrease in the consumption. The tax is an extra cost for suppliers and so they will decide to decrease the amount of junk food supplied moving the supply curve to the left.
Individual vignette Many multinational companies seek to enter the Chinese market with the objectives of significant increase in profit and a large expansion of the market share. However it is not all of the powerful corporations that succeed in the Chinese market and there can be many reasons for this outcome. To name a few of the big corporations who have struggled in China we see Mattel, eBay and Home Depot. In the following vignette I will discuss the business situation of Home Depot an why it failed to enter China. The failure of Home depot in the Chinese market In 2006, Home Depot Inc., the world 's largest home improvement chain, entered the Chinese market with 12 stores situated around the big cites of China.
There were two joint venture agreements made between China, Korea, and Wal-Mart. (Walmartfacts.com, 2006) In the mid-2000’s “Wal-Mart Stores, Inc. closed out the year with $312.4 billion in sales, while expanding to more than 6,200 facilities around the world, including 3,800 stores in the United States, along with 3,800 international units. Around the globe, we now have a strong presence in Argentina, Brazil, Canada, China, Costa Rica, El Salvador, Germany, Guatemala, Honduras, Japan, Mexico, Nicaragua, Puerto Rico, South Korea, and the United Kingdom.” (Walmartfacts.com,
It is worth noting that the FDI distribution in China has been largely lopsided and this can be attributed to the imperfect and primitive legal regime . Additionally, the main reasons have been that some investors, especially from the US and MNCs countries, are a bit laidback due to concerns about the security and stability of their investments. Moreover, the Chinese from overseas (especially those living in Hong Kong) may employ linguistic as well as cultural links to keep contractual costs and information at bay. The overseas Chinese are known to contribute smaller amount of FDI compared to the non-ethnic ones. This can be attributed to the fact that the overseas Chinese have medium to small-sized firms.
The store layouts reflected the typical sizes of apartments and also included a balcony. Another big problem IKEA faced was that its prices which were considered low in Europe and North America, were considered high than in China. Prices of furniture made by local stores were lower as they had access to cheaper labour and raw materials, and because their design costs were close to zero. Ikea solved this by builting a number of factories in China and increased local sourcing of materials.Today globally 30 per cent of IKEA's range comes from China while about 65 per cent of the volume sales in the country come from local sourcing. These local factories also resolved the problem of high import taxes in