Wal-Mart is a large retail company that has been among the leading companies in terms of revenue and sales worldwide. It deals with the operation of grocery stores, hypermarkets and discount stores department. Over the years the company has been affected by factors of production such as land, labor, capital, machinery and raw material. These factors of production are either variable costs where they change depending on output or fixed costs where they remain unchanged regardless of production output.
Land and machinery are the most common fixed factors of production in Walmart. Walmart stores and outlets are located in strategic geographical positions. This is to ensure efficient distributions of orders from the stores to the consumers. It has also revolutionized machines such as the Auto- C self- driving floor scrubber that will reduce costs and advance robots (Rick T.Wilking, 2018). Box unloaders and the automated shelf scanners have been introduced in their efforts to cut labor costs. According to Walmart executives, machines are essential since they allow workers to focus more on creativity and innovation and also help in achieving customer satisfaction.
The popular variable costs in Walmart is the labor and the availability of raw materials. According to the company costs of labor have been a bigger liability since the company requires over two million employees who operate on more than ten thousand stores in the world. It has also reduced inflation and promoted employee productivity in most regions. Walmart has also partnered with suppliers of its raw materials to increase its levels of output. This has been as a result of decreased raw materials and unhealthy relationships between the company and its suppliers (Krieg, 2013)
Increased labor cost is one of the factors that have influenced the use of machinery in Walmart, robots are used to monitor inventories, clean floors, unload trucks and offering online delivery services. The company also operates on a large scale such that some work would be very tiresome and hectic to be done by a human, it has received critics from most labor unions accusing them of offering low wages and harsh working conditions. Due to this Walmart has also employed unskilled professions as a result of a limited number of employees especially in the United States.
Developed technology and innovation have also increased the use of machinery in the company. These factors have been ranked as the top contributing factors leading to long term productivity and economically improvements of most organizations(M Giorcelli, 2018). According to the theory of technological determinism, any change in technology leads to the social development of the organization. (Vintar, 2014).It also argues that new technologies transform society in all aspects, institutional, social and individual levels. Technology in the organization is the leading factor that directs the organizational transformations and their elements.
Competition by other firms has led to the company increasing more land for their production. Walmart has built more stores and warehouses to increase the accessibility of the transfer of goods to its customers. The company has faced stiff competition from Amazon, the leading online company in the world. Both Amazon and Wal-Mart have delivery services but amazon is more successful as deliveries are made in wide coverage. Walmart Company is putting more effort into increasing its delivery services to counteract Amazon.
Despite there being a high labor cost in production, labor is an essential factor in production. Increased qualified personnel have increased the labor used in Walmart production (Yoffie & Baldwin, 2017). The company has also helped in improving the skills of women and minorities in societies to promote gender equality in its works place. Increased salaries have also increased the level of labor in the company.
The good relationship between suppliers and Walmart has increased the level of raw materials used in production. This good relationship has been attained through a partnership with the local industries, offering tenders and empowerment of the citizens in different countries. The company has also engaged in environmental sustainability policies which have played a vital role in increasing the level of raw materials.
There has been a tremendous rise in the revenue of Walmart from 2012 to 2017. Revenue increased to $446.5 billion in 2012 by a rise of 5.8% from 2011. It increased to $468.7 billons in 2013, a 5% increase. In 2014 the revenue rose to $476.3billion a rise of 1.6 %.In 2015 the revenue was approximated to be $486 billion and the increase has risen to$ 514.4 billion in 2019. This increase is a result of low production costs and better management. However, the company has some areas to improve when making production decisions.
The company has suffered from a bad reputation due to increased court cases and allegations about the poor working conditions of its employees. The company should work hard to rebuild the company’s image and name that has been tarnished multiple times. A bad reputation has made the company lose a substantial amount of customers resulting in a reduction in revenue. The company should reward employees according to the work done. Gender equality should be observed and the employee’s welfare should be managed.
The company should maintain friendly relationships between their suppliers. Several complaints accusing Walmart of a bad relationship with its suppliers have also affected the progress of the business. Machines introduced in the company should be tested before introduced to the market. Some machines such as the Auto-C self-driving floor scrubber have faced numerous breakdown, demanded retraining sessions and taken different routes from the programmed ones(Rick. T. Wilking (2018). These changes would help the company improve its revenue and beat the competition in the market.
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Yoffie, D., & Baldwin, E. (2017). Wal-Mart update 2017: Culture, Institutions, competition and the Limits of Globalization. American Politics and Society, 35(1), 1-18. Doi: 10.3167/gps.2017.350101