Evaluating Action Controls in Walmart’s Business Operations

The assignment delves into Walmart’s extensive action control measures which encompass legal requirements, information confidentiality, resource management, and conflict of interest prevention among employees. While effective in certain operational aspects such as delivery times and stock pick requirements, the controls appear less stringent on general employee conduct and customer service. The analysis will explore how these systems influence corporate culture and whether stronger reliance on cultural and personal controls might enhance their effectiveness. Additionally, the assignment encourages students to consider improvements that could balance rigorous action control with a more flexible approach to employee behavior management.

Running head: WALMART: MANAGEMENT CONTROL SYSTEM 1
Walmart: Management Control System
Name
Institution

WALMART: MANAGEMENT CONTROL SYSTEM 2
WALMART: MANAGEMENT CONTROL SYSTEM
Financial Performance
Walmart stores online sales growth has contracted to 12 percent for the fiscal year 2016
subsequent to twenty-two growth recorded in fiscal year 2015. However, the ecommerce
performance for Walmart remains impressive. A 14 to 15 billion dollar online Walmart business
is more than respectable, particularly where it augments a brick-and-mortar business. The brick-
and-mortar generates about 470 billion dollars in annual sales. Walmart stock market is
unfriendly as the investors negates the long-run benefits if the organization’s ecommerce
investment. Due to underperforming and persistent loses, Walmart closed 269 stores globally
alongside 154 stores in the United States.
The company has reported worse sales in 35 years since 1980. The sales have dropped
0.70% in revenue to about 482.10 billion dollars due strong dollar that could have Walmart sales
revenue increasing 2.8%. Walmart’s ecommerce sales growth has slowed for 5 quarters in a row
to 8% in final three months of fiscal 2016. The sales growth outlook has decreased to flat from
three to four percent worse than expected impact from fluctuations in currency and revenue loss
from stores closure. Walmart share has slid 3.10% to 64.09%.
Walmart’s retail sales market share has dropped 0.7% from 9.9% to 9.2% five years ago.
Net sales went up 2.5% to 81.5 billion dollars and traffic improved by 0.7%. In the fourth quarter
overal sales dropped 1.5% to 129.7 billion dollars which would surged 2.20% in absence of
currency fluctuations. Walmart’s net income for 3 months dropped 7.90% to 4.57 billion dollars.
Sales in the UK fell 5.80% in most recent quarter six-times in a row drop. Walmart is reducing
cost and investment 1.50 billion dollars over the 4 years. Walmart earned 446.980 billion dollars

WALMART: MANAGEMENT CONTROL SYSTEM 3
in profit in year 2014, a 6.0% surge in sales in year 2013 based on its financial statement (2011
to 2013).
The most dividend surge was reported in 2015 February where 2.0% surge was approved
by its Board of Directors equivalent to a surge of 0.49 cent a share. For the previous 5 years,
Walmart US reported 328.70 billion dollar sales in top line revenue. Walmart is presently valued
at 15.1 times forward earnings with real trade of 69.480 a share. Walmart has 11, 000 million
stock authorized alongside 3780 million outstanding traded in stock exchange markets. The
operating income of the Company surged to 32585 million dollars in 2014 from 28545 million
dollars in 2012.
Over the past three years, the revenue of Walmart has surged 39,736 dollars. The gross
surge in revenue has been 9.10%. The Walmart’s cost of sale surged from 304657 million dollars
to 335127 million dollars. In 2014, Walmart recorded a 2.0% surge in assets over three years.
Walmart’s stock comprised 78% of total assets. Property and equipment stood at $170 indicating
a good surge over past 3 years because of new retail stores being built.
Walmart liquidity ratios as at Jan 31, 2015, Jan 31, 2014 and Jan 31, 2013; current ratio
0.970, 0.880 and 0.830. Walmart’s quick ratio showed 0.24; 020; and 0.20 and cash ration
showed 0.140; 0.10 and 0.110. These ration indicate good direction. Walmart’s liquidity ratio
preset ratio surged from 2013 to 2014 as well as from 2014 to 2015. The quick ratio dropped
though improved from 2014 through 2015 exceeding 2013’s ratio.
Potential Problems Facing Walmart
Walmart is facing stiff competition against Amazon in e-commerce while coping with the
effect of the strong dollar as well as loss of share in the Walmart’s United Kingdom stores. This
has since the company report its 1st annual sale decline since at least year 1980. The revenue of

WALMART: MANAGEMENT CONTROL SYSTEM 4
Walmart declined by 0.7% to 482.10 billion dollars for the year. This was mainly triggered by
the strong dollar, without the effect of which its sales would have surged 2.80%. The decline, the
Walmart’s worst in at least thirty-five years based the data from S&P Capital IQ. This plunged
came as the global hugest retailer stated that ecommerce sales growth slowed for fifth quarter in
a row to 8% in the final 3 months of year.
Walmart has blamed the Chinese, Brazilian and UK markets deceleration. Amazon
quarterly growth by contrast stood at 26% despite the Walmart’s much huger base. The company
has cut down its sales growth outlook for this fiscal year to flat from between three to four
percent manifesting the Walmart’s worse than anticipated influence from the fluctuations in
currency as well as revenue loss from its closure of stores. The Amazon share slid 3.1% to
64.090% dollars. The firm is facing intensifying competition amid the fast shifts in the manner
consumer undertake their shopping. The market share of Walmart has slipped to 9.2% from 9.9%
five years ago.
Walmart remains on the back foot based on rethinking its business model for this novel
landscape. This has negatively impacted Walmart because the firm has not played far harder in
online space and hence it cannot retain its retail crown in the long run. The stiff competition has
turned Walmart American stores unattractive and unappealing to shoppers. This is the
competition come in all types and from all angles including online or discount stores such as
Dollar General as well as Kroger, higher end store (Merchant & Van, 2012). This has seen
Walmart’s sales figure blunt by deflation in some groceries, like meat and the impact from lower
petrol process. This has seen Walmart spent a lot of money to compete with Amazon online and
integrate ecommerce into its stores, like Walmart’s mobile pay app as well as click-and-collect

WALMART: MANAGEMENT CONTROL SYSTEM 5
pick-up service. The company is also using a lot of cash to expand its online grocery service to
additional parts of the United States.
The organization is facing what is described as a ‘perfect storm’ in regards to its top-line
growth which has hurt its sales substantially. The Walmart’s core customer are really struggling
with flat levels of income. The saving from lower prices of fuels are never translating into
increased retail expenditure (Davila, 2005). The business is trapped under intense pressure from
deflation in core product categories including food alongside the impacts of strong overseas
dollars. This is occasioned with the inability of lower-to-middle-income consumer’s health to
improve leaving Walmart to face a prolonged macroeconomic headwinds in the United States.
Action Control
The company focuses it action control on 4 vast areas including company asset,
information and reputation; operational planning, sales and customers; and regulation and laws.
Walmart undertakes to acknowledge each regulatory requirement initially and highlight them
precisely. The firm ensures strict adherence to the requirement compliance.
Walmart puts a mandatory approval for each stakeholder who wants to trade in its shares
as an evidence of strict compliance with Company Act and US SEC rules. All Walmart
operational procedures follows detailed pre-action reviews while all its financial objectives, key
corporate actions as well as capital spending must be reviewed and subsequent approved by
Walmart board prior to execution (Schaeck & Cihák, 2014).
Walmart mandates the Board Committee to acknowledge both actions as desirable or
undesirable to come up with reinforcement as well as rules for such classified actions. Walmart’s
staff and directors must read, consent and sign significant documents including Code of Conduct.
Walmart seeks to establish a culture of customer-friendly and further successful application of

WALMART: MANAGEMENT CONTROL SYSTEM 6
action accountability to this culture. Walmart has barred its staff from drinking alcohol at
workplace. The company has documented and disseminated precise and straightforward
instructions on delivery time, price display as well as store pick up time. The firm strictly follow
its employees to ensure strict adherence to such instructions while keeping their unquestionable
and unwavering promises to both potential and existing customer-based.
The personal information regarding clients are never used outside the firm and only
serves the intended purpose and those employees that violates such instructions must show
cause. No asset and services of Walmart are allowed to be used by employees for their self-
interest. All employees and executive are prohibited from conflict of interest and commercial
interest in Walmart rivals must be disclosed promptly (Korhonen, Laine & Martinsuo, 2014).
The confidentiality of Walmart is of paramount among the employees. An employee of
Walmart must receive an advanced approval in order to receive any form of loan, gift or
substantial benefit in the company. Walmart’s part-time staff must never engage in any form of
conflict of interest while working in the company and always ensure that solely the objective and
strategic goals of the organization flourish.
Action Control Side Effect
The Action Control of Walmart has captured a huge scope of its business hence filling
the disparities in other firm’s controls. Walmart has precisely defined its desired actions in
various operational aspects including delivery time, stock pick time and requirements for
disclosure. The firms often undertake effective review of the staff behavior and conduct against
the signed Code of Conduct and promises made to customers as well as confidentially and
disclosure requirements in terms of conflict of interests.

WALMART: MANAGEMENT CONTROL SYSTEM 7
Nevertheless, Walmart still exercise relative loose action controls on the general conduct
and behavior of employees and this sometimes stretches to customers’ services rather than
increasing dependence being put on both cultural and personal controls (Fiordelisi & Mare,
2014). Walmart exercise stronger action controls in regards to legal requirements as well as
information, reputation, and resources of Walmart apart from particular invisible stock controls.

WALMART: MANAGEMENT CONTROL SYSTEM 8
References
Davila, T. (2005). An exploratory study on the emergence of management control systems:
formalizing human resources in small growing firms. Accounting, Organizations and
Society, 30(3), 223-248.
Fiordelisi, F., & Mare, D. S. (2014). Competition and financial stability in European cooperative
banks. Journal of International Money and Finance, 45, 1-16.
Korhonen, T., Laine, T., & Martinsuo, M. (2014). Management control of project portfolio
uncertainty: A managerial role perspective. Project Management Journal, 45(1), 21-37.
Merchant, K.A. & Van der Stede, W.A. (2012) Management Control Systems, 3rd edition,
Prentice-Hall.
Schaeck, K., & Cihák, M. (2014). Competition, efficiency, and stability in banking. Financial
Management, 43(1), 215-241.