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Business Research Study of Wal-Mart’s Profitability Essay Sample

Business Research Study of Wal-Mart’s Profitability Pages
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When first quarter results came in for Wal-Mart, the new CEO was not too happy and quickly recognized the challenges he would face as he strategized to increase sales. The results showed that profits decreased by 5% and that the future months were not looking good for the organization. Wal-Mart is the world’s largest retailer and has witnessed its fifth straight quarterly decline in U.S. sales (Finance Post News and Publication, 2013). The organization speaks on low-income American customers still struggling to make ends meet and the effect it can have on sales. Purpose of the Study

The organization has seen a steady decline in sales at particular locations and wants to determine how the geographic location of the stores correlates with the organization’s profitability. The CEO’s objective for the first quarter of 2015 is to get the organization’s profits back on track. The internal research team will complete a research study to determine if the geographic location is a factor in the consistent decrease of sales. Research Question

The research question is what is the correlation between the geographic location and profitability of the Walmart stores? Hypotheses
HO: There is no correlation between store geographic location (IV) and store profitability (DV). HA: There is a correlation between store geographic location (IV) and store profitability (DV).

Significance of the Study
This study is significant because it provides empirical evidence as to the relationship between store location and store profitability, as well as the most important location factor in that relationship. If the study’s hypotheses are shown to be true, the results can be used by similar companies to gauge their current profitability with respect to the store location. If necessary, they could implement similar improvements to increase the profit potential. In addition, this information could be used as a basis for investments as well as a way to increase the awareness of the importance of location to the Wal-Mart business worldwide. Conclusion

Over the next few weeks, the research team will gather statistical data, information from multiple sources, perform statistical calculations, and interpret the data gathered to present their findings to the CEO. CHAPTER TWO: REVIEW OF THE LITERATURE

Introduction
The purpose of this research is to solve for the decline in sales and determine what the correlation is between the geographic location and the profitability of the organization. The organization can determine the value of each location that is causing the decline in sales and take the necessary measures to course correct its previous decisions (Bonanno & Goetz, 2012). Wal-Mart Strategy Approach

Wal-Mart has different strategies when deciding on new locations. Wal-Mart usually selects locations close to each other to economize on shipping product. Locations in proximity also benefit Wal-Mart when opening new locations because one may transfer experienced managers and other personnel if needed. Wal-Mart plans on expanding by adding 120 to 150 “Neighborhood Markets,” because of the strong returns (Wal-Mart, 2014). These locations produce double digits in sales annually each year. Wal-Mart also plans on opening 115 supermarkets next year to increase profitability (Wal-Mart, 2014).

When planning future site locations is will be important to choose a site that offers optimum coverage and presence, the organization will want to consider the consumer and compile data on the competitors in the area. The organization will complete a location analysis and consider the convenience of the customer and the impact. The organization will develop a strategic communications strategy (Pitney Bowes, n.d.). Geographic Location

There is enough evidence to conclude that geographic location has an important effect on business performance. It is not as fair to say that it is the most important factor because that statement will diminish the importance of other factors. Commercial chains such as Starbucks, conduct studies of how location affects performance. They use the data and analysis to their favor, by adjusting their strategy. This information gave them a different view and another perspective to their business (Wheatley, 2013). Geographic location can result in different benefits to the business, such as market pooling, input sharing, and knowledge spillovers. It can also come with some negative points, like more intense competition, congestion, pollution, and others (Nguyen, 2011). Alternative Viewpoints

There are different types of alternative viewpoints, when determining the type of environment to market with Wal-Mart. One would need to be more sensitive to member’s needs and customer’s needs. Any announcement of Wal-Mart’s arrival immediately divides the community residents because they feel that their presence creates problems. Consumers decide whether to support the new competition or support their current market (Bonanno & Goetz, 2012). Conclusion

This chapter presented relevant literature on Wal-Mart’s strategy approach, research done on geographic location by another organization and alternative viewpoints of Wal-Mart’s locations.

CHAPTER THREE: SAMPLING AND DATA COLLECTION PLAN
Introduction
In order to provide a sound and valid analysis to the CEO, the research team had to compile a data set that would help to diagram the concerns of the organization. Descriptive statistics, measures of central tendency and measures of dispersion will be performed against the data, and the results will be presented to the CEO. Research Design

The research methodology used for this sample is quantitative, using the data mining element. The internal research team has selected store locations to collect statistical data. The team will use the systematic method of sampling and gather sales from one month out of each quarter for 2014. The purpose of this research is to determine how the geographic location affects the profitability for Wal-Mart. Selection of Subjects

The internal research team has chosen the Mid-Atlantic Region for store selection. This region is comprised of eight states: Delaware, Washington D.C., Maryland, New Jersey, New York, Pennsylvania, Virginia, and West Virginia. A total of four stores from each state were chosen. One store from each part of town; the north side, east end, south side, and west end, based on the smallest store in circumference. The internal research team will gather statistical date for 32 store locations in the Mid-Atlantic Region (Appendix A). (My411.com, n.d.) and (Yellowpages, 2014).

Instrumentation
Wal-Mart used the data mining as the instrument to complete the research in eight different states. This method was conducted to know which demographic to target for new locations. Walmart used this method to transform its supplier relations and captures point-of-sale transactions from the eight different states. Data mining software also captures and analyzes patterns and relationships in the transaction database on open-ended questionnaires. Methodological Assumptions

The methodological assumption proposed to set-up based on the business needs. The questions asked in the survey will support the goal set by Wal-Mart. Once established, the company will be prioritized with the most important data elements. The research conducted has credibility and fits the theories around the testing. The questions are considered relevant and coherent. The methodology assumption would be considered valid internally and externally in this research. Procedures

The Business Research procedure will consist of evaluating the performance of the selected stores in specifics months and surveying customers from the store database to gain more information from their needs and interests and use them to our advantage. The performance will be evaluated based on sales and employee satisfaction. Once collected, the data will be evaluated by an internal research team. Data Collection and Analysis

The data collected will be analyzed by an internal research team. For the statistical analysis, the research team will use Esri’s ArcGIS. It is a system that helps use spatial information to perform deep analysis, gain a greater understanding of the data, and make more informed decisions. Pearson’s product moment correlation will be used to test the hypotheses.

Conclusion
This chapter addressed the sampling and data collection plan for the research team. Research design and subject selection were discoursed. The procedures, instrumentation, methodological assumptions, and analysis were also discussed.

CHAPTER FOUR: DATA ANALYSIS
Introduction
The below data sets will describe and summarize the research that is being performed. Store Location
Central Tendency: Mean= 1
Dispersion: Standard Deviation= 1
Number: Count= 32
Minimum/Maximum: 1/1
Confidence Interval: n/a

Profitability
Central Tendency: Mean= $470,648
Dispersion: Standard Deviation= $238,648.54
Number: Count= 128
Minimum/Maximum: $100,000/$900,000
Confidence Interval: (429,304.25, 511,991.75)

See the histogram in Appendix A, and descriptive statistics in Appendix B. A scatter plot is in Appendix C.

Descriptive Statistics Interpretation
Store Location
A total of 8 locations from the Mid-Atlantic Region that were comprised of 4 locations per state, for a total of 32 stores were chosen for the research study. Each store is treated as an individual location with an average mean of 1, standard deviation of 1, min/max of 1, with no confidence interval. Profitability

The data was significantly skewed. Thirty-two locations were selected based on data mining that yielded 128 total sales numbers for all locations. The average mean in profits was $470,648, with a standard deviation of $238,648.54. The minimum/maximum of sales for the months was between $100,000 and $900,000. The confidence intervals for the total amount of sales for each month chosen were $429,304.25 and $511,991.75. The p-value was found to be less than 0.05. Conclusion

With the data having a significant skew and a p-value less than 0.05, the null hypothesis of whether or not there is a correlation between store geographic location and store profitability, would have to be rejected. CHAPTER FIVE: FINDINGS

Introduction
To summarize the findings of the business research study, one needs to compare the results to the research question and hypotheses that were tested. After extensive research was conduct on the sample of Wal-Mart stores used for the study, it was found that the correlation between location and profitability of Wal-Mart stores was negligible. One would then, accept the null hypothesis and reject the alternate hypothesis. In the remainder of this research study, the findings, observations, and recommendations will be discussed. Findings

Based on the information gathered during our research is safe to say that the profitability of the store does not depend on its geographic location. It is recommended that before opening a store in a certain location a research team conducts a study where they can gather information about that area and the behavior of potential customers so they can offer them what they want and the store can be profitable. In conclusion, if the research is done effectively before settling a store location the profitability of the store would not be affected suggesting that there will be no relation between the success of the store and its geographic location. Recommendations/Observations

Since it has been determined that the geographic location and profitability does not have a correlation, in order to increase sales for 2015 the CEO will want to conduct surveys in the locations where sales are down. Conducting the surveys and analyzing the results will help the research team determine what changes should be made to increase revenue and the profitability of those locations.

Research Challenges/Ways to Minimize/Suggestions for Future Research
There were many challenges our team faced in this study. Some of the challenges were choosing a topic, deciding on which feedback to use after the instructor gave our individual paper back, and staying on the same topic throughout the process. Another issue was during the first couple of weeks our team experience had a team member change and added a new member during the next week. The ways to minimize the challenges is having a leader each week to help with keeping everyone on the same path. The suggestion for future research is having everyone to submit different websites to help with the research. Also, to have everyone help in areas that other team member maybe having trouble in when completing his or her part. One need to get a better clarification of the previous week feedback to know which direction to do for the next step of the research. Conclusion

References
About.com. (2014). Walmart Locations Near Washington DC. Retrieved from http://dc.about.com/od/shopping/a/Walmart-Locations-Near-Washington-DC.htm Bonanno, A. & Goetz, S. (2012). Walmart and Local Economic Development: A Survey, SAGE

Journals, Vol 26. Retrieved from
http://edq.sagepub.com.ezproxy.apollolibrary.com/content/26/4/285. Finance Post News and Publications. (2014) Wal-Mart (NYSE:WMT) First Quarter Profits Plunge 5%, Issues Weak Outlook. Retrieved from http://usfinancepost.com/wal-mart-nysewmt-first-quarter-profits-plunge-5-issues-weak-outlook-18660.html MyStore411.com. (n.d.). Retrieved from

http://dc.about.com/od/shopping/a/Walmart-LocationsNear-Washington-DC.htm MyStore411.com. (n.d.) Retrieved fromhttp://www.mystore411.com/store/list_state/3/new%20jersey/walmart-store-locations MyStore411.com. (n.d). Retrieved fromhttp://www.mystore411.com/store/list_state/3/New%20York/Walmart-store-locations MyStore411.com. (n.d). Retrieved fromhttp://www.mystore411.com/store/list_state/3/PENNSYLVANIA/Walmart-storelocations MyStore411.com. (n.d.) Retrieved fromhttp://www.mystore411.com/store/list_state/3/West%20Virginia/Walmart-store-locations Nguyen, D. (2011). Geographic location, ownership and profitability of Washington log truckingcompanies. Retrieved fromhttp://www.fpti.wsu.edu/research/Documents/WA_log_trucking_paper_McCracken.pdf. PitneyBowes (n.d.) Retail Store Location Planning. Retrieved from http://www.pitneybowes.com/uk/industries/telecommunications/retail-store-location- planning.html

Wal-Mart (2014) Retrieved from
http://news.walmart.com/news-archive/2013/10/15/walmart-announces-118-to-128-billion-fy2015-global-capital-expenditure-plan Wheatley, M. (2013). Data-Driven Location Choices Drive Latest Starbucks Surge. Retrieved from http://data-informed.com/data-driven-location-choices-drive-latest-starbucks-surge/ Yellowpages. (2014). Richmond Walmart. Retrieved fromhttp://www.yellowpages.com/richmond-va/walmart Yellowpages. (2014). Arlington Walmart. Retrieved fromhttp://www.yellowpages.com/arlington-va/walmart

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