Case Study instructions 1. When Kuwait put pressure on the foreign oil companies in the late 1970s, what affect it had on the Global Oil market and politics? 2. Who….
Does Globalization pose great threat to Walmart with regard to its governance risk
Walmart, the retailing giant, began its first international initiative (in Mexico City) in 1991 as a joint venture. Since then, it expands its global business. Now Walmart international segment conducted business in 26 countries. Globalization pose great threat to Walmart with regard to its governance risk.
International sessions present an interesting set of governance dilemmas, that is, subsidiaries have the autonomy, but Walmart does not have enough governance. Ineffective oversight results in subsidiary governance failures—adverse impact on the revenue growth and company value. Firstly, Walmart ought to update its IT systems and its dashboard to reflect values and key measures including net sales, comparable store and club sales, Walmart <link is hidden> operating segment’s eCommerce sales, liabilities, expenses of certain categories, expense leverage, returns, capital and operating investments or expenditures of particular types and new store openings.
Second, extent to which an international session board could take decisions independent of parent board’s policy really matters. Walmart along with its international sessions have sound governance practices which can be cascaded consistently and effectively. Lastly, Top decision makers in Walmart can hire business consulting group for recommendations of governance. As a result, Walmart’s revenue will be improved. To be more specific, Walmart will need to invest 2% more expense in system development starting from year 2. By simulating the results, we can see a significant improvement in the 5% increase in revenue of global operation outside US in year 2. It improves from -20% to more than -6% and -4% in the subsequent two years. The gross margin increases by 2.8 % for year 2 and year 3 globally. As a consequence, the percentage change in company value increases substantially from -29 billion dollars to -14 billion dollars.