Q: What does Wal-Mart want?
A: Wal-Mart wants to make money for its shareholders.
Wal-Mart wants to make money for its shareholders. Selling lots of different kinds of products at a lower-than-average profit margin while making up the difference in high sales volume is simply their established method of making profits, which is, in turn, only part of making money for stockholders.
Q: How do shareholders make money through Wal-Mart?
A: Stock price increases and dividend payments.
Wal-Mart stockholders make money through stock increases and dividend payments. An increase in stock prices increases a shareholders’ net worth or will allow them to make money selling those stocks. Divident payments, on the other hand, increase a stockholders’ cash holdings. Stock prices are a reflection of market optimism regarding the prospects of future earnings, while dividends are a register of the relationship between actual earnings and projected future earnings. For instance, even if a company is earning lots of money, they might forgo paying dividends if it seems that opportunities for growth are strong enough to justify re-investing all profits.
Q: What’s the difference?
A: Wal-Mart stock prices are a measure of prospects for future growth, while dividends are a measure of the efficacy of past growth.
Since Wal-Mart has traditionally been regarded as a ‘growth company’, dividends have a loosely inverse relationshp to growth, in that in times when prospects for growth have been strong, large percentages of earnings were re-invested in new construction and hiring. When growth slows, such as in the past year, Wal-Mart pays out greater dividends in order to keep shareholders interested and stock prices from falling.
Q: So what?
A: In certain moments, growth is more important than profits, while in other situations, profits (and therefore dividends) are the only way to make money for shareholders.
The Dot-Com boom of the late ‘90s, early 2000s is an example of a situation in which companies’ stocks were valuable because their prospects for future earnings seemed good, even when actual earnings were non-existent. These companies went bust because their shareholders began to doubt that actual earnings would ever appear, even as the company was sinking more and more investor money into growing itself.
Q: What does this mean for how Wal-Mart operates?
A: When growth seems viable, Wal-Mart will build more stores as quickly as possible. When growth does not seem viable, the most direct route Wal-Mart can take is to concentrate on increasing profits from existing stores.
Q: How does Wal-Mart know when to grow ‘em and when to hold ‘em?
A: It’s generally a function of market share and market growth.
What, for instance, would a 300,000 m^2 mat Wal-Mart be like? Why would it ever come to be, and what are its political and economic opportunities and challenges? The establishment of this datum thus provides a structure within which other inquires can be more precisely targeted.
-Desired Foot Candles: 100
-48″ flourescent tubes provide 100 FC for 30 square feet of retail space
-11,250 48″ tubes required to light the average super center @ 32 Watts/Bulb = 360 KW energy demand.
-5′ X6′ sunoptics skylights 30′ on center provide equivalent light levels
-375 skylights light the average super center (approximately 3% of roof area)
Wal-Mart Water Consumption:
-roof area of average supercenter: 337,500 ft2
parking lot area of average supercenter: 440,000 ft2
total surface area for water collection: 777,500 ft2
-Potential water collection in temperate climate such as New Jersey (approx. 45 inches of rainfall/year)= 28 gallons/ft2
Total potential collection of supercenter roof and parking lot=21,770,000 gallons
Potential water collection in desert climate such as arizona (approx. 7 inches of rainfall/year)=4.3 gallons/ft2
Total potential collection of supercenter roof and parking lot = 3,343,250 gallons.
-Wal-Mart Peak Electricity Demand:2,000 KW
-Roof area of average supercenter: 337,500 ft2
BP Standard 2000 Watt PV cell dimensions: 66″X32″ (8.8 ft2)
38,352 200W units fit on average supercenter roof
Potential power generation during daylight hours=7670 KW
-Perimeter of average supercenter: 2,500 ft
Aeroenvironmental 400 watt micro turbine diameter = 4′
625 units fit around average supercenter perimenter
Potential power generation when average wind speed is over 10mph (throughout northeast, mid-west and west coast) = 250 KW
This chart shows several of Wal-Mart’s key economic indicators: Stock Price, Dividend Payments, Store Openings, New Store Openings, Store Replacements, and Same Store Sales. By charting these indicators and graphing these relationships, we can see that while stock price has risen steadily, it has recently plateaued along with new store openings, while dividend payments continue to rise as growth in same store sales stagnates, illustrating a situation in which Wal-Mart, having to pay off investors to keep them from jumping ship, is operating in a saturated market and constantly lowering its operating margin.
The 4 categories set up by the Boston Martix are as follows:
Dogs: Have a small market share in a slow-growing market.
QUestion Marks: Have a small market share in a growing market.
Stars: Have a large market share in a growing market (i.e. Wal-Mart in the 1990s).
Cash Cows: Have a large market share in a saturated market. These companies generally make large profits but do not invest heavily in growth. Every company eventually wants to become a Cash Cow.
We can think of the basic distinction among Wal-Mart’s operating modes as being that of the difference between operating in a growing market and in a saturated market. Architectural consequences emerge.
The color blue denotes options with direct architectural implications.
On average, 5,555 people visit a given Wal-Mart on a given day in the United States. Additionally, 80% of all Americans have shopped at Wal-Mart in the past two months.
The map shows the location of all New Jersey Wal-Mart locations,each of which is marked with a + sign. Each location has been surrounded by two circles. The grey circle denotes a 20 mile radius – an estimate of the greatest distance a person would be willing to travel to shop at a Wal-Mart. The blue circles, meanwhile, combine the information about average Wal-Mart patronage mentioned above with density data for each county. In other words, if all the people that shop at a given Wal-Mart lived as close as possible to it (given existing density patterns), how great an area would those customers occupy? If Wal-Mart were to become the center of a new type of planned comunity, what would be the scope of these interventions?