(Pretend that this is your first assignment on a summer internship, and that you very much want to receive a permanent job with this firm after graduation.)Walmart is the largest retailer in the US (and other parts of the world) employing 1.2 million in the USA. In February 2015 Doug McMillon announced a series of employment changes, among other things raising minimum starting pay to $9/hr. with plans to further increase it to $10.hr. within one year.
http://cdn.corporate.walmart.com/a1/0e/6fec066e4cf48b9ec4b9f09bcd67/associate-opportunity-fact-sheet.2.pdfHe also announced increases in employee benefits (e.g. healthcare, 401k plan, educational support, etc.) and career development and promotion opportunities, etc.
http://cdn.corporate.walmart.com/a1/0e/6fec066e4cf48b9ec4b9f09bcd67/associate-opportunity-fact-sheet.2.pdfOf course, these changes increased their costs substantially, and information on these (and future) cost increases was included in the announcements (or could be estimated by external analysts). Since January, Walmarts stock price has declined substantially (approximately 30% by mid-September. When WMT announced their quarterly results, documenting their increased costs, the stock price fell more than 13% in just a few days! Note that these declines in the market value of Walmarts stock are predominantly (if not completely) due to its Human Resource practices!DISCUSSION QUESTION 6
How (P, Q, C, A) does Walmart compete?
Who are Walmarts competition, and what changes have occurred in the past several years?
Why did Mr. McMillon (His HR head, the Board, etc.) make such broad changes in Walmarts employment practices?
Why was the Stock Markets reaction so negative?
Do you believe Walmarts employment strategy will produce positive results?
When do you estimate those results will be recognized by investors?