Action Case Study Walmart Essay Example | Topics and Well Written Essays - 750 words

Action Case Study Walmart - Essay Example â€Å"Net Sales† was â€Å"$405Billion†, operating income was â€Å"$24Billion† and employee strength was â€Å"8416 workers.† (Financial highlights, 2010, para.1). Wal-Mart follows strict ethical and moralistic views in business. Its main guidelines are in terms of â€Å"Respect for the Individual†, â€Å"Service to our Customers and â€Å"Striving for Excellence.† (Our 3 basic beliefs, n.d, para.1). From a strictly ethical perspective, the circumventing of audit standards enforced by Mart auditors, Wal-Mart of the Ningbo Belfa Group are indeed reprehensible and was caught on three different occasions by the audit team. Speaks of the utter callousness with which this vendor views audit was caught on three different occasions; violating minimum wage and hours of overtime rules stipulated by the audit team. While Wal-Mart could hardly be said to be a party in these misfeasance, its strategic alliance with Belfar Group could put it in a spot of real trouble, in terms of being associated with a company with human rights violation record. This could also reflect badly on the business image and reputation of Wal Mart too. Walmart claims to have over 3800 food outlets in the United States and more than 2600 stores in the rest of the world. It has gained eminence as one of the market leaders in the retail trade and has completed streamline and reinforcement in supply chain management network by deliberating its pricing below competitive prices. Thus, it gained a major chunk of the middle class customers; who cannot afford high cost consumer products for daily use. Perhaps, one of the main reasons for the commercial success of Wal-Mart has been the success in online marketing and also its lower price than other brands. Also, it caters the needs of a large lower middle class segment of consumers, who would like to buy goods at cheaper rates than what is available in physical stores. Wal-Mart has attained a tremendous success in catering to this market. The factors that possibly

CIMA Official Learning System - Performance Operations Essay

CIMA Official Learning System - Performance Operations - Essay Example Since all organization produce more than one product and the overhead costs are incurred together and thus the allocation, appropriation and absorption of these overhead costs have to be done most justly. Allocation allocates the overhead costs to the cost centres or units from where these costs are incurred. Appropriation is done on two levels. On the primary level, appropriation is done by dividing overhead costs to both product and service centres on an equal basis. On the secondary level, overhead costs are distributed on arbitrary bases, depending upon either time or usage. Absorption is the absorption of overhead costs to the production cost. To do this, absorption rate is determined using the following formula: Overhead Recovery Rate = Overhead Costs/ Unit Chose The advantage of full cost approach is that it is relatively simple to use this approach if the firm can account for its costs easily. This approach also brings stability to the pricing system, thereby allowing the firm to justify their prices to the consumers. Full costs approach also makes it easier to understand the pricing strategy of their competitors. Under the full cost approach, the firm can expect a reasonable rate of recovery for its products. However, there are certain disadvantages of the full cost approach.... However, there are certain disadvantages of the full cost approach. The full cost approach does not allow for the adjustment of prices according to the changing demands and competition and thus may result in increased prices of the products against the competition. The full cost approach also does not allow the organization to adapt its pricing structure to prevent loss. This is because the volume of production of the products is not flexible and thus when demand goes down, the volume cannot be suitably adjusted. The treatment of costs in the full cost approach is also standardized and thus do not allow for the differentiation between relevant and irrelevant costs (Lal, 2008) Marginal Costing Approach Marginal Costing has been defined by I.C.M.A London as ‘the ascertainment of marginal costs and of the effect on profits of changes in the volume or the type of output by differentiating between fixed costs and variable costs’ (Murthy and Gurusamy, 2009). Marginal Costing a llows the organization to write of its fixed costs in the profit or loss account while using the variable cost to determine the profit margin for the product. The Profit in marginal costing is determined by subtracting the variable and fixed costs from the selling price of the product. By differentiating between fixed and variable costs, marginal costing allows the organization to effectively decide the feasibility of the product by studying the current manufacturing costs. Since the costs are variable, the selling price of the product can also be adjusted to meet the pricing demands of the market. Marginal Costing Approach basically allows flexibility in the management decision, including the make-buy decision, the sales mix and the method of product to be used. Marginal Costing is more