Question 5: The 1st figure depicts Walmart's relative success; the 1st table depicts Walmart's absolute success. Google and re-Google. Then tell us why Walmart - has become the face of retailing success? Focus more on the functional-level strategies. Walmart's Competitive Advantage % (FY: 1972-2016) 25% 20% 15% 10% Competitive Advantage unha 5% 0% M -5% - 10% -15% 1972 1974 1976 1978 1980 1982 1984 1986 1988 990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2015 2016 Year 1st Figure: Walmart competitive advantage across years Data source: WRDS; Data Management: Stata Key Procedure: a. Firm-level identifier GVKEY was used to identify Walmart. b. Operational definition of competitive advantage = ROE (Walmart) - ROE (Retailing industry) Year 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Common stockholder's equity 68542 71315 76343 76255 81394 80546 77798 77869 72496 74669 80925 Net Income 15699 16999 16022 16363 14694 13643 9862 6670 14881 13510 Beta 0.41 0.41 0.41 0.41 0.41 0.41 0.41 0.41 0.41 0.41 Risk-free rate 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 Market Return 0.13 0.13 0.13 0.13 0.13 0.13 0.13 0.13 0.13 0.13 Cost of equity 5.52% 5.52% 5.52% 5.52% 5.52% 5.52% 5.52% 5.52% 5.52% 5.52% Benchmark income 3785 3938 4216 4211 4495 4448 4297 4300 4004 4124 Residual Income 11914 13061 11806 12152 10199 9195 5565 2370 10877 9386 Note: Figures are in Million Dollar 1st Table: Walmart's residual income Data source: WRDS, Yahoo Finance, Fed at St Louis, CRSP; Data Management: Stata Key Procedure: a. Firm-level identifier GVKEY was used to identify Walmart. b. Operational definition of residual income = Net income (Walmart) - Common stockholder's equityt-1 (Walmart)* Cost of equity (Walmart) c. In order to keep things simple, we assume one single beta, risk-free rate & market return for the overall research time- period Question 5: The 1st figure depicts Walmart's relative success; the 1st table depicts Walmart's absolute success. Google and re-Google. Then tell us why Walmart - has become the face of retailing success? Focus more on the functional-level strategies. Walmart's Competitive Advantage % (FY: 1972-2016) 25% 20% 15% 10% Competitive Advantage unha 5% 0% M -5% - 10% -15% 1972 1974 1976 1978 1980 1982 1984 1986 1988 990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2015 2016 Year 1st Figure: Walmart competitive advantage across years Data source: WRDS; Data Management: Stata Key Procedure: a. Firm-level identifier GVKEY was used to identify Walmart. b. Operational definition of competitive advantage = ROE (Walmart) - ROE (Retailing industry) Year 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Common stockholder's equity 68542 71315 76343 76255 81394 80546 77798 77869 72496 74669 80925 Net Income 15699 16999 16022 16363 14694 13643 9862 6670 14881 13510 Beta 0.41 0.41 0.41 0.41 0.41 0.41 0.41 0.41 0.41 0.41 Risk-free rate 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 Market Return 0.13 0.13 0.13 0.13 0.13 0.13 0.13 0.13 0.13 0.13 Cost of equity 5.52% 5.52% 5.52% 5.52% 5.52% 5.52% 5.52% 5.52% 5.52% 5.52% Benchmark income 3785 3938 4216 4211 4495 4448 4297 4300 4004 4124 Residual Income 11914 13061 11806 12152 10199 9195 5565 2370 10877 9386 Note: Figures are in Million Dollar 1st Table: Walmart's residual income Data source: WRDS, Yahoo Finance, Fed at St Louis, CRSP; Data Management: Stata Key Procedure: a. Firm-level identifier GVKEY was used to identify Walmart. b. Operational definition of residual income = Net income (Walmart) - Common stockholder's equityt-1 (Walmart)* Cost of equity (Walmart) c. In order to keep things simple, we assume one single beta, risk-free rate & market return for the overall research time- period
