Understanding Stakeholders
What is a stakeholder? According to Cambridge Dictionary “A stakeholder can be an
employee, customer, or citizen who is involved with an organization, society, etc. and
therefore has responsibilities towards it and an interest in its success.”
While this definition appears generally broad, the stakeholders involved with an
implementation can be numerous. This section reviews different types of stakeholders,
introduces tools for both stakeholder identification and analysis towards both priorities
and stakeholder support.
There are two different types of stakeholders, internal and external. Internal
stakeholders are those involved day to day in the program. These are individuals
associated with the actual project or specific problem. External stakeholders are those
outside of the organization who are influenced or impacted by the project or issue.
There may also be external stakeholders that may be part of the project depending on
the issue.
There are many different stakeholders and it is important to understand the interest and
influence of each. The first step is to brainstorm and identify all the potential
stakeholders. Figure 1 is an example of a stakeholder diagram depicting the target
audience call center quality issue. The second ring of circles represents the individuals
or organizations that have a direct connection with the interests of the primary
stakeholder impacted by the initiative. The other rings around the secondary group are
tertiary stakeholders who have a direct connection with the interest of the secondary
stakeholders in support of the primary stakeholders.
The key purpose of this brainstorming tool is to ensure that you have not missed a stakeholder
group. First you must revisit the problem statement to ensure that you have the focus of the
issue. Below the example problem statement is an example of brainstorming for internal and
external stakeholders.
Problem: Many call center representatives are not achieving quality standards, thereby
contributing to the overall low-quality rating (92%) for the call center. Through data and process
evaluation, it was determined that the training time for call center representatives is 30% less
than other similar call centers, which may contribute to lack of skills training. In addition, the
online tools available to the call center representatives are not updated frequently with
procedural changes and do not contain all required information necessary for representatives to
perform their job. The low quality over the past 6 months has resulted in a 2% decrease in
customers and a $550,000 loss in annual revenue. Decreased employee satisfaction in the call
center due to the issue has contributed to a 5% increase in voluntary attrition, which costs the
business $80,000 annually. There is an opportunity to improve quality and reduce both customer
and employee attrition by addressing the skills training and resource issue in the call center.
© 2019. Grand Canyon University. All Rights Reserved.
Figure 1
Employee
tertiary family
Local
Businesses
Customer
Organizations
Employee
Immediate Family
Customers
Customer
Families
Other internal
organizations
Call Center
Employees
Curriculum
Team
Stakeholders
Call Center
Leadership
Organization
Leaders
Training
Group
Human
Resources
Training
Team
Recruitment
Staff
HR Leadership
Once the stakeholder individuals or organizations are identified, they require analysis
for interest and support. The other critical aspects of this analysis are to understand what
the stakeholder is contributing and identification of an action plan. Reference the
"Stakeholder Analysis Template" in the course materials for an example.
2
Negative Support/High Influence
(Commit)
I
N
F
L
U
E
N
C
E
Negative Support/Moderate Influence
(Invest)
N
C
E
Negative Support/Low Influence
(Marginalize)
SUPPORT
Positive Support/High Influence
(Leverage)
Positive Support/Moderate Influence
(Plan)
Positive Support/Low Influence
(Maintain)
SUPPORT
Name of Stakeholder
Description of Stakeholder
Role of Stakholder
Example: Call Center Manager Leader of the Call Center in Phoenix Project Sponsor
Level of Knowledge in
Program
High level of knowledge
Available Resources, Information, Influence, Money,
Staff, Technology, etc.
Funding of project and internal resources from call center
Level of Interest
High
Level of Support
Positive
Level of Influence
High
Action Plan for Stakeholder
Engagement
Maintain regular communication with
stakeholder on progress and updates.
1
Qualitative and Quantitative Research on Walmart’s Current Ratio
Gilbert Johnson
Grand Canyon University
Applied Business
25 June 2021
2
Qualitative and Quantitative Research on Walmart’s Current Ratio
Part 1
The current ratio is a metric that gauges an organizations' ability to meet its short-term
obligations. When a business has a current ratio of less than one, the current assets are higher
than its current liabilities; hence, it experiences difficulties in catering for its current business
obligations (Pandey & Bhatt, 2020). Therefore, this report analyzes the current adverse ratio of
Walmart Corporation and its effects on the business performance. The current ratio for Walmart
appears will be as shown below:
Current ratio
0.94
0.92
0.9
0.88
0.86
0.84
0.82
0.8
0.78
0.76
0.74
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Current ratio
Source: Qualitative data from Macrotrend
3
The relationship between the current ratio a and the net margin of a business can be
shown in the following scatter diagram:
y = 2.552x + 1.0655
R² = 0.0578
Scatter Plot
4
3.5
3
2.5
2
1.5
1
0.5
0
0.8
0.82
0.84
0.86
0.88
0.9
0.92
0.94
From the scatter plot above, it can be concluded that there is a positive linear relationship
between the current ratio and the net margin. It implies that a higher current ratio in the target's
business results in higher profits, while lower current ratios lead to lower profits. However, the
relationship is relatively weak as only 5% of the changes in net margin can be explained by the
fluctuation in the current ratio. The remaining 95% of the variation in net margin can be
explained by other factors such as competition and other external factors.
Part 2
A favorable current ratio is desirable to a company since it implies that it can meet its
obligations comfortably. The ideal current ratio for all firms is one and not more than 1.5. A
current ratio that I above 1.5 indicate the company is not efficiently using its assets (Macrotrend,
2020). At Walmart Corporation, the current ratio from 2005 to 2020 has been less than one,
which means its current liabilities have been higher than its current assets.
4
I conducted a survey to understand the reasons why Walmart had a current ratio of less
than one and the solutions the company undertook. The following questions were asked:
1. What caused the company to run with a current ratio of less than 1?
2. What impact does the current ratio have on business performance in terms of operational
efficiency and profitability?
3. Have there been efforts to improve the business's current ratio, and what are the efforts?
4. How does an adverse current ratio affect customer's importance, efficiency, quality, and
employee satisfaction?
5. How do measures adopted to improve Walmart's ratio affect customer experience,
efficiency, and employee satisfaction.
The survey was addressed to Walmart's management and industry pundits and provided the
following insights:
Causes of a current ratio less than 1
Retail companies tend to have low current ratios and quick ratios. A comparison with
peers such as Costco and Target corporation can confirm this premise. For instance, in the third
quarter of 2013, target corporation had a quick ratio of 0.2 while Costco had a quick ratio of 0.6
(Hargreaves, 2013). Therefore, it is an industry thing. Another main reason why Walmart has a
low current ratio is that it has high supplier leverage. Its account payables are pretty high.
Impact of an adverse current ratio
When a company's current assets fall below the current liabilities, the company may be
unable to pay its current obligations, such as paying its current creditors, paying wages and
salaries on time, and other short-term obligations such as interest and tax payments (Pandey &
5
Bhatt, 2020). Therefore, the delay or inability to meet the short-term obligations negatively
impacts the company's operational efficiency, leading to reduced profits. Profit reduction is due
to additional costs that the company must incur to cover the shortfall in current assets, such as
taking bank overdrafts (Pandey & Bhatt, 2020). Bank overdrafts are cost-ineffective due to the
high inters rates charged. Furthermore, difficulty in meeting employee dues and when they fall
due affects employee morale and satisfaction negatively.
Solutions advanced
Despite a lower current ratio associated with the retail industry, Walmart's current ratio
has been below the industry average. The management of Walmart has tried to address the issue
by reducing supplier leverage. However, reducing supplier leverage limits the variety and the
volume of products that Walmart can offer its customers, which may negatively affect customer
experience. Another way Walmart has tried to improve its current ratio is by renegotiating the
credit terms with its suppliers to allow for more time for settling of account payables (Pandey &
Bhatt, 2020). This eases the pressure on the working capital and enables the company to cater to
the most pressing needs, such as paying workers' dues. In addition, the renegotiation of credit
terms with the suppliers by Walmart increases the company's operational efficiency and enables
it to run smoothly.
The following chart shows the trend in the current ratio after Walmart undertook
measures to enhance its current ratio. From this trend, there has not been any significant
6
improvement in the current ratio since 2005.
Trend Current ratio
0.94
0.92
0.9
0.88
0.86
0.84
0.82
0.8
0.78
0.76
0.74
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Part 3
The management of companies is always trying to enhance the current ratio of their
companies. A current ratio of 1:1 is not adequate since not all current assets can easily be
converted into cash to meet the current short-term obligation. Companies need to maintain a
margin of safety by ensuring they have a current ratio of more than one. Companies have taken
several measures to improve their current ratio. Some of the measures taken include;
They are negotiating for a faster debtor conversion cycle. The management of various
companies in different industries has renegotiated their credit terms with their debtors to reduce
the credit period as much as possible and hence improve liquidity (Pandey & Bhatt, 2020). More
frequent and faster payment from debtors enhances the company's operational efficiency as the
company's cash is not tied up on debtors. Companies have also enhanced their payment of
current liabilities. Early payment of creditors reduces the interest payments and enables the
company to get discounts, easing pressure on the working capital.
7
Companies have also improved their current liabilities by selling off idle and
unproductive assets. Unproductive assets block money and lead to unnecessary accrual of
interest costs. Selling of the unproductive assets also grants the company ready to use cash which
enhances its working capital. It is common practice for companies to improve their current assets
through shareholders' funds (Borad 2019). Financing current assets through equity increase the
current assets while the current liabilities remain intact, improving the current ratio. These
measures impact business performance since they impact the operational efficiency of the
companies, enhance customer experience, and boost employee satisfaction. The chart below
shows the impact of the intervention measure carried out by companies in the retail sector on the
industry's current ratio. The measures taken in the industry are effective and have led to an
improvement in the current ratio.
Industry trend
1.34
1.32
1.3
1.28
1.26
1.24
1.22
1.2
1.18
1.16
2014
2015
2016
2017
2018
2019
2020
2021
8
References
Borad, S. B. (2019, October 28). How to analyze and improve current
ratio? eFinanceManagement. https://efinancemanagement.com/financial-analysis/howto-analyze-and-improve-current-ratio
Hargreaves, R. (2013, November 30). Does Wal-Mart Have a Liquidity Problem? The Motley
Fool. https://www.fool.com/investing/general/2013/11/30/does-wal-mart-have-aliquidity-problem.aspx
Macrotrend. (2020). Walmart Current Ratio 2006-2021 | WMT. Macrotrends | The Long Term
Perspective on
Markets. https://www.macrotrends.net/stocks/charts/WMT/walmart/current-ratio
Pandey, I. M., & Bhatt, R. (2020). A Casebook In Financial Management | (4th ed.). McGrawHill Education.
Year
Current ratio
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Net Margin
0.89
0.85
0.85
0.88
0.87
0.87
0.88
0.83
0.87
0.92
0.92
0.86
0.81
0.93
0.81
0.84
3.57
3.24
3.4
3.41
3.33
3.59
3.77
3.57
3.63
3.27
3.12
2.98
2.31
2.91
2.77
3.6
Scatter Plot
4
3.5
3
2.5
2
1.5
1
0.5
0
0.8
0.82
0.84
0.86
y = 2.552x + 1.0655
R² = 0.0578
Scatter Plot
Current ratio
0.94
0.92
0.9
0.88
0.86
0.84
0.82
0.8
0.78
0.76
0.74
0.88
0.9
0.92
0.94
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Current ratio
2018 2019 2020
Walamart's trend in current ratio
Year
Current ratio
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Net Margin
0.89
0.85
0.85
0.88
0.87
0.87
0.88
0.83
0.87
0.92
0.92
0.86
0.81
0.93
0.81
0.84
3.57
3.24
3.4
3.41
3.33
3.59
3.77
3.57
3.63
3.27
3.12
2.98
2.31
2.91
2.77
3.6
Trend Current ra
0.94
0.92
0.9
0.88
0.86
0.84
0.82
0.8
0.78
0.76
0.74
2005 2006 2007 2008 2009 2010
Trend Current ratio
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Industry Trend
Year
Current ratio
Profit Margin
2015
1.18
2.2
2016
1.23
2
2017
1.24
2.2
2018
1.21
2.2
2019
1.24
2.7
2020
1.32
1.9
Industry trend
1.34
1.32
1.3
1.28
1.26
1.24
1.22
1.2
1.18
1.16
2014
2015
2016
2017
Industry trend
2017
2018
2019
2020
2021
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