DP2 Growth and Evolution DP 003-11-09-2017

DP 2 1.2 Growth and evolution (Re-inforcement)
DP 003-11-09-2017

Dear students - Please answer for Tuesday 12/09/17 the questions in case study WALMART (taken from: IB Training Booklet Using the OCC Resources). We will review them briefly in class. 
Fernando. 
(a) ii 
1) FINANCIAL ECONOMIES. As one of the largest retail groups of Germany, Metro will be able to negotiate better interest rates with financial institutions, and consequently reduce its financial costs and improve profits.
2) PURCHASING ECONOMIES. Undoubtedly, Metro will have a greater leverage when buying in bulk from providers. Not only will Metro be able to get better credit terms on purchases from suppliers, but it will help Metro reduce its average costs, transfer those savings to customers, attract more clients, strengthen customer based loyalty, and consequently position itself as a dominant player in the industry.  
(b) SUPPLIERS are one of many Metro stakeholders. They are worried, because Metro is becoming one of their biggest clients. This is good news and bad news. Bad news - because Metro will have 1) greater negotiating power when buying from suppliers (greater discounts, extended credit terms, greater capacity to ask for promotional sponsorship, etc). Supplier's commercial portfolio will increase, as Metro will become one of its biggest clients. Instead of diversifying risk among more clients, it has concentrated in less clients. If Metro has payment problems, its suppliers will bear those problems as well, as they won't be able to collect payments from Metro. 



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