you will complete a comprehensive recommendation to Walmart executives either recommending or forgoing expansion into your selected country. In your paper, Summarize the culture and financial climate...

WALMART
EXPANSION PLANS
TABLE OF CONTENTS
1. INTRODUCTION
2. ABOUT THE COUNTRY – PERU
3. FACTORS THAT AFFECT THE EXPANSION PLANS:
A) FOREIGN EXCHANGE RATES
B) INTEREST RATES
C) BALANCE OF PAYMENT
D) GOVERNMENT POLICIES
E) TAXES AND TARIFFS
4. MITIGATION OF FOREIGN EXCHANGE RISK
5. POTENTIAL POLITICAL RISKS AND IMPACTS
6. FUNDING
7. CONCLUSION AND RECOMMENDATION
8. REFERENCES
1. INTRODUCTION
Walmart stores Inc. is an American multinational retail corporation that operates a chain of hypermarkets, discount department stores and grocery stores. It has its headquarters in Bentonville, Arkansas. Mr. Sam Walton is the founder of the company in 1962 and it was incorporated in 31st October 1969. It has 11,496 stores worldwide till date.
As per the latest audit reports (FY 19-20) the company has reported an annual sale of 137742, when compared to previous years the company has got a 5.6% increase in its revenue even in this global health crisis. Also growth in the membership income was the highest quarterly increase in more than five years; new member count increased more than 60%. As the company has got good increase in revenue rates it would be time to expand its area of operations.
An analysis of the country into which the expansion plans are intended to be implemented is done in the following parts, conclusion has been arrived and recommendations regarding financing have been made.
2. ABOUT THE COUNTRY – PERU
Peru, officially the Republic of Peru is a South American country. It is a mega diverse country, 19th largest in the world and 3rd largest in South America. It is a developing country having mining, manufacturing, faming and fishing as its major economic activity. It is regions one of the most prosperous economy with an average growth rate of 5.9% and it has also world’s largest industrial growth rate.
The economy has contract sharply this year as prolonged viral outbreak hammers the domestic economy. The continuing lockdowns has hit the manufacturing and mining industries in the country hard. Consequently the merchandise exports tumbled and imports shrank, thus indicating a dwindling domestic demand. On 3rd August the government has announced a $700 million public spending in order to strengthen the economy.
Meanwhile the political situations have worsened during the period as congress rejected the Presidents reshuffled cabinet, worsening the political uncertainty in the country. The GDP of the country contracts by 11.7% in the year, however the economy is expected to rebound strongly in the following periods.
3. FACTORS THAT AFFECTS THE EXPANSION PLANS
Walmart have proposed to choose Peru as its destination for expansion plans. Now the country intends to check whether the proposal is viable and profitable in the current economic and political situations of Peru.
Some of the factors that could be adhered to for the selection process are:
A) Foreign Exchange Rates
The currency used in Peru in exchange of commodities is Sol. The Central Bank of Peru (BCP) conducts a managed floating regime for the exchange rate of PEN versus the US Dollar. The exchange rates are determined by the markets, but sometimes the bank intervenes so as to reduce the chances of large fluctuations.
As the economy is financially dollarized, the demand for the stability of the exchange rate is crucial so as to protect the interest of investors and customer confidence. Despite the Peruvian financial systems deliberate efforts to reduce the degree of dollarization, the BCP is also very much vigilant on fluctuations. An increase in the reserves has allowed BCP to guarantee a stable sol in the exchange market.
When checking with current exchange rate movements the currency has been stable with minimal changes across last 5 months.
As the country has been able to maintain stability in the exchange rates through its deliberate efforts and policies it would be favorable for Walmart to choose Peru as its expansion destination. The financial position of the company could be improved as its revenue would not be reduced to larger extend when converted into USD and a huge loss of exchange rate differences would not be experienced. The country is very much specific in its stability of exchange rate and has been trying to improve its framework on macroeconomic policies.
B) Interest Rates
The central Bank has held its benchmark interest unchanged at a historic low rate of .25% on the latest reports. They have been successfully able to control the inflation rates in the economy due to subdued demands. The bank has targeted to keep the inflation rates between 1% and 3%, so that the country would only experience a stable inflation and it has been successful in maintaining this level. It has favored the inflow of capital investments in the country and also maintained stability to the foreign exchange rate.
In order to...