How Wal-Mart can benefit from contribution margin analysis

Running Head: Contribution Margin
Wal-Mart: Contribution Margin
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How Wal-Mart can benefit from contribution margin analysis
Wal-Mart is an American public corporation that leads in retail distribution and has a wide range of chains that are spread within America and in other countries. It has been known for its low pricing of goods. “In 2010 it was the world’s largest public corporation by revenue”. It was known as Wal-Mart Inc. stores for a long time until in 2008 where it changed it name to the current one.
Contribution margin analysis is a technique used by companies to decide what new product(s) to add to their products or which product needs to be dropped out of the market by taking into consideration additional revenues, additional costs, effects the new product will have on the existing ones and competitors reaction. The manager will always wonder what will happen to his profits when he makes a decision of introducing new products (Marshall et al 2003).
Wal-Mart recently expressed its interest in selling the iPad. An iPad is the first of its kind a tablet computer developed by Apple Inc. It is in between a smart phone and a laptop. There are many people who are very eager for the iPad to hit the market. It has developed so much interest in the potential customers. This is a rare case where a new device is a hit from the first time it was introduced in the market. There has been talk that Apple revenues which are already high will be boosted further by the sale of iPad (The virtual Circle).
The Gartner group has come up with a model of technology adoption known as “the Hype circle” has five stages. It generally says that new developments in the market are often over hyped then disappointments follows and realism sets in. This may have a truth in it but may not always be the...