MANY RESOURCES
Wal-Mart Stores Inc.

Wal-Mart Stores Inc. is the largest retailer in the world.  Does this company have resources?...You bet! 

Wal-Mart is the second biggest employer in the U.S., with over 600,000 on staff.  The company is non-unionized and yet attracts committed motivated employees.  Management uses a company owned satellite and a fleet of 15 aircraft to communicate with stores from head office in Bentonville Arkansas. 

The company leases about 70% of Wal-Mart stores.  Wal-Mart's two step hub and spoke distribution network is one of the most sophisticated distribution systems in the world.  As a result of these two policies 43% of Wal-Mart's assets is inventory...more stock on the shelves. 

Wal-Mart Stores Inc. represents a company with many resources.  Wal-Mart is profitable because the company has learned to deploy these resources efficiently.  
 

SUFFICIENT RESOURCES
JCPenney Company

JCPenney Company was founded by James Cash Penney in 1902.  The company operates over 1,200 department stores throughout the U.S.  In 1995, the company reported sales of over $21 billion, making it the fifth largest retailer in the U.S. 

Obviously JCPenney is a company which has a great deal of resources behind it.  However, in each of the past three years, the company has closed more stores than it has opened.  Gross selling space has decreased by over a million square feet.  A comparison of the deployment of assets between Wal-Mart and JCPenney shows why JCPenney has only sufficient assets for its operations.

JCPenney Wal-Mart Current Assets 34% 3% Inventory 23% 43% Plant Property & Equipment 24% 48% Other 17% 5%

Over a third of the company's resources are tied up in accounts receivable and other current assets.  JCPenney Company is an example of a company which has sufficient resources for current operation.  However, the company does not utilize its resources to their maximum potential.

INSUFFICIENT RESOURCES
Failed Boutiques

Every year, just after Christmas, the shutters come down on a new batch of failed boutiques.  The statistics are not good.  Nine tenths of all small businesses fail within their first 5 years of operation, half within the first year. 

Lack of management expertise, lack of infrastructure, and lack of experience are key reasons for failure.  However, even companies that have had initial success often succumb to failure due to an inability to raise capital for expansion. 

Most often the failed boutique is an example of a company which has insufficient resources.