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One Nation Under Wal-Mart

13 Feb 2017Business Essays

Wal-Mart Stores, Inc was founded in 1962 by Sam Walton and it was incorporated in 1969. It first appeared on the New York stock exchange in 1972. It is the largest private employer worldwide. In United States, it has an estimated 20% of the retail grocery and 45% of the retail toy business. This makes it the largest grocery retailer that exists in United States. Wal-Mart has its operations in United Kingdom as ASDA, Mexico as Walmex and Japan as the Seiyu Co. Ltd. However in 2006, operations in South Korea and Germany had to be closed and sold by management because of a highly competitive market and sustained losses that it had incurred (Davies 1997).

The Wal-Mart stores, division of the United States is the largest business subsidiary resulting in the 67.2% net sales of the fiscal year 2006. The Wal-mart stores, Inc, also operates under two segments: the Sam’s CLUB and the Wal-Mart stores segments. Supercenters, Walmart.com, neighborhood markets and discount stores comprise the Wal-mart stores segments. The neighborhood markets is comprised of frozen food, paper goods, pharmaceuticals, household chemicals, photo processing, dry grocery, bakery, meat, pet supplies, beauty aids and general merchandise departments (Shaw Barry 2007).

Currently, Wal-mart is one of the largest companies in the world and has achieved much of its success in retail. It has more than 4,750 stores with an estimated 138 million shoppers who visit these stores weekly. The company has managed to conquer almost every corner of America increasing its strongholds in both the rural South and Midwest and also urban America. The company’s marketplace is powerful such that it is estimated that 82% of the households in America purchase an item from Wal-Mart yearly. Household’s staples are controlled at 30% of the market, 15% and 15-20% of all magazines and all CDs are sold respectively. Wal-Mart is also behind the importation of 10% of all goods from China to United States (Shaw Barry 2007).

Answers to Discussion Questions

Question one

I personally like Wal-Mart as a consumer because it is the largest retail company that exists in United States of America. I shop at Wal-Marts quite frequently because the prices offered at Wal-marts are cheaper compared to other retail stores in my area of residence. Apart from the low prices it guarantees to consumers, it also offers a wide range of products ranging from electronics, photo processing and toys to grocery products. These items are readily available at all times and at affordable prices.

I like Wal-Mart stores because of the diverse activities that it offers to human mankind and other development activities globally. It employs about 1.8 million people worldwide in the more than 3,900 stores in United States of America and more than 2,799 stores in the west of the world (Shaw Barry 2007).

Despite the cheap prices that Wal-Mart offers, I do not like its policies regarding its employees. This is because workers in Wal-Mart store earn low wages; they are also given low rates of the employee health insurance, cases of alleged sexism and a host of other issues.

Question two

There is a Wal-Mart store in my area of residence that offers a wide range of products. The impact of the store on the local community has been mixed. The Wal-Mart store has created both positive and negative effects on the local consumers hence changing consumer behavior as well.

Wal-Mart store has had more of negative effects to my community as compared to the good things it has done for us. It has had much success on consumers’ part through the cheap and affordable prices of goods it offers hence attracting quite a large number of consumers who prefer to purchase from the store than purchasing from other stores. Another positive impact that Wal-Mart has created in my area of residence is employment generation to the local community. Its many stores that are spread throughout the state create many career opportunities to most people who are unemployed.

However the negative impacts that Wal-Mart store has created in my community surpasses by far the good aspects that it has produced. Wal-Mart store has increased competition with the other business as a result of the lower prices it offers forcing other business to close down even though they were established long ago before Wal-Mart’s existence in the community. Buyers have chosen to go to Wal-Mart and this has greatly affected the sales of these other businesses that in turn make losses because of this. In other words, Wal-Mart has destroyed other local businesses in my area of residence. Despite the employment creation that Wal-mart offers, one employee turnover rate has been high in my community because of the low wage rate it offers to its employees. A part from the low wage rates, these employees have limited benefits given to them accompanied by the low rates of health insurance. This has resulted into consumer resistance that starts with the employees themselves. Because of these factors costs have been shifted to the tax-payers and other businesses that are forced to pay the underinsured employees of Wal-Mart indirectly. As a result of the poor pay that Wal-Mart offers to the employees in my community, these workers have been forced to rely on food stamps, public aid, housing vouchers and state health subsidies among other things.

Moreover, due to the low labor costs it offers, the producers of consumer goods in my area have been forced to reduce their labor costs as well hence driving them out of business. The Wal-Mart store in my community has become unpopular yet it offers cheap prices for goods and services. It seems to work out for consumers who are only buyers of these goods but for workers, producers and other establishments, it has done more harm than good.

I would support the idea of a rival new store to be opened in my area that will offer great competition to Wal-Mart. I would support any other new company that is ready to establish high employee standards than what Wal-Mart is currently offering. I will not be in favor of any other extra Wal-Mart branch opening in my community because Wal-Mart has low standards for its workers despite the low prices it currently offers for its goods and services. It has low business ethics regarding employees. Introducing another branch of its own will lead to monopoly practices in the community.

Question Three

I think that the rise to retail dominance by Wal-mart would impact the society negatively. Retail dominance means that Wal-Mart dictates other businesses as well as consumer behavior in a society. Competition is created between Wal-Mart and other businesses such as the supermarkets who cannot cope with the low costs of goods that Wal-Mart offers since they (supermarkets) get their goods probably at a higher cost hence lowering would mean making losses in their business. Rise in retail dominance will result to Wal-Mart’s dictation on what it offers both the consumer and employees in terms of quality of products and wages respectively.

Dominance by Wal-Mart will just mean yet another evolution of capitalism and Walmartization in America. Capitalism is a type of economic system whereby a larger part of production and distribution is privately owned just like what we see in Wal-Mart. Business ethics in this case is bound to go down because of the dominance such ethics include: the labor practices and quality of life that will be offered to the employees. Therefore dominance creates capitalism and this means that Wal-Mart’s retail dominance will make the production and distribution processes to be entirely owned by Wal-Mart.

Retail Dominance will have a negative impact on workers. This means that the policy of the workers will be determined by Wal-Mart workers will continue receiving low wages and there will be major job lay-offs. The turnover rate will be high and also the costs on the tax payer will be increased.

Question four

A retailer can become two large and hence powerful. This can be seen in the case of Wal-Mart as it controls the prices it buys goods with. The low retail price it offers has had major adverse effects on other businesses and it has introduced high costs to these businesses. This has exerted a lot of pressure on these companies.

Wal-mart Company can be said to be a powerful company in the worldwide. A part from being the world’s largest retailer, Wal-Mart is also the largest company worldwide surpassing General motors, Exxon Mobil and General Electronic. It exerts its power for the purpose of establishing the lowest prices to its consumers. Wal-Mart has got the power to dictate prices, hence other business or producers have to lay off their employees or close their plants and therefore, they opt for overseas products. In conclusion, I agree that a retailer can become too powerful just as experienced in Wal-Mart’s case.

Question Five

In my opinion, I do not think the opposition of Wal-Mart’s expansion process is causing any interference with out market processes but it could be a part of a political process in that politicians tarnish the company’s name to gain political votes. Politicians could be using the weaknesses of the company in order to gain their political stand and strength.

On the other hand I think the opponents of Wal-mart have valid concerns. This is because Wal-Mart poorly pays its employees by offering low wages to them. Wal-Mart has made other businesses to close down because of the low prices it offers for its goods and the costs that it has increased on the part of the tax payer. All these have resulted into low standards that the company has created (www.fastcompany.com/magazine/77/walmart.html). Therefore it is important that Wal-mart Company keenly looks into these issues so as to create consumer satisfaction.

References

  • Davies, F., (1997). Current Issues in Business Ethics. Routledge. ISBN 0415124492.

  • Shaw, W. Barry V. (2007). Moral Issues in Business (10th Ed.) Wadsworth Publishing ISBN 0-495-00717.

  • Wal-Mart You Don’t Know, Accessed on 9 July 2007, from https://www.fastcompany.com/47593/wal-mart-you-dont-know.

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