Is Wal-Mart Good for America? It is generally known that effective business and cash management techniques are extremely important for the companys performance. Even Wal-Mart, which is known as the #1 international retailer, is no exception to the rule. It operates numerous retail stores worldwide and is organized in three basic segments: Wal-Mart Stores, Wal-Mart International and SAMs Club. All three divisions strive to achieve competitive advantage by introducing new services, and negotiating the lowest possible prices with their suppliers to provide customers with high-quality products at the lowest price. Nevertheless, although some businessmen believe that Wal-Marts business practices are sound, that it not the case. They are manipulative and are not good for America. In spite of the companys successful performance, there are several unimpressive circumstances concerning Wal-Marts strategies: low-cost strategy, outsourcing, below subsistence wages and insufficient benefits to Wal-Marts employees.
The economists claim that Wal-Marts low prices often come with a high cost, having a detrimental impact on small businesses, being blamed for insufficient environmental protection policies, poor record on employees rights, anti-union stance, the use of public subsidies, to mention a few. Wal-Mart is condemned for being one of the key factors that propelled global outsourcing, as far as it sources too much of its merchandise from Asian suppliers. According to Richard Freeman (2003), Wal-Mart imports 10% of all U.S. total imports from China. Outsourcing cut jobs for the U.S. workforce and made a powerful impact on the decline of manufacturing in America and the rise of manufacturing in China and Asia (Smith, n.d.).
The Essay on China, India, and Wal-Mart: Issues of Price, Quality, and Sourcing
1. What are the ethical issues associated with Wal-Mart’s extensive sourcing of low-cost products from China? Wal-Mart pricing is too low. As the world’s largest retailer, Wal-Mart leverages its huge orders to convince factories to sell goods at low prices that are not sustainable. This puts pressure on other brands to pay less, thereby setting a dangerous industry precedent. According to ...
It seems that we are shopping our way to the unemployment line. Obviously, it should be good for products to come into the U.S. at a low cost. It should be good for the customers to buy products cheaply. However, you cant buy anything if you are unemployed. Outsourcing is the practice of shifting jobs to lower-wage countries. It leads to creation jobs anywhere in the world, but at the same time it leads to significant shift in the kinds of jobs for the U.S.
employees. According to David Moberg (2004), 1.5 jobs had been lost for every job that Wal-Mart created. In its turn, cut in jobs increases the level of unemployment, and causes layoffs and difficulties for millions of American workers. That leads to a general downturn in the business cycle and decline in the U.S. economy. In spite of these problems, Wal-Mart continues its predatory strategy. In addition, in order to continue its low cost strategy, Wal-Mart practices substandard wages and insufficient medical benefits (Wal-Mart criticized, n.d.) for more than 1.3 million employees at 4,700 stores worldwide.
The retailers labor costs are more than 20% less than the competitors. For example, Wal-Marts grocery employees earn $8.23 per hour – 23% less than grocery workers at the other stores (Freeman, 2003) Due to Wal-Marts aggressive and manipulating business practices, a number of Wal-Mart competitors were forced to leave the market. This effect created by aggressive low-cost strategy was called the Wal-Mart effect. Wal-Marts scale of operation allows bargaining hard with suppliers to get the lowest possible prices. What does it mean? Wal-Marts policy is quite simple: On basic products that don’t change, the price Wal-Mart will pay, and will charge shoppers, must drop year after year (Fischman, 2003).
In case the manufacturer is unable to provide Wal-Mart with low prices, he faces the risk having the entire brand removed from Wal-Mart stores.
The Essay on Mart Wal Jobs Economy
The largest and most successful company in the world is now being ridiculed for the way in which it has risen to the top. Wal-Mart is accused of setting a bad example for American companies by squeezing producers for low prices, outsourcing manufacturing jobs, discriminating in the workplace and for the inhumane treatment of employees. What these critics don't understand is that there are positive ...
In order to survive in the face of Wal-Marts pricing demands, the suppliers and manufacturers are forced to close American plants in favor of outsourcing production from overseas, where the labor cost is not so expensive. In such a way, to retain its position as the overall low-cost provider in the industry, Wal-Mart works in three dimensions by decreasing supplier power, decreasing industry competitiveness, and influencing the decline of manufacturing in America. References: Fishman, C. (2003).
The Wal-Mart You Don’t Know. Retrieved February 27, 2007, from http://www.fastcompany.com/online/77/walmart.html. Freeman, R. (2003).
Wal-Mart Is Not a Business, It’s an Economic Disease. Retrieved February 27, 2007, from http://www.larouchepub.com/other/2003/3044wal-mart .html . Moberg, D. (2004).
The Wal-Mart Effect. Retrieved February 27, 2007, from http://www.alternet.org/stories/18926/ Smit, H. (n.d.).
Is Wal-Mart Good for America? Who Calls the Shots in the Global Economy? Retrieved February 27, 2007, http://www.pbs.org/wgbh/pages/frontline/shows/walm art/secrets/shots.html.
Wal-Mart criticized for substandard wages and health care benefits. (n.d.).
Retrieved February 27, 2007, from http://www.news-medical.net/?id=19505.
