Ethics of Walmart

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IS WAL-MART GOOD FOR AMERICA?
THE EFFECTS OF OUTSOURCING
ON AMERICAN BUSINESS

Presented to

Dr. Mary Dunn
Lecturer, PH.D.
McCombs School of Business
University of Texas at Austin

Prepared by

Anum Siddiqui
Hayden Godat
Aly Manji
Brian Seward
Rod Afkami

April 14, 2006
TABLE OF CONTENTS

EXECUTIVE SUMMARY................................................................................................iii

INTRODUCTION...............................................................................................................1

Purpose.....................................................................................................................1
Background Information..........................................................................................2

SOURCES AND PROCEDURE.........................................................................................3

ANALYSIS OF THE STUDY............................................................................................4

Survey Results...........……......................................................................................4 Problems Related to Outsourcing............................................................................5

Conclusion – Societal Effects.....................................……….................................7

RECOMMENDATIONS.....................................................................................................9

APPENDIX – Wal-Mart Consumer Survey .....................................................................10

REFERENCES..................................................................................................................11

LIST OF FIGURES

Figure

1 Do you shop at Wal-Mart?...........................................................................................4 2 What do you identify with Wal-Mart?.........................................................................5 3 U.S. trade deficit with China........................................................................................7 4 Are you aware that Wal-Mart outsources/Would you continue shopping at Wal-Mart?............................................................................................................................7

EXECUTIVE SUMMARY

Purposes of the Report

The purposes of this report are to (1) inform American consumers about Wal-Mart’s practice of outsourcing, (2) analyze the effects of such business practices, and (3) provide recommendations to mitigate the problems associated with outsourcing such as job loss, trade deficit, and lower standard of living. Last year Wal-Mart recorded over $316 billion in sales. This amount is equal to the combined sales of IBM, Hewlett Packard, Dell, Microsoft, and Cisco Systems with $2 billion left over. Wal-Mart’s incredible power has magnified a dire problem facing American business – outsourcing.

Background Information

From its humble beginnings as a “nickel and dime” store, Wal-Mart has grown into a retail giant with over 4,300 stores and over 1.7 million employees worldwide. With a broad range of both grocery and retail items, Wal-Mart provides convenience as a one-stop shop. By basing 80% of its suppliers in China, Wal-Mart is able to offer everyday low prices.

Problems with Outsourcing

Despite outsourcing’s cost saving advantages, it is detrimental to American business in a number of ways. * Job loss: Wal-Mart’s outsourcing policies are causing dramatic losses in American jobs. Since goods can be manufactured in China for much less, Wal-Mart is forcing its suppliers to move to China to meet its low price demands. * Low standard of living: Wal-Mart’s actions are destroying jobs, which in turn lowers the purchasing power of the American worker. * Trade deficit: Wal-Mart’s practices are contributing to an enormous trade deficit with China, which is currently...
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