MBA 6008-Global Economic Environment
Final Project: Wal-Mart
December 30, 2011
Wal-Mart is a successful retail corporation that is known worldwide. The retail company has created economic benefits for consumers that are extremely tremendous. Wal-Mart has provided more choices for consumers at lower prices in communities where local retail monopolies were evident prior to this retail chains arrival. This company operates their retail stores in numerous formats worldwide. Their commitment is saving people money so they can have better lives. With that being said, we will begin by analyzing Wal-Marts environment and the many challenges they face as they embrace the future. The birth of discount retailing began in 1962 the year that Kmart, Target, and Wal-Mart first opened. But before then, Sam Walton actually owned a chain of variety stores during the 1950s and they faced stiff competition from many regional discount stores. Before Sam Walton opened Wal-Mart, he traveled the country studying and learning everything he could about discount retailing. He was convinced American consumers wanted a different type of store. Trusting his vision, Sam and his wife Helen put up 95 percent of the money for the first Wal-Mart store in Rogers, Ark (Wal-Mart history). From then on the company begins to flourish and would later become chain of retail stores. There is no argument that Wal-Mart has completely changed the discount retail industry. Understanding a company’s market structure and landscape will help marketers develop marketing plans that establish marketing strategies that are successful. As part of a business plan, the market structure definition and competitive landscape is a vital part of planning an effective advertising or other marketing campaign. In a market of perfect competition, no barriers to entry exist, and many offering different goods. Consumers will often shop based on price differences alone. Wal Mart can be viewed as a purely competitive company within the grocery industry for its super centers because they offer lower prices than their competing grocery chains (Grunert, Jeanne). Top of Form
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The idea that Wal-Mart's power actually wrecks the functioning of the free market does seem shocking to many. After all, Wal-Mart became dominant in the same way that thousands of other companies did before, through the use of smart innovation, a unique culture, and a focus on serving their customers. Even a decade ago, consumers could fairly conclude that, in most respects, the rise of Wal-Mart's had been great for the nation. But the issue before us is not how Wal-Mart grew to scale but how Wal-Mart will use its power today as well as in the future. The problem is that Wal-Mart, like other monopsonists, does not have to participate in the market so much as to use its power to micromanage the market, they carefully coordinating the actions of thousands of firms from a position above the market (Lynn, Barry C.). One of the basic premises of the free-market system is that firms are free to buy from or sell to a variety of other firms. In Wal-Mart’s case, no one can truly deny that every single firm that supplies the retailer is, technically, free not to do so if they choose. But, can this be true in the real world? After all, when a firm comes to depend on selling through Wal-Mart's system, how conceivable does the idea of walking away become? There are producers who own and maintain machines, employ workers who are skilled, lease land and buildings. Even with the most careful planning, many would find the sudden loss of 20% or more of their revenue to be extremely disruptive, if not hurtful (Lynn, Barry C). One other premise of the free-market system to consider is the price of a commodity or good carries essential information from actor to actor within an economy, for...
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