Wal-Mart Research Paper

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The Good and the Bad of a Wal-Mart World:
Wal-Martization in America
By
Annamarie Bailey

Submitted for Rob Wells

Abstract

By examining the pros and cons associated with the effects Wal-Mart has on America, this paper will focus on why this corporation is good and bad for America. I will explain the history of Wal-Mart and it’s enormous success today. The first point is about the effects outsourcing has on American jobs. Secondly, a point will be made to explain how newly built Wal-Marts effect small businesses and communities. The third point is about the company’s employment policies. Personal opinions will be included as a reflection of the aforementioned points made.

More than 40 years ago, the birth of a retailing phenomenon took place in America. Discount stores, such as Kmart and Target, offered a new concept for consumers that swept the nation. The owner of one tiny chain of discount stores made the decision to research this new concept to improve his own business and surpass competitors. Sam Walton saw the future of American consumerism shifting towards a different kind of store; one that would allow its customers to simultaneously purchase products at the lowest possible prices and search though a wide variety of quality merchandise.

Walton’s present-day colossal global chain called Wal-Mart Stores, Inc., is primarily based on his vision. As stated on walmartfacts.com, its sales have increased dramatically for the past 20 years, and the company has become America’s largest employer (“Wal-Mart Facts,” 2007). According to CNNMoney.com, Wal-Mart is one of America’s most admired companies (“America’s Most Admired,” 2007). Wal-Mart was No. 1 on the Fortune 500 list four years in a row, dethroning what was once Exxon’s top spot (Associated Press, 2006). In 2006, Exxon reclaimed the title, but gave it back to Wal-Mart this year (Tkaczyk, 2007). It seems as if Wal-Mart is not only a money-making machine, but it also allows low-income families to stretch dollars further with its low prices. Sounds like a benevolent concept, doesn’t it? It may be. However, the reality of business makes one question: how far does America’s favorite discount store chain go to offer their every day low prices? Wal-Mart is undoubtedly successful, but the way this company achieves its success by maintaining such low prices is far from ethical.

In an article titled “Don’t Blame Wal-Mart,” a spokeswoman for the company stated, “‘We expect our suppliers to drive the costs out of the supply chain. It's good for us and good for them.’” (Reich, 2005). One of the ways this retail giant stays ahead of competitors is by eliminating inefficiencies in the supply chain through their suppliers. These suppliers have to cut costs to offer customers lower prices. This means that to stay competitive, the company must decrease expenses. The most cost-effective way to accomplish this, from a business standpoint, is to outsource production to countries with cheap labor.

From a stockholder’s perspective, outsourcing is a major benefit in terms of production because costs are lowered and the company gains a competitive advantage. In contrast, this eliminates thousands of American jobs. When a company makes the decision to take production offshore, employees who have worked in that manufacturing business all their lives may have to start over again at the age of 50. And what company will gladly recruit these unemployed elders? Wal-Mart. After all, it employs many elderly workers eligible for Medicare, according to a University of California study done in 2004. This means the number of elderly workers has probably grown within the last three years (Liedtke, 2004). Perhaps Wal-Mart accepts elderly applicants with open arms because many manufacturing companies lay off employees to be competitive enough to supply Wal-Mart with “quality products.”

Robert Reich, the author...
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