BUS644 Operation Management
Dr. Ronald Beach
November 26, 2011
It is very common for everyone that lives in a small town to get all their groceries at Wal-Mart. During the last 50 years of creation, from a small town on Arkansas, Wal-Mart became the biggest retail company of the world. At this time, this company is one of the major employers of the world and has more than 4,000 stores just in America. It is very difficult for a small business to compete with this company. Now before going forward, it is very important to understand how Wal-Mart operates. The main strategy of their operation is getting the cheaper supplies and sells their products a very low price to the customers. Another of their strategies is to centralize all kinds of products in one store. The key element for this business is to analyze the market considerations when they open a new location. There are tools to help companies to find out the best location. For example, according to Stevenson (2011, P. 348), “Geographic Information Systems is a computer based tool for collecting, storing, retrieving, and displaying demographic data on maps”. Now that we know this, let’s analyze the following disadvantages of opening a new Wal-Mart in a small town.
Disadvantages for owners of small business located nearby are several. Let’s start by mentioning that small towns are surrounded by and full of small business that support the local economy and employ the local population. With the presence of Wal-Mart, small businesses that offer similar products will be obligated to reduce their price to the minimum in order to compete with the big retail company. According to Dartmouth College, in 2009, they conducted a study that indicates the “the impact a Wal-Mart store has on a local business is correlated to its distance from that store. The leader of that study admits that this factor is stronger in smaller towns”. Wal-Mart is using what
References: Stevenson, W. J. (2011). Operation management (11th ed). New York: McGraw-Hill/Irwin. Retrieved from http://www.ilsr.org Retrieved from http://articles.chicagotribune.com/2010-07-04/business/ct-biz-0704-soda-wars-20100703_1_chicago-wal-mart-costco-and-wal-mart-pricing