Is Wal-Mart Good for America?
Currently Wal-Mart has 4,227 stores in the U.S and 3,210 internationally. Wal-Mart is the largest retailer in the world. In 2004 Wal-Mart accounted for 6.5 percent of the retail sales. In 2004 Wal-Mart had 1.3 million employees (Emek Basker). Sam Walton, a former JC Penney employee, started a small store named Walton’s in Bentonville, Arkansas in 1945. It grew into a multi-million dollar retail company known as Wal-Mart. Wal-Mart has done great things for consumers by keeping their prices low and affordable. They helped China create a middle class in their economy because most of the goods sold at Wal-Mart are manufactured in China. Although those things are good, they come at a price. They have created a more competitive market for retailers and manufacturers which caused a lot smaller retailers to close and go out of business. Wal-Mart also manipulates their suppliers by forcing them into unfair contracts and Wal-Mart provides very little chance for growth and promotion for their employees. In order for Wal-Mart to keep their prices low, they have to find the cheapest goods. Those goods are usually purchased from overseas manufactures. This business model has created a drop in manufacturing jobs in the US. Many believe that Wal-Mart is responsible for the loss America’s production industry. Wal-Mart set the standard for most retail businesses. In order to keep income flowing, most retail stores have modeled their stores after Wal-Mart. Wal-Mart offers a wide variety of merchandise in all their stores. They call them supercenters. You can find everything including but not limited to groceries, medicine, tires, pet supplies, music, electronics, clothing, books, office supplies, beauty products, sporting equipment, and gardening tools. The philosophy behind Wal-Mart was for customers to be able to find everything in one store for a cheap price. Since Wal-Mart has become so popular, more and more stores have taken the same approach to retail. Emek Basker quoted Target’s chairman in his study saying, “Target is the world’s premier student of Wal-Mart”. Target has now become a supercenter offering everything in one store. Since more retailers have adopted Wal-Mart’s business model, consumers have more options for lower prices. The only way Wal-Mart can stay competitive in this market is to cut back on labor, cut employee benefits, and continuously find cheaper manufactures. Suppliers are forced to lower prices in order to secure contracts with Wal-Mart and other retail stores. This in turn forced them to lay off hundreds of people in order to remain profitable. Manufacturers needed cheaper labor so they moved most of their factories overseas. They also found that US labor laws were too restrictive and that other countries did not have that problem. When Wal-Mart and other retail stores saw that it was cheaper to manufacture products overseas, they sent their suppliers over to China. They were able to get their raw materials cheaper and have Chinese workers assembled their products for a lot cheaper than they would have to pay workers in the U.S and not give them benefits. That allowed them to keep their prices down. Because a lot of manufactures ran to China for cheap labor, the Chinese started demanding more money. After a while labor in China got higher and it was no longer that much cheaper to manufacture in China. Once the Chinese were being paid more their living standard rose and they were able to buy in the market. Whereas before the Chinese workers didn’t make enough money to be able to live decently. When they started making more money they were able to create a better life by building houses and buying in stores. Although Wal-Mart created a middle class in China, they have not done much to help maintain our middle class. I feel Wal-Mart hasn’t contributed to our economy as much as they contributed to China’s. Since Wal-Mart has had a...
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