Wal-Mart is the
biggest chain of retailer and consumer, which
provides a large number of quality products under
one roof. These include grocery clothing, pharmacy,
toys, hardware and various CDs, DVD Musical instruments,
consumer electronics, books etc. etc. Moreover,
every Wal-Mart possesses McDonalds where people
can eat and have a break while shopping. It also
contains a photo shop so people can do shopping
while their photos get ready.
Wal-Mart is basically an innovative creation
of Sam Walton who opened the first Wal-Mart store
during 1962. It is publicly traded under the New
York stock exchange and recognize by the symbol
WMT. The secret of the international economic
aspect of Wal-Mart is hidden in the number of
shareholders associated to it, which are from
many economically developed countries of the globe.
These shareholders till the end of this year are
estimated to be around 333,604 as a common stock
of Wal-Mart. So Wal-Mart basically works in economic
collaboration with other states where consumers
get a large range of discounted products that
include mostly stocks and a small percentage of
premium products.
Another interesting aspect of Wal-Mart is the
SAM’S Club, which requires a membership
and provides products on further discounts. This
is basically a warehouse club owned by Wal-Mart.
Moreover, it also operates via various super-centers
that include a variety of grocery markets. Not
only a large variety of products under one roof
with discounted price is the source of attraction
of Wal-Mart but also its customer services attract
the people. There customer service also includes
exchange of their products even if a customer
comes back after a month. The key to any successful
business is meeting the demand of the very customers,
maintaining the quality of products and a reasonable
prize along other satisfactory demands of the
valuable customers. All these together are a part
of Wal-Mart. At the same time the new concept
introduced by Wal-Mart, which is getting all kinds
of consumer products under one roof is what attracts
the customers the most.
Therefore, Wal-Mart is at the same time most
potential economic source of American economy
as well as international economy but on the other
hand, it is a threatening source for the small
town businesses. The basic reason seems to be
the quality products with economic prices and
variety of products all together under one roof.
So people when go for shopping they do not have
to switch markets and shopping centers for different
stuff.
They get a hand on every thing just under one
single roof. At the same time, these small town
businesses do not have much capital and resources
to mobilize and are no more a source of attraction
for the local consumers. However, the interest
rates that the American federal government has
arose, is leaving immense repercussions to the
small town business. When these rates go up, the
small town business economies have to suffer a
lot. (Small Biz Advisor - News and Views, Nov.
2004)
The current operating and financial position
of Wal-Mart
Every year a report is calculated based on the
percentage of sales and purchase per month in
Wal-Mart stores. However, reports show that every
year the company increases it sale from 9 % to
18 %. At the same time the income from the club
segments also increases every year along the expansion
activities of the company. On the other hand with
the domestic increase in sales the international
segment of sales also increases. This is basically
due to the merging of large business companies,
which offers a handsome public tender. For instance,
during 1998, the Mexican joint venture with Wal-Mart
resulted in a hypermarket chain in Germany. (Washington
post.com Copyright © 1995-2004 Pinnacor)
Moreover, the domestic expansion activity keeps
on increasing with the production of new Wal-Mart
stores as well as converting Wal-Mart stores into
Super centers and new SAMS club. At the same time
the expansion strategy includes relocating the
existing SAMS clubs into new locations. This also
leads to international expansion of further units
of both the club and store. For instance, during
1999, Wal-Mart was expanded to Argentina, Brazil,
Canada and Mexico as its further units. (Washington
post.com Copyright © 1995-2004 Pinnacor)
Furthermore, during 2000 the evaluated profits
and ratio of sales and purchase to Wal-Mart was
immense as information technology and various
technological equipments were added along the
non-information technology equipments. However,
the company estimated an approximate amount of
$12 million for programming and replacing the
various software and $3 million as the cost of
hardware acquisition. Nonetheless all these costs
are basically funded by some operational cash
flows. On the other hand the company continuously
communicates to other big companies in order to
calculate the per year compliance of the company.
However, during the coming few years the company
tremendously grew and is presently the dominant
market community among the various shopping centers,
which not only provides the best environment to
the nations most successful retailers but also
offer the consumers a very suitable shopping environment
at an affordable cost to all classes of the society.
Therefore, by December 2003, the closing price
of the common shares in New York Stock Exchange
was calculated to be $33.57 with an addition to
the preferred shares at liquidation value along
the consolidated debt that makes around $5.6 billion
as compared to the amount estimated during 2002.
At the same time, the percentage of retail operating
as well as the development properties, which include
both the office and industrial properties reached
to an amount of 362 and 34. (NEW EDGAR, June 2004)
similarly the company earned immense fame and
profit during the present year.
Wal-Mart Suppliers
The power of Wal-Mart lies in its policy to bring
the possible lowest prices with a variety of products
under one roof to its customers. At the same time,
the management strategy and the policy to control
its suppliers is the key element in making Wal-Mart
successful. Though the retailers have a very transparent
policy for the suppliers, which also include compensating
the charges of retailers’ products from
the consumers. For instance, if some basic product
of a retailer does not change in a year, Wal-Mart
pays the price of that very product and charges
this amount from the shoppers. Therefore, these
low prices results into high prices for the consumers
and retailers, which the 21,000 suppliers to Wal-Mart
are not aware of. (Fisherman, Copyright ©
2004 ) At the same time, due to Wal-Mart and its
various policies to control the suppliers in its
own interest is accelerating the loss of American
jobs to low wages countries like China, so this
has immensely increased the import from china
in the U. S Wal-Mart with a cheaper price.
On the other hand, Wal-Mart is quite famous for
handling its various branches all over the world
while improving the quality of merchandise and
controlling the suppliers of both it’s competitors
and its personal retailers. For instance, Wal-Mart
keeps on forcing its suppliers for redesigning
their very products completely after few months
or maximum after a year. Moreover, the various
suppliers and manufactures to Wal-Mart are facing
various challenges in meeting orders of Wal-Mart,
which are raising questions for identification
of the work process and business opportunities
that they can address. Therefore, Wal-Mart has
decided to develop a knowledge base with in the
company to provide solutions to such problems
whenever required. (Roberti, May 2004)
Furthermore, whenever the suppliers and retailers
deliver any problems, issues or cases to the Wal-Mart,
they listen them and address solutions them every
year which strengthens the trust and builds a
healthy relationship of understanding among the
Wal-Mart and its very suppliers and retailers.
(RFID GAZZETTE, May 24, 2004)
Economic Impact Of Wal-Mart On Small Local Business
Companies
Though Wal-Mart is the world’s largest retailer
and consumer center and a principle source in
boosting up the American economy but it is resulting
into negative impacts over the local small business
economies. The very policies of Wal-Mart from
controlling their suppliers to managing the working
environment and low wages strategy along a policy
to provide products related to every filed of
life under one single roof with a cheaper rate
then any other shopping center. This is affecting
the local market tremendously. Basically Wal-Mart
is a very large business company, which primarily
focuses on developing and expanding Wal-Mart while
maintaining its standard of products and presenting
a healthy shopping environment. Therefore, it
offers incentives like partnership to the suppliers,
sharing profits with the staff as well as assuring
a friendly customer care service with everyday
low prices. So to keep a track on these policies,
Wal-Mart also has to work with a minimum cost
of production. (Moberg, July 2004)
However, the small local business companies cannot
earn a large amount of profit from a minimum cost
of production as compared to big shopping centers
and specifically Wal-Mart, which is the world’s
largest chain of shopping centers. Another aspect
that affects the small town business companies
is the low wages labors with extra facilities.
Since small town business companies do not have
ample potential and capacity to earn maximum profits
with minimum cost production and minimum lose,
workers are also not interested to work with these
companies as they find no charm and attraction
in the working environment. Moreover the relationship
enjoyed in the working environment of Wal-Mart
cannot be provided to the workers of the small
town business. For instance, the executives are
asked to bring the pens back from the conferences
or the head of Wal-Mart international sits in
a small office on the same floor as his staff.
(Moberg, July 2004) So they promote equality among
the employers ensuring a friendly working environment
just like one family. However, the practical side
of this picture shows that Wal-Mart is basically
exploiting the rights of labors and do not pay
them sufficient amount according to the hard work
extracted by them.
On the other hand, Wal-Mart uses the resources
of small town business economies like China and
other countries and do not pay them enough amounts
for the products manufactured there. However,
prior to making these products a part of Wal-Mart,
America usually assembles them so it may give
a picture of made in America. Therefore, small
town economies like China give a lot more input
then they earn while America enjoys most of the
fruits. At the same time, the various economic
policies of Wal-Mart are enormously affecting
the local business companies specifically in the
field of employments. Prior to Wal-Mart the various
U.S domestic companies use to send their employees
in other countries while opening their branches
there. But presently Wal-Mart has captured the
world market and employees vacancies. So no the
locals of these small town business companies
are left unemployed, as most of these employees
hired in the small town business economies in
Wal-Mart are Americans or from the funding countries
or other shareholders and partners to Wal-Mart
business.
Local Small Business Communities and
Expansion of Wal-Mart
Though Wal-Mart is the World’s largest chain
of shopping centers but due to its immense affect
over the local small business economies as well
as domestically over the small business companies
are fighting basically for the labor’s right.
Basically the out side picture of Wal-Mart’s
working environment presents a picture of a very
healthy and family like environment but internally
they lack massive shortcomings when the rights
of workers and labors are questioned. For instance,
the workers are at times forced to work extra
hours but are not given extra amount for that
over time. Similarly there is a lot of sexual
discrimination in the working environment in regard
to giving posts and salary scale as well as various
benefits. Above all there is no labor union for
this chain of shopping centers worldwide. So the
workers do not have any medium to address their
very problems and get solution for them.
However, various local and small town business
communities have started joining hands together
to fight against the expansionist policy as well
as the various strategies, which are not only
exploiting the rights of workers at Wal-Mart but
also resulting into other shortcomings. For instance,
in Michigan, four major unions are uniting to
fight against Wal-Mart. These include the Teamsters,
United Food and Commercial Workers, Service Employees
International and Hotel and Restaurant Employees
International. (Tenisha, The Detroit News, May
21, 2004) So we can observe the strong impact
of this giant business retailer over the small
local business economies as unions belonging to
all communities related to Wal-Mart have joined
hands.
On the other hand, the small local business merchants
lose economic strength and diversity of various
products, as they do not have the potential to
compete the giant retailers like Wal-Mart. Therefore,
when any giant business community enters into
a local and small town business community, the
host community along the other smaller towns located
in the surrounding of this host community loses
their Main Street merchants. (Mitchell, 2000)
Therefore, in this way America through its economic
expansionist policy all over the world is grabbing
the resources and manpower from the small town
business communities leaving them handicap to
these large business communities. For instance,
a small town of about 10,000 people can support
50-60 small merchants but cannot compete any large
corporate retailer like Wal-Mart if it enters
to the community. (Mitchell, 2000)
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