The corporation’s sheer size is difficult for most to grasp–it’s not only the largest corporation in the world for the past ten years, but also the largest corporation in the history of the world. Wal-Mart’s impacts are far reaching and play as much of a role in effecting globalization, as globalization effects the company. It’s been estimated that Wal-Mart has been able to save consumers $263 billion in 2004 due to its efficient supply chain, low supplier costs, and low employee wages and benefits. One author, Kerby Anderson, suggests that “Wal-Mart has become the national commons”; 85% of all consumers visit the corporation at least once every year.   When asked their opinions about Wal-Mart, people eagerly praise the company for its “always low prices,” or criticize it for its negative impact on small local businesses who cannot compete. In fact, the term the “Wal-Mart Effect” has been coined to describe the effects of opening a Wal-Mart store:

“A store moves into a community bringing lower prices, it drives down prices in other stores. And either they compete or close their doors” (Globalization & The Wal-Mart Effect)

However, the effects of Wal-Mart’s operations extend past the border of the United States: similar to other American companies, Wal-Mart is shifting more work to India and China, two developing capitalist nations that provide highly-skilled and motivated workers for very low costs. According to NY Times columnist, Thomas L. Friedman (different from the Friedman we discussed in class), globalization should be embraced as a “win-win” situation for all parties involved–providing an influx of capital and jobs to developing nations, and low priced goods & international markets for the developed nations.

But, does Wal-Mart take globalization too far? Friedman argues Wal-Mart has become the symbol for all that’s wrong in corporate America & capitalist-driven globalization, by being “heartlessly efficient and pitting everyday low prices for consumers against everyday low wages and benefits for employees” (Article). Wal-Mart is known to use its enormous market power to “bully” best prices suppliers and taking short-term financial advantage of a vulnerable labor force. It controlled rising health care costs through long eligibility waits, high deductibles, and high costs for good coverage. But employees continue to work for Wal-Mart due to its status as the largest corporation in the world, among other benefits such as profit sharing, 401(k) pension plans, and discounted stock options to compensate for the low hourly wage. I feel that these benefits do not outweigh the costs Wal-Mart places on employees and competitors; they have destroyed local small business ownership and taken advantage of developing economies’ labor force. Furthermore, through globalization, Wal-Mart has gained an even larger market share and used its status to bully suppliers into lower prices and enticed laborers with discount stock options to compensate for low hourly wages.

Advertisements

4 responses »

  1. Mike says:

    What about the ~$263 billion Wal-Mart is saving everyone each year? They might be cheap on workers compensation, but then people don’t have to spend as much because of the unbeatable prices they have for everything you may need. Do the low wages of their million employees outweigh the benefits for the several millions of poor people that can only afford Wal-Mart products? From a utilitarianism perspective, Wal-Mart looks like a savior.

    The suppliers don’t have to sell to Wal-Mart, why don’t they just stop. They are obviously making a lot of money from Wal-Mart at their ‘bullied’ small margin, but the large quantities they buy gives them an enticing profit they can’t refuse. They are supporting an abundance of jobs and suppliers in business.

  2. Mike M says:

    What is the problem with Wal-Mart being ruthlessly efficient? They clearly have developed a successful business model since it has allowed them to become the largest corporation in the history of the world. While some would argue that they do not treat their employees well, many people continue to work there, which seems to show that Wal-Mart must be doing something right to keep its employees. Overall, I agree with Thomas Friedman. While many small businesses have been hurt by Wal-Mart, overall Wal-Mart provides customers with cheap, desirable products and clearly is reasonably fair to its employees and suppliers since it has done so well.

  3. I gota agree with you on this Mike, I really don’t see how Wal-Mart is the bad guy in this situation. It seems that they have developed a good business model, that unfortunately does destroy local business. I feel as if since Wal-Mart is doing it, and they are doing it so well, I don’t see how other companies haven’t tried to compete with them, even though Wal-Mart is very well established. Until some sort of regulation comes about from United States this business will continue to thrive. But isn’t this just the essence of globalization? America is providing a business to two developing countries, which in essence is helping to boost the economy.

  4. […] Globalization & The Wal-Mart Bully (bizgovsociii.wordpress.com) […]

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s