Essay Topic: The Wal-Mart Effect

PBS Frontline Video: Is Wal-Mart Good for America? Video Stream: http://www.pbs.org/wgbh/pages/frontline/shows/walmart/view/ Guidelines: Be sure to follow all formatting guidelines provided in the syllabus. Your final work product must have a cover page with a word count, an essay that is 3-4 pages in length and a works cited page. The minimum writing requirement expectation is two full pages. If the minimum expectations are not met, the assignment will be marked incomplete. Be sure to provide a proper citation in MLA or APA format for all works consulted on a separate works cited page. Background: As the economic power of the worlds largest retailer continues to grow, so does the concern over its actions. Some are concerned that Wal-Mart has become so influential that its actions may impact national policy and the foundations of social life in the United States and other countries. This PBS special will examine the Wal-Mart way of doing business and examine the effects those business practices have on society, the economy and the government. Essay Questions: Why has Wal-Mart been able to achieve extraordinary success? It is my privilege to write about one of the biggest and most successful retail business in the world - Wal-Mart. It was founded by Sam Walton whose mission was to provide the best possible treatment for his customers through the variety of products in Wal-Mart. But Wal-Mart grew so much that it became the single largest employer in America as far as number of employees were concerned. Preceded by the federal government's huge employing Postal Service. Wal-Mart employs hundreds of thousands of employees in America and other countries where it has bases. Due to its overwhelming strength in the retail market, it virtually runs a monopoly on the retail market. But due to government laws restricting monopoly, prices are relatively cheap and bearable. One major strength behind Wal-Mart is its huge variety of brands that it provides to the customers. It is common in USA for people to say that if a particular item is not found elsewhere, it can be found in Wal-Mart. Due to its reasonable prices for its goods, it is also popular among the middle class and the lower income group of America.

Most of the cheaply priced products in Wal-Mart are manufactured in developing countries like China, India, Pakistan, etc. Thus it indirectly helps the hundreds of meagerly paid factory workers working under hard conditions in the developing countries for their livelihood. One of the major reasons behind the huge success of Wal-Mart is its treatment towards its employees. Although the employees at the lower level of the chain are paid close to the minimum wage, the huge variety of benefits like life and health insurance for you and your family, education opportunities through he various online universities, etc. are very attractive. The employees in the higher order of the ladder like the Store manager or the Regional manager gets paid huge amounts of money envied even by some doctors and lawyers. It also provides a part-time income for the high-school or college students. I am credible to write about these programs because I was an employee myself at Wal-Mart for 2 months when I worked as an Inventory Associate and a Cashier. Another reason I noticed behind its huge success is its clearly laid out inside system for managing the goods coming and going from the stores. It is called a S.M.A.R.T system. Whenever, a particular product gets ringed by the cashier and purchased by the customer, a message is sent to the warehouse of that particular product to order some more of the same to fill the vacant space in the shelf. The system is very solidly built and everything ranging from the warehouse to the cashier's desk is interconnected. It allows minimum chance for mistakes or fraud activities and hence is very effective. If something is good for Wal-Mart, is it good for America? Due to the whole economy of America is based on consumerism, Wal-Mart plays a huge part in the economy of America. It is true people get wide variety of choices and cheaper prices due to those products in Wal-Mart that are manufactured in developing countries. But when more and more people buy those and not the costlier US built counterparts, it negatively affects those industries based in USA which can lead to their outsourcing to other countries for cheaper wages. This causes a lot of employees employed by those companies to lose their jobs and hence increases the unemployment rate of the country. In this case, it is good for Wal-Mart due to their higher sales but it is not that good for America. But if we consider another scenario, all the goods purchased in the stores has some taxes associated with them and these taxes go to the government and government spends it on its people based on their needs. This is a win-win situation for both the parties. A third scenario is when Wal-Mart decides to cut the wages of its employees by some amount due to its profit motive. This decreases the money in the hands of a huge number of American people who employed by them considering the fact that it is the single most largest employer in America. That can negatively impact the economy of America as well.

Therefore, some actions that may be good for Wal-Mart are not good for America and vice-versa. Describe the positive and negative impact of maintaining low prices. What are some of the long-term effects of providing low prices? The positive impact of maintaining low prices are that more people in the United States especially the lower income population can buy products without sacrificing all their wages. This improves their quality of living and in turn their neighborhoods. Lower prices for goods also decreases crimes in the stores like shop-lifting or stealing. People have the tendency to buy goods in large quantities when they comparatively lower than before due to the fear of price hike. This causes generation of profit for the stores as well as income for government due to sales tax. Negative impact of low prices are that most of the cheaply priced goods are manufactured in developing countries where the wage is much lower. Hence the manufacturing companies within United States find it hard to keep up with the lowering of prices due to the wages given to their workers. This eventually causes either the manufacturing companies to shutdown or outsource their factories to the developing countries. This leaves the workers jobless negatively impacting the economy. This is a long term effect of low prices.

Are the interests of Americans as workers and the desires of Americans as consumers fundamentally conflicting sets of values? Why or why not?

The interests of Americans as workers revolve around the idea of a stable job or a constant wage. But that of the consumer in America is to have cheaper prices. These two ideas are fundamentally conflicting sets of values because there is a limit in considering how far the price of a product can go low if it is manufactured in the United States. This limit is the federal minimum wage. This minimum wage is much higher in value compared to the minimum wages of the developing countries. Hence there is more chance for the companies to search elsewhere if they feel they can't cope up with the competition. Is Wal-Mart good for the relationship between the United States and China? Why or why not?

Wal-Mart is a major distributor of goods made in China in USA. These goods are relatively cheaper compared to their American counter parts due to the cheap labor available there. This increases the customer satisfaction of Wal-Mart customers. Thus the Chinese economy benefits due to the huge number of people in China employed by these factories. This can benefit the relationship between China and United States. But in long term, due to the decreased prices of these goods, there is the problem of unemployment in America. This negatively impacts the relationship of USA with China. - What factors may diminish Wal-Marts influence? Is there a system of checks and balances in this situation? There are a number of checks and balances with the government in the form of laws that can diminish Wal-Mart's influence on the US economy. The laws framed against monopoly in the USA during the times of Rockefeller and Chase Morgan are still valid and powerful ways by which government controls these giant companies. To secure the life of employees in the US, government has set the minimum wage at 7.25 per hour. This has a great impact on the huge number of Wal-Mart employees. Government can control the taxes for certain goods to make them cheaper or costlier These can be seen in the case of essential necessities like food items not being charged any taxes in some states while luxury items being heavily charged. All these measures help the government to have a firm grip on the consumers of Wal-Mart who are also the citizens of United States.