Is Wal-Mart Good for America?

1. What is Wal-Mart? It is thousands of various goods under one roof, and it is a chain of nearly 34 hundred stores all over the country. Wal-Mart is a unique company with tremendous power and influence (Wal-Mart’s Revolutionary Power, 2004). It sets a new standard for other companies to follow, if they want to compete.
Wal-Mart is best understood from a functionalist perspective, because it focuses on customer needs and customer satisfaction. And its slogan about everyday low prices is not only truthful, but it also seems to show indifference to financial side. The clearest evidence of it is the ability to buy everyday staff much cheaper, than in other stores. Although the quality of goods is often not satisfactory, still one would hardly find a less expensive store, than Wal-Mart. Wal-Mart is a law unto itself, and it does not regard the opinions of critics, opponents or press. Its main concern is customers; that is why it aims efforts at functional and practical side of business. Wal-Mart’s economy is based on the principle of low pricing. Every dollar, saved by a customer, makes it possible for them to buy other goods. Once a customer visited a Wal-Mart store, it is hard for them to resist the temptation of going there again.
2. Wal-Mart is a large bureaucratic organization, which embodies Weber’s concept of rationalization and there are a lot of evidences of it. First of all, it is important to explain the main ideas of Weber’s theory. Rationalization is a major concept in the analysis of modern capitalism (Lieberman, 2006). It consists of a number of related processes, in the course of which every aspect of human life becomes a calculation. It brings about spread of bureaucracy, state control and administration. While on the subject of Wal-Mart, it should be mentioned that it tries to increase the productivity of work by all means. Some researchers consider that those, who clamor about the Wal-Mart’s business, simply do not understand the economy itself. In economy only those companies who best serve customer needs, achieve success in their business (Semmens). But on the whole, today rationalized system is an inevitable part of business organization.
3. George Ritzer defined McDonaldization as “a process by which the principles of the fast-food restaurant are coming to dominate more and more sectors of American society as well as rest of the world” (Ritzer, 2003). The reason for such a process lies in all those conveniences that McDonalds chain of restaurants provides for their customers. And we can see that the same thing is now happening with Wal-Mart. It becomes more and more popular with customers, but gradually ruins the economy of the country. Wal-Mart embodies Ritzer’s four principles: efficiency, calculability, predictability, and control (Ritzer, 2003). It also exemplifies its rationalization. However, these four principles often work for the prosperity of business, but not customers. Wal-Mart successfully predicts and controls the demands of the customers and fulfills their needs in order to keep business running smoothly. Despite the destructive power of McDonaldization, described by Ritzer, it is clear that the more people visit McDonalds, the harder it is to stop the process. McDonalds and Wal-Mart have much in common. For example, efficiency of McDonalds, as one of Ritzer’s principles, lies in the opportunity to buy food quickly, while efficiency of Wal-Mart lies in providing customers with a great number of low-priced goods under one roof. In this regard, we can see the similarity between these two processes in modern society.
4. Iron Cage of Rationality is a Weber’s concept for capitalistic society, in which every individual has to be controlled by government and bureaucratic regulation. All spheres of social life are rationalized, together with people’s way of thinking and style of life. The temptation to get everyday goods at low prices maintains the popularity of Wal-Mart stores among common American people. And it undoubtedly has control over customers and influence on the whole society.
Outsourcing of American jobs is considered to be another negative characteristic of Wal-Mart chain store system. As has been mentioned above, Wal-Mart caters for every need of customers, but does not pay much attention to the working conditions. On the whole, Wal-Mart provides jobs for 1,6 million Americans, and each new shop is supposed to create about 500 working places. In reality, due to the fact that many companies either become out of business or reduce their personnel, in several years it appears that there are hardly any new working places in Wal-Mart. The question of outsourcing of American jobs concerns not only competitive companies. The matter is that it is often cheaper to produce goods abroad, in China, Mexico and other countries with lower salaries. It is much more profitable to hire 20-40 workers in China than one worker in the USA (The Strategy: Low Costs and Go Global, 2004). As a result, American people loose their jobs and the production is suspended.
Moreover, the quality of imported goods leaves much to be desired, and also affects labor conditions in foreign countries. This state of things has an adverse effect on workers, who receive extremely low wages and have to work for 12 hours a day or even more. In such a way, it is clear that Wal-Mart is ready to use any means, even labor exploitation, in order to maintain its popularity with customers.
However, it seems that Chinese people are willing to work even for 100$ a month, which would be unacceptable for American employees. They come to work and live at the factories. Nowadays, out of six thousands of world-wide suppliers, 80% are in China (China’s View of Wal-Mart – Big Partner, 2004). On the one hand, it has a negative effect on American employment, as many jobs have been eliminated because of Chinese competition. On the other hand, a lot of new jobs have been created as well.
5. Is Wal-Mart really contributing to growing income equality in the USA? Today Wal-Mart’s income has reached $250 billion in annual sales (Semmens). If we take a look at the past, we will see that in early 80s the company was trying to avoid independent trade representatives. It used to order goods directly from the manufacturers and claim price decrease. In reality the economy of suppliers appeared to be quite illusory, as the duties of trade representatives were imposed on Wal-Mart’s own employees. All the achievements of Walton were motivated by a strong desire to surpass his opponents. At some point, Walton managed to succeed in business and contribute to the financial state of the whole country. Nonetheless, rapid development of Wal-Mart business also has a negative influence on the income equality in the USA. First of all, this enormous chain store system has to buy a bulk amount of items. As a result, its suppliers become dependant on Wal-Mart. They constantly have to reduce prices for their products, as well as fulfill other requirements of Wal-Mart. In case the partnership with Wal-Mart is broken, the company is likely to become out of business. Rubbermaid Company experienced a similar situation. They used to have tight relationships, and for Rubbermaid no customer was more important than Wal-Mart. In 1994 Rubbermaid Company was highly estimated for the quality of produced goods (Muscling Manufacturers, 2004). For some time both companies were satisfied with their partnership. However, once Rubbermaid made an attempt to claim for price increase, Wal-Mart not only rejected, but dropped a number of Rubbermaid goods. It balked the supply of Rubbermaid products, which resulted in considerable financial losses. Such vindictive actions of Wal-Mart resulted in gradual decline of Rubbermaid business. Thousands of its employees lost their jobs, while Wal-Mart still maintains its brilliant reputation and incredible popularity with customers. Rubbermaid and Wal-Mart showed two absolutely different ways to organize US economy. This argument proves that in spite of visible benefits of Wal-Mart business, there is also a negative influence on the US income. Wal-Mart always tries to reduce prices, which naturally affects suppliers. And if the latter are no longer able to reduce prices, Wal-Mart looks for someone else, while supplying companies loose their clients and turn bankrupts.
6. Having covered all the above stated questions, it is important to answer the summarizing one. Is Wal-Mart good for America? The answer to this question can be argued about. On the one hand, it is a highly profitable business, and what is good for business, is good for national economy. For more than a decade, Wal-Mart has been the best friend of customers, selling everything from electronic devices and cloths to food products at incredibly low prices. The reverse side of it lies in low wages, dissatisfactory health insurance and a toilsome work oversees. Some researchers consider it a destructive business organization; others keep to the point that the main purpose of any business is satisfaction of customers’ needs. In this regard, Wal-Mart may be considered an ideal example of a successful business for others to follow. However, Wal-Mart greatly affects economy of the country. According to statistics, in 2001 Wal-Mart has decreased the level of inflation by 15%, which means a considerable sum of money (Edid, 2005). Despite the fact that many people have a negative attitude to Wal-Mart and complain about the store chain system, 97% of Americans visit Wal-Mart at least once a year. Many of them just can’t help it, as it gives a good opportunity to save a considerable sum of money.

Works Cited
Frontline: Is Wal-Mart Good for America? 16 Nov. 2006 25 Feb. 2008.
http://www.pbs.org/wgbh/pages/frontline/shows/walmart/
Edid, Maralyn. The Good, the Bad and Wal-Mart. Institute of Workplace Studies. 3 Apr.
2005. 25 Feb. 2008 http://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article=1007&context=briefs
Lieberman, David. Weber: Rationalization of Modern Society: State, Economy and
Law. University of California, 2006.
Ritzer, George. McDonaldization of Society. New Century Edition, 2003.
Semmens, John. Wal-Mart is Good for the Economy. The Freeman: Ideas on Liberty. 23
Aug.2006. 25 Feb. 2008.
http://www.fee.org/pdf/the-freeman/1005Semmens.pdf