Wal-Mart Corporation

Wal-Mart Corporation


Nowadays, discount chain stores, such as Wal-Mart are steadily growing and becoming widely spread. The commercial success of such discount chain stores is, to a significant extent, predetermined by the obvious advantageous customers can benefit from by shopping at the discount chain stores, among which low prices are viewed as the most important advantage compared to conventional retailers. However, such an approach to the discount chain stores seems to be not very reasonable as customers are basically attracted by low prices that, being beneficial in short-term, can hardly outweigh the costs the customers and community will have to pay in a long-term perspective.
Speaking about the success of Wal-Mart in the market, it should be pointed out that the company was founded in 1962 and since that year it has been progressing. In fact, one of the major reason of its success was the strategy of the company which targeted at mass consumers. In other words, the major goal of the company was to sell a possibly larger amount of goods to large number of customers. One of the strategic advantages of the company compared to traditional retailers was the price. To put it more precisely, this discount chain store had prices which were substantially lower compared to traditional retailers. As a result, the company managed to attract a large number of customers and, what is more, gradually, the company developed customers’ loyalty to its brand, though the price always remained one of the defining factors for customers’ choice of Wal-Mart.
At the same time, it is worthy of mention that, to a significant extent, the commercial success of Wal-Mart was determined by the weakening of smaller retailers which, in actuality, were in a disadvantageous position compared to Wal-Mart in relation to price and amount of products available to customers. Naturally, customers preferred Wal-Mart discount chain stores instead of traditional retailers.
Furthermore, the international expansion of Wal-Mart also played an important role in the development of the company and its commercial success. In fact, nowadays Wal-Mart operates throughout the US, in Mexico, in the UK and in Japan (Brunn 2006:54).
It is worthy of mention that in each country it has its particular brand name that contributes to the loyalty of local customers who perceive this brand as their own and rely on it more than they would probably do if it were some foreign brand. At the same time, this is the result of Wal-Mart’s close cooperation with local companies that also contributed to the faster and easier process of entering the market since the company simply used the existing network and experience of its partners in the UK, Mexico and Japan to faster develop their network and promote its brand (Kabel 2006:68-69). However, the company also operates in such countries as Brazil, Puerto Rico, Canada and Argentine where Wal-Mart has got a right to wholly owned operations. As a result, due to the possibility to operate worldwide, the company has got an opportunity to improve its position in the world market since it has found new markets for its products where the competition is less strong than in traditional markets where the company is already popular.
However, it is necessary to underline that such commercial success are not always positive and do not produce positive impact neither on the local economy where Wal-Mart functions nor on its employees. In this respect, it should be said that opening new stores by Wal-Mart often is not accompanied by the consultations with local community, or, at least, the position of the local community can be simply ignored. In such a situation, the opening of new discount chain stores may be quite harmful for customers and local communities, not only economically but also morally and culturally. For instance, the opening of a store by Wal-Mart in Mexico in 2004 provoked a serious opposition from the part of local historians, archeologists, and community at large since the new store was built nearby the Teotihuacan Pyramid of the Moon and could and actually did damage historically important areas (Brunn 2006:159).
Nonetheless, the negative economic effect, being less obvious, is much more important and harmful for customers. In this respect, it should be said that Wal-Mart discount chain stores create a number of problems, including traffic and environment problems. In fact, these two problems are closely interrelated since the former naturally engenders the latter. To put it more precisely, Wal-Mart targets at large amount customers. Naturally, this contributes to the increasing level of traffic and resulting environmental problems, which, in their turn, may lead to health problems customers, or people living in the nearby areas can suffer from (Madsen 1990:265). What is more, it is the local community that as a rule deals with these problems while Wal-Mart practically ignores them.
Furthermore, the economic impact on the local business may be also quite harmful. In this respect, it should be said that small towns where discount chain stores are situated lose a substantial part of their retail trade. In such a way, smaller stores tend to gradually disappear, being unable to compete with such giants as Wal-Mart. As a result, people living in these areas are loosing their jobs and small businesses and their socio-economic position deteriorates dramatically.
Naturally, the supporters of the development of Wal-Mart discount chain stores may argue that they create new job places and, consequently, minimize the harm caused to the local community, or even create really new job opportunities minimizing the rate of unemployment in the area.
However, in actuality, this argument turns to be absolutely unconvincing since, as a rule, Wal-Mart discount chain stores create new job places but this is a part-time job mainly. Practically, it means that the job places created by the discount chain stores cannot be regard as absolutely equal to those full-time jobs that people often loose as a discount chain store is opened nearby (Leach 1993:402). And even those people who get employ at such a new store can hardly bear the existing conditions of work since often the wages are low. In this respect, it is even possible to say that the wages in the discount chain stores are as low as their price and both gradually kill the local business and deteriorate the position of the community since businesses can afford low prices while people either loose their jobs or are employed part-time and receive low wages that results in the high level of turnover at the discount chain stores (Brunn 2006:261).
Finally, it should be said that it is actually the local community, or the local tax-payers, who are forced to pay for the harmful socio-economic effects of Wal-Mart discount chain stores. The reasons is quite obvious since “low wages, stagnation or disappearance of small business lead to the increased need in social support of the larger strata of society” (Brunn 2006:315) creating an additional burden of the tax-payer services. No wonder that this burden is particularly difficult for the local tax-payers who do not have such a potential as the discount chain stores.
Thus, it is possible to conclude that possible benefits of the Wal-Mart discount chain stores are provisional, while, in actuality, their effect on the local community and business are extremely destructive. This is why Wal-Mart’s commercial successes, being really impressive, are not supported by the creation of better conditions of work of its employees and often lead to the deterioration of the economic situation in the areas where its discount chain stores operate.

Bibliography:
1. Kabel, Marcus. “Wal-Mart, Critics Slam Each Other on Web.” Washington Post. July 18, 2006.
2. Madsen, P., Ph. D., and Shafritz, J. M., Ph. D. (Eds.) Essentials of Business Ethics. New York: Penguin Books, 1990.
3. Leach, William. Land of Desire: Merchants, Power, and the Rise of a New American Culture. New York: Pantheon, 1993.
4. Brunn, Stanley D. Wal-Mart World: The World’s Biggest Corporation in the Global Economy. New York: Routledge, 2006.