Question 3: Assessing if the Wal-Mart’s rapid rise to retail dominance is a positive or a negative development for our society
Following what Shaw (2013) educates, business competition eventually benefits the society because; the competition itself stabilizes the prices of quality products. Therefore, in a society that needs to develop, businesses are allowed to compete freely when they have an equal access to raw materials. Competition arises when there are new entrants in the new market and as prices go down, those competitors that are not able to produce standard products at reduced production costs withdraw from the market. That outcome is what has been taking place in the discounted retail industry where Wal-Mart has remained the only largest retailer able to sell products at 40 percent lower than its competitors and sustain its business. Viewed from this perspective, the firm’s rise to dominance has been a positive development to the society. However, from a different perspective, Wal-Mart’s growth is criticized for every reason it is praised. For instance, Wal-Mart is able to sell its products at reduced prices by exploiting workers and paying them less than what they should reasonably earn. Failure to meet the interests of the employees, the high turnover rates at the company increases the levels of unemployment in the society. Wal-Mart’s dominant position discourages the growth of other competitors and that weakens business competition, and that can be interpreted as a negative development for society (Gereffi & Christian, 2009).
What the rise of Wal-Mart to retail dominance tells about capitalism, globalization, and the plight of workers
Capitalism gives private companies the freedom to set prices without considering other businesses in the industry. Walmart is the largest retailer and because of their lowered prices, other businesses must comply and lower prices. To achieve this, companies in the U.S. close factories and move abroad to be able to meet the production cost. Walmart is making huge profits from their market dominance; however, the profits are funneled to the company’s executives and shareholders, which indicate that capitalism is all about making profits for the company and not for the benefit of the community. Globalization has made it possible for Walmart to expand their business exponentially. However, this is affecting local retailers who cannot go global and purchase their goods from countries such as China. Additionally, Walmart is anti-union and pays their employees low wages. The company’s labor costs are 20 percent lower than unionized businesses and most of their employees work and survive without company health insurance.
Question 4: Determining if a retailer ever become too large and too powerful
Under the capitalist system, it is possible for a retailer to become too big and powerful. As Collins (2016) argues, there are those that win and those that lose under a capitalist system. In that system, the winners are understood to be those that work hard prudently, honestly, responsibly, efficiently, and thoughtfully, while the losers are the lazy ones that are extravagant, inefficient, imprudent, and negligent. That is to say, that the capitalist system praises the winners by making them powerful and disregards the losers and consequently, those disregarded become defenseless and more vulnerable to the abuse of the winners. Wal-Mart has become a very powerful retailer globally generating over $200 billion of revenue annually. In terms of size, Wal-Mart is three times larger than its main competitor France’s Carrefour. Thus, Wal-Mart has become too large and powerful and it is not comparable to any other retailer (Bloomberg Businessweek, 2007).
Bloomberg Businessweek (2007, October 6). Is Wal-Mart too powerful? Bloomberg. Retrieved from https://www.bloomberg.com/news/articles/2003-10-05/is-wal-mart-too-powerful.
Collins, M. (2016). The winners and losers of free market capitalism. Forbes. Retrieved from https://www.forbes.com/sites/mikecollins/2015/08/04/the-winners-and-losers-of-free-market-capitalism/#42b544247f75.
Gereffi, G. & Christian, M. (2009). The impacts of Wal-Mart: The rise and consequences of the world’s dominant retailer. Annual Review of Sociology, 35, 573-591.
Shaw, W. H. (2013). Business ethics: A textbook with cases 8th ed.: The nature of capitalism. Mason: Cengage Learning.
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