Walmart Case Study

Mission Statement

The purpose of this paper is to further inform Wal-Mart Watch on several issues Wal-Mart needs reformation/change in. You have a vested interest in how Wal-Mart operates and this paper should point out major flaws in the company and then an analysis of how to rectify these issues. The issues deal with the economic, small business, and employee wrongdoings by Wal-Mart.

Wal-Mart

The first Wal-Mart, opened in Benton County, Arkansas in 1962 (Slater 48). By the time the company went public in 1969 it had 18 stores throughout Arkansas, Missouri, and Oklahoma. The new company slowly expanded farther and farther from its original location. Robert Slater states that by 1998, Wal-Mart had approximately 2400 stores in all 50 states and about 800,000 employees in the United States. Wal-Mart is the largest retailer in the United States as well as the world. This superstore operates in over thirteen countries (Walmart). Wal-Mart opens up discount centers and super centers offering groceries and other goods.

Walmart is the largest private employer and owns and operates the largest trucking fleet in the world. For a company that has been around since 1962, that is a huge feat to accomplish in that small amount of time. Nobody would have thought many years back that Wal-Mart would be as successful as it is now, other than the founder himself, Sam Walton. Mr. Walton knew that by the year 2000 Wal-Mart would be the largest employer in the world and by that same year would have done $100 billion dollars in sales(Walmart). This feat has not been accomplished by any other retailer anywhere throughout the world. Some people would say that Wal-Mart has been extremely beneficial to the economy, while others would say that it has destroyed the economy by driving out other business. There are facts to support both cases.

There are many reasons to why The Wal-Mart Corporation to come off as a great American company. But by digging deeper, one can see how Wal-Mart has driven other companies out of business, forced suppliers to lower their prices, and even cut back on wages and benefits that they offer their employees.

The image that most people have when picturing rural America is small towns, nice quant little farms, and family owned shops and restaurants. Most picture a town where people live their whole lives to grow up and raise a family and eventually retire. However, most of what we used to see is gone, and now replaced by that large blue sign, and those "low, low prices": Wal-Mart, a staple in most every American town. This could be beneficial to the town by providing jobs for hundreds, and it even bringing some conveniences that a town may never have had before. The consequences of it usually include the closing of downtown shops that have been there for fifty years and farmers having to shut down their farms due to loss of sales in their corn to Wal-Mart, which would be cheaper to the consumer.

Wal-Mart has a big affect on small businesses and the "mom and pop" stores. Activists say mom and pop stores make towns unique and Wal-Mart is killing this concept, since Wal-Mart began moving into additional retail areas, for instance groceries, clothes, and flowers. Why go to the friendly mom and pop when money to support one's family can be saved by going to Wal-Mart? Bonnie Neisius, owner of a UPS franchise in Las Vegas, mentioned that she has watched businesses around her drop left and right since Wal-Mart has moved into the heart of the shopping center. Neisus states that she is personally "probably down 45 percent. I just don't get the foot traffic anymore." Richard Moe, president of the trust in Neisius' UPS store, describes his version of what Wal-Mart is doing to local businesses and mom and pop stores. "We know the effects that these superstores have. They tend to suck the economic and social life out of these downtowns, many of which whither and die as a result. I think it will drastically affect the character of the town. (Pearlstein)"

The Wal-Mart Corporation hires more than one million workers in the United States. This is far more than any other private company can and will hire (Lichtenstein). The company plans to hire over 800 thousand more workers in the next five years. Wal-Mart has many negative affects on labor markets, however, due to the increasing of average efficiency in the retail department. This means that fewer workers are needed per sale and to keep the store running efficiently, thus fewer jobs will be available for people to apply and be hired for. Although those stats are staggering because of the number of people being hired each year in total, so many would question if Wal-Mart is really opening more jobs than they are killing? All growth and productivity in the retail sector has been due to the reallocation of workers because of net entry of establishments. Wal-Mart is an important key to this process because, due to the copying by other smaller retailers of Wal-Mart's efficient but job killing style of work, increasing number of stores will choose this method as well which means decreasing employment in those stores also. Wal-Mart is hiring many people, yet costing a lot of jobs because of their low cost style.

A New York Times article states that in May 2004, after much debate by supporters against this structure, Chicago's city council came to a vote because of all the lobbying being done to stop Wal-Mart's practices. The city council allowed Wal-Mart to build one of there stores near the West Side (Goldman). Goldman goes on to say "When Englewood voters went to the polls in April 2004, they voted to oppose Wal-Mart's initiative by an overwhelming margin of 60.6 percent to 39.3 percent." Although Wal-Mart may be rejected in Englewood, unfortunately many other cities and towns will still be approved by their governments for Wal-Mart's and they will continue to be built. This is a growing problem and will continue unless something is done to stop the growth of this giant retailer.

Wal-Mart's wrongdoings begin with the poor treatment of women. With more and more women entering the workplace, issues involving their treatment have become a current hotbed in the media. Wal-Mart currently employs nearly three quarters of a million women. In the U.S. alone in 2005 there were sixty-eight million women who were either looking for work or were currently working. This means that females at Wal-Mart make up almost one percent of all women who are in this countries workforce. Recently much attention by the media has been given to the way female associates at Wal-Mart are treated and rewarded in comparison to their male counterparts. In 2001 men earned around 4.5% to 5.6% more than women doing similar