Wal-Mart and Its Impact on Business of Small Town Economies

Wal-Mart is the biggest chain of retailer and consumer, which provides a large number of quality products under one roof. These include grocery clothing, pharmacy, toys, hardware and various CDs, DVD Musical instruments, consumer electronics, books etc. etc. Moreover, every Wal-Mart possesses McDonalds where people can eat and have a break while shopping. It also contains a photo shop so people can do shopping while their photos get ready.

Wal-Mart is basically an innovative creation of Sam Walton who opened the first Wal-Mart store during 1962. It is publicly traded under the New York stock exchange and recognize by the symbol WMT. The secret of the international economic aspect of Wal-Mart is hidden in the number of shareholders associated to it, which are from many economically developed countries of the globe. These shareholders till the end of this year are estimated to be around 333,604 as a common stock of Wal-Mart. So Wal-Mart basically works in economic collaboration with other states where consumers get a large range of discounted products that include mostly stocks and a small percentage of premium products.

Another interesting aspect of Wal-Mart is the SAM'S Club, which requires a membership and provides products on further discounts. This is basically a warehouse club owned by Wal-Mart. Moreover, it also operates via various super-centers that include a variety of grocery markets. Not only a large variety of products under one roof with discounted price is the source of attraction of Wal-Mart but also its customer services attract the people. There customer service also includes exchange of their products even if a customer comes back after a month. The key to any successful business is meeting the demand of the very customers, maintaining the quality of products and a reasonable prize along other satisfactory demands of the valuable customers. All these together are a part of Wal-Mart. At the same time the new concept introduced by Wal-Mart, which is getting all kinds of consumer products under one roof is what attracts the customers the most.

Therefore, Wal-Mart is at the same time most potential economic source of American economy as well as international economy but on the other hand, it is a threatening source for the small town businesses. The basic reason seems to be the quality products with economic prices and variety of products all together under one roof. So people when go for shopping they do not have to switch markets and shopping centers for different stuff.

They get a hand on every thing just under one single roof. At the same time, these small town businesses do not have much capital and resources to mobilize and are no more a source of attraction for the local consumers. However, the interest rates that the American federal government has arose, is leaving immense repercussions to the small town business. When these rates go up, the small town business economies have to suffer a lot.

The current operating and financial position of Wal-Mart

Every year a report is calculated based on the percentage of sales and purchase per month in Wal-Mart stores. However, reports show that every year the company increases it sale from 9 % to 18 %. At the same time the income from the club segments also increases every year along the expansion activities of the company. On the other hand with the domestic increase in sales the international segment of sales also increases. This is basically due to the merging of large business companies, which offers a handsome public tender. For instance, during 1998, the Mexican joint venture with Wal-Mart resulted in a hypermarket chain in Germany. (Washington post.com Copyright © 1995-2004 Pinnacor)

Moreover, the domestic expansion activity keeps on increasing with the production of new Wal-Mart stores as well as converting Wal-Mart stores into Super centers and new SAMS club. At the same time the expansion strategy includes relocating the existing SAMS clubs into new locations. This also leads to international expansion of further units of both the club and store. For instance, during 1999, Wal-Mart was expanded to Argentina, Brazil, Canada and Mexico as its further units. (Washington post.com Copyright © 1995-2004 Pinnacor)

Furthermore, during 2000 the evaluated profits and ratio of sales and purchase to Wal-Mart was immense as information technology and various technological equipments were added along the non-information technology equipments. However, the company estimated an approximate amount of $12 million for programming and replacing the various software and $3 million as the cost of hardware acquisition. Nonetheless all these costs are basically funded by some operational cash flows. On the other hand the company continuously communicates to other big companies in order to calculate the per year compliance of the company.

However, during the coming few years the company tremendously grew and is presently the dominant market community among the various shopping centers, which not only provides the best environment to the nations most successful retailers but also offer the consumers a very suitable shopping environment at an affordable cost to all classes of the society.

Therefore, by December 2003, the closing price of the common shares in New York Stock Exchange was calculated to be $33.57 with an addition to the preferred shares at liquidation value along the consolidated debt that makes around $5.6 billion as compared to the amount estimated during 2002. At the same time, the percentage of retail operating as well as the development properties, which include both the office and industrial properties reached to an amount of 362 and 34. Similarly the company earned immense fame and profit during the present year.

Wal-Mart Suppliers

The power of Wal-Mart lies in its policy to bring the possible lowest prices with a variety of products under one roof to its customers. At the same time, the management strategy and the policy to control its suppliers is the key element in making Wal-Mart successful. Though the retailers have a very transparent policy for the suppliers, which also include compensating the charges of retailers' products from the consumers. For instance, if some basic product of a retailer does not change in a year, Wal-Mart pays the price of that very product and charges this amount from the shoppers. Therefore, these low prices results into high prices for the consumers and retailers, which the 21,000 suppliers to Wal-Mart are not aware of. (Fisherman, Copyright © 2004)

At the same time, due to Wal-Mart and its various policies to control the suppliers in its own interest is accelerating the loss of American jobs to low wages countries like China, so this has immensely increased the import from china in the U. S. Wal-Mart with a cheaper price.

On the other hand, Wal-Mart is quite famous for handling its various branches all over the world while improving the quality of merchandise and controlling the suppliers of both it's competitors and its personal retailers. For instance, Wal-Mart keeps on forcing its suppliers for redesigning their very products completely after few months or maximum after a year. Moreover, the various suppliers and manufactures to Wal-Mart are facing various challenges in meeting orders of Wal-Mart, which are raising questions for identification of the work process and business opportunities that they can address. Therefore, Wal-Mart has decided to develop a knowledge base with in the company to provide solutions to such problems whenever required.

Furthermore, whenever the suppliers and retailers deliver any problems, issues or cases to the Wal-Mart, they listen them and address solutions them every year which strengthens the trust and builds a healthy relationship of understanding among the Wal-Mart and its very suppliers and retailers.

Economic Impact Of Wal-Mart On Small Local Business Companies

Though Wal-Mart is the world's largest retailer and consumer center and a principle source in boosting up the American economy but it is resulting into negative impacts over the local small business economies. The very policies of Wal-Mart from controlling their suppliers to managing the working environment and low wages strategy along a policy to provide products related to every filed of life under one single roof with a cheaper rate then any other shopping center. This is affecting the local market tremendously. Basically Wal-Mart is a very large business company, which primarily focuses on developing and expanding Wal-Mart while maintaining its standard of products and presenting a healthy shopping environment. Therefore, it offers incentives like partnership to the suppliers, sharing profits with the staff as well as assuring a friendly customer care service with everyday low prices. So to keep a track on these policies, Wal-Mart also has to work with a minimum cost of production.

However, the small local business companies cannot earn a large amount of profit from a minimum cost of production as compared to big shopping centers and specifically Wal-Mart, which is the world's largest chain of shopping centers. Another aspect that affects the small town business companies is the low wages labors with extra facilities. Since small town business companies do not have ample potential and capacity to earn maximum profits with minimum cost production and minimum lose, workers are also not interested to work with these companies as they find no charm and attraction in the working environment. Moreover the relationship enjoyed in the working environment of Wal-Mart cannot be provided to the workers of the small town business. For instance, the executives are asked to bring the pens back from the conferences or the head of Wal-Mart international sits in a small office on the same floor as his staff. So they promote equality among the employers ensuring a friendly working environment just like one family. However, the practical side of this picture shows that Wal-Mart is basically exploiting the rights of labors and do not pay them sufficient amount according to the hard work extracted by them.

On the other hand, Wal-Mart uses the resources of small town business economies like China and other countries and do not pay them enough amounts for the products manufactured there. However, prior to making these products a part of Wal-Mart, America usually assembles them so it may give a picture of made in America. Therefore, small town economies like China give a lot more input then they earn while America enjoys most of the fruits. At the same time, the various economic policies of Wal-Mart are enormously affecting the local business companies specifically in the field of employments. Prior to Wal-Mart the various U.S domestic companies use to send their employees in other countries while opening their branches there. But presently Wal-Mart has captured the world market and employees vacancies. So no the locals of these small town business companies are left unemployed, as most of these employees hired in the small town business economies in Wal-Mart are Americans or from the funding countries or other shareholders and partners to Wal-Mart business.

Local Small Business Communities and Expansion of Wal-Mart

Though Wal-Mart is the World's largest chain of shopping centers but due to its immense affect over the local small business economies as well as domestically over the small business companies are fighting basically for the labor's right. Basically the out side picture of Wal-Mart's working environment presents a picture of a very healthy and family like environment but internally they lack massive shortcomings when the rights of workers and labors are questioned. For instance, the workers are at times forced to work extra hours but are not given extra amount for that over time. Similarly there is a lot of sexual discrimination in the working environment in regard to giving posts and salary scale as well as various benefits. Above all there is no labor union for this chain of shopping centers worldwide. So the workers do not have any medium to address their very problems and get solution for them.

However, various local and small town business communities have started joining hands together to fight against the expansionist policy as well as the various strategies, which are not only exploiting the rights of workers at Wal-Mart but also resulting into other shortcomings. For instance, in Michigan, four major unions are uniting to fight against Wal-Mart. These include the Teamsters, United Food and Commercial Workers, Service Employees International and Hotel and Restaurant Employees International. So we can observe the strong impact of this giant business retailer over the small local business economies as unions belonging to all communities related to Wal-Mart have joined hands.

On the other hand, the small local business merchants lose economic strength and diversity of various products, as they do not have the potential to compete the giant retailers like Wal-Mart. Therefore, when any giant business community enters into a local and small town business community, the host community along the other smaller towns located in the surrounding of this host community loses their Main Street merchants.

Therefore, in this way America through its economic expansionist policy all over the world is grabbing the resources and manpower from the small town business communities leaving them handicap to these large business communities. For instance, a small town of about 10,000 people can support 50-60 small merchants but cannot compete any large corporate retailer like Wal-Mart if it enters to the community.