Wal-mart in Latin America

As Wal-Mart's domestic growth begins to reach an apex, the retail giant has had no other choice but to consider foreign expansion of the organization. While Wal-Mart has experienced some success in Asian markets, there is still some considerable question as to whether or not the retailer will be able to successfully expand into Latin American markets. Given the notable challenges associated with expansion of domestic enterprise into the larger global community, it is helpful to consider barriers that can impede this process. Using this as a basis for investigation, this research considers the feasibility of Wal-Mart's expansion into Costa Rica. Examining issues of labor concerns as community impact, it will be possible to demonstrate that Wal-Mart should expand into this country.

Critically reviewing what has been written about labor issues in the context of Latin America, Epstein (2004) notes that the sheer size and magnitude of Wal-Mart has made it able to force labor costs down in Latin America. According to Epstein, Wal-Mart " (p. 20). For a region that has been beleaguered by economic problems in the past, the need to reduce costs is essential for maintaining Wal-Mart's business in the country. When this information is placed in the context of Wal-Mart's expansion into Costa Rica, it becomes evident that the current strong hold that Wal-Mart has on the economies of Latin American countries will make it even easier for Wal-Mart to acquire favorable labor costs and conditions in this country. As such, from the standpoint of labor, Wal-Mart should have no trouble cultivating the labor force that it needs to keep costs low. As Wal-Mart enters Costa Rica, it will be able to exploit workers and create a situation in which working conditions for citizens will be highly unfavorable. Thus, in terms of labor, Wal-Mart will be able to exploit the current situation to garner favorable labor contracts.

In addition to being able to acquire the necessary labor concessions, researchers have also noted that Wal-Mart will be able to easily retain control of local communities and economies. Researchers examining the community impact of Wal-Mart have been quick to note that in many areas across the globe, Wal-Mart has replaced mom and pop retailers at an overwhelming pace (Wal-Mart reshapes..., 2006). In developing regions of the globe that depend on mom and pop retailers for individual livelihood and the development of local economies, the development and establishment of Wal-Mart has meant huge blows to local economies. Many of the counties in Latin America, such as Costa Rica, rely on mom and pop businesses as a central means to support local economies (Wal-Mart reshapes..., 2006). As such, the establishment of Wal-Mart in Costa Rica would mean the destruction of local economic infrastructure that will enable Wal-Mart to become highly profitable.

When the data is examined overall, it becomes evident that the only party that stands to gain if Wal-Mart should enter Costa Rica is Wal-Mart. At the present time the labor conditions that exist in Costa Rica coupled with the weak retail infrastructure make Costa Rica a favorable target for Wal-Mart's development. However, when these issues are framed in the context of the impact that this development would have on the citizens of Costa Rica, it is evident that Wal-Mart's entrance into Costa Rica would be a bane for economic and social development. Unfortunately, the sheer economic power of Wal-Mart has made it possible for the organization to successfully enter other Latin American countries. Even though the outcomes may not have been as positive for individual countries, for Wal-Mart the existing economic and social conditions in Latin America make countries in these regions favorable targets for business development and expansion. Thus, regardless of the negative impact that this process may have on Costa Rica, the economic benefits for Wal-Mart will more than likely be extensive.

References

Epstein, J. (2004). The Bentonville menace. Latin Trade, 12(5), 20.

Wal-Mart reshapes the retail world. (2006). MSN Money. Accessed April 17, 2006 at: http://moneycentral.msn.com/content/invest/forbes/P142021.asp.