Case Analysis- One Nation Under Walmart

Case Analysis- One Nation Under Walmart

Question 1: Do you like Walmart? Do you shop there? If so, how frequently? If not, why not?

I like to shop at Walmart firstly due to the fantastic shopping experience offered by the chain retailer. Over the recent years, the retailer has sought to improve the shopping experience through innovations targeting its physical assets. One of the most exciting shopping offers by the company is online grocery pickup. Online pickup allows shoppers to select items at home and then visit to pick them up from stores, saving time. Additionally, the retailer has positioned associates throughout the stores to streamline purchases. Whenever a customer picks an item, employees scan it without going to a teller point. The strategy significantly reduces a customer’s checkout time. Walmart also allows customers to scan their purchases through a self-service checkout option.

Question 2: Walmart in My Area

The buildings hosting Walmart stores are quite expansive and are accompanied by large and paved parking lots. The negative impacts of these vast stores and parking areas on the local community cannot be overstated (Downtown Economics, 2007). One such adverse effect is that they cause drainage problems, which eventually lead to ground-carving and flooding. The sprawling of the retailer’s spaces also occasions traffic congestion due to the expansive areas covered by the supermarket. Walmart retailer stores also come with increased social costs, especially overreliance on public support programs. For instance, about 38% of the retailer’s employees in California rely on public assistance programs due to increased poverty (Downtown Economics, 2007). That can only mean that Walmart workers get low wages that cannot get them out of poverty. Therefore, despite the retailer’s many positive customer experiences, it also comes with substantial costs.

Question 3: Effects of Walmart’s Rapid Rise to Retail Dominance

Walmart’s rise to dominance has led to a few negative impacts on local communities. For instance, Walmart’s substantial purchasing power enables the company to reduce costs which it then transfers to final consumers through reduced prices (Shaw, 2016). Local businesses that cannot afford to lower prices to Walmart’s level are eventually driven out of the market leading to job losses. The retailer’s dominance has also prompted local business districts out of business and hurt other established companies. Research shows that one new Walmart worker typically replaces 1.4 workers from other companies. Also, opening one new Walmart store drives two other local supermarkets out of business within five years of operation (Shaw, 2016). Essentially, Walmart has a zero or negative net effect on the local people’s revenue.

Another negative revenue effect of Walmart on the local people is the low wages the company pays its employees. Walmart is a staunch anti-unionist, paying employees 20% less than its pro-union peers (Shaw, 2016). For instance, sales clerks earn a paltry $8.23 per hour, way lower than the prescribed $15 minimum wage for federal employees (Shaw, 2016). Also, Walmart’s employees have to survive without health insurance covered by the employer. The company’s hardliner stance on cost reduction has sacrificed American jobs while keeping employees’ wages down.

Question 4: Can a retailer ever become too large and too powerful?

American people’s blind preference for convenience has made Walmart way too powerful. By aspiring to get all products at a one-stop place, people have empowered Walmart to become a monopoly to the detriment of other local businesses (Shaw, 2016). It is quite worrying that there cannot be successful local businesses specializing in electronics and grocery since Walmart takes a giant share of the market.

Besides, Walmart’s workforce is way too large for a single company. The company employs about 1.4 million Americans, which translates to about 1% of the country’s entire workforce (Shaw, 2016). With such a workforce, the company ought not to make any risky decisions resulting in a layoff. On the flip side, Walmart issued a late alert regarding its five stores in Oklahoma and Florida. The closure affected 2,200 employees, which is too high to contend with.

Question 5: Opposition to Walmart’s Expansion

Local communities are starting to oppose Walmart’s expansionary strategies in a bid to protect local businesses and downtown stores. Business commentators fear that political opposition is the greatest threat to the retailer’s growth instead of peer competition. Such opposition is justified since Walmart drives thriving local retailers out of the market, bringing little social and economic benefits. These pressures will also go a long way in encouraging the retailer to adopt green business practices like increased wages, insurance coverage, and corporate social responsibility.

Question 6: Reasons for Walmart Raising Its Minimum Wage

Before raising its minimum wage to $9 in 2015, Walmart had faced immense public criticism for its low pay structure and over-reliance on part-time employees. There is still pressure on the company to increase wages to the current level required of $15. Another reason for the increased wages is the tightening job market. Five years before 2015, the national unemployment rate stood at 9.7%, while in 2015, the unemployment rate was 5.7% (Tabuchi, 2015). Walmart was having difficulties retaining its employees, hence raising wages to catch up with industry peers.

However, Walmart still lags compared to industry peers such as Gap and Ikea, which pay a minimum of $10 or above. The primary motive of these retailers’ standardized wages is to reduce turnover and attract new employees. Still, none has come close to Costco, which pays $20 per hour (Tabuchi, 2015). However, Walmart’s decision to increase minimum wages has pushed industry peers to follow suit.

References

Downtown Economics. (2007). Issue 132 The Local Costs and Benefits of WalMart.             https://fyi.extension.wisc.edu/downtowneconomics/files/2012/07/local-cost-and-benefits- of-walmart.pdf

Shaw, W. H. (2016). Business ethics: A textbook with cases. Cengage Learning.

Tabuchi, H. (2015, February 19). Walmart Raising Wage to at Least $9. The New York Times.             https://www.nytimes.com/2015/02/20/business/walmart-raising-wage-to-at-least-9-            dollars.html

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Case Analysis

Case 4.3 “One Nation under Walmart”

The majority of huge corporations such as Nike, Coca-Cola, and Johnson & Johnson are familiar with contemporary capitalism. Walmart represents something new in relation to the economy. It is the company that has achieved its power not in production but in retail. Walmart is known for its affordable low prices. Everyone loves these prices, but not everyone loves Walmart. Why not? (Shaw, 2017, p. 148). Read Case 4.3 “One Nation under Walmart” in the textbook on pages 148-150 and address the following questions in a paper that will be submitted to Dropbox:

Do you like Walmart? Do you shop there? If so, how frequently? If not, why not?
Is there a Walmart store in your area? If so, has it had any impact on your community or on the behavior of local consumers? If there’s no store in your area, would you be in favor of Walmart opening one? Explain why or why not.
Is Walmart’s rapid rise to retail dominance a positive or negative development for our society? What does it tell us about capitalism, globalization, and the plight of workers?
Can a retailer ever become too large and too powerful?
Is opposition to Walmart’s expansion a legitimate part of the political process or is it unfair interference with our market system and a violation of the company’s rights? Do opponents of Walmart have any valid concerns?
In 2015, Walmart raised its minimum wage to $9 per hour (up from the federal minimum of $7.25). Why do you think Walmart did this, and what impact do you think it will have?