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Pre-Final-Walmart Pros and Cons

Isme add karna h
by

Jam Singh

on 19 August 2016

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Transcript of Pre-Final-Walmart Pros and Cons

Is It Really Worth The Low Prices?




Today in America there are multiple Wal-Mart’s, employing lots Americans and the company has plans to continue expanding locally and globally.





Supporters of Wal-Mart claim that their low prices and one stop shopping retail model is what creates value for its customers and keeps them returning.







Critics of Wal-Mart point out that Wal-Mart drives down employee wages and hurts small businesses and suppliers
In order to assess the impact of Wal-Mart stores on the American economy it is important to examine its effects on
consumers, other businesses, employees, and governments
Walmart and the American Economy
Walmart Supporters
Walmart's Critics
PROS
CONS
Consumers complain that Wal-Mart stores lack adequate customer service
E.g. long lineups, lack of sales help
Consumer Disadvantages
•Always low prices on over 1 lakh products
Convenience and Economic benefits
• According to a study conducted by Global Insight in 2005, Wal-Mart saved the U.S consumer approximately 18 billion dollars a year (Ghenawat & Mark, 2006)

•In Canada these savings are proportion smaller but have a similar economic impact
Fact
Consumer Advantages
Consumer Advantages Cont.
•Convenience shopping leads to increased sales and pumps more money into the economy
•Economic inflation is reduced because other retailers must also lower their prices in order to compete with Wal-Mart ("Walmart's Impact on Canadian",2009)
Advantages for Other Businesses
•For example: home furnishing stores and fast food restaurants
•This happens because when a Wal-Mart is built it increases consumer traffic in that area bringing more customers to the non-competing businesses (Renkow, 2005)
Disadvantages for Other Businesses
•Wal-Mart is a threat to other nearby competing retail establishments either forcing them out of business or causing them to downsize as their customer base decreases
•Some of the most hard hit competing businesses include stores that sell clothing, shoes, hardware, building supplies, and groceries

•Wal-Mart's pressure on manufacturers for lower prices has contributed to the disappearance of manufacturing jobs in North America in favor of developing countries such as Mexico and China where labor costs are lower

•Also hard hit are business providing services such as: pharmacies, optical services, and car repairs
Disadvantages for Businesses Cont.
Another sector affected by job losses when a Wal-Mart comes to town are the local wholesalers and distributors
Since their customer base disappears and Wal-Mart has its own centralized suppliers these companies have no one to sell their products to.
Even Suppliers that supply products to Wal-Mart are eventually squeezed out of business due to Wal-Mart’s constant demand for lower prices

FACT

•According to Wal-Mart its rapid expansion provides more job opportunists and gives people a source of income
Wal-Mart has created more than 45,000 permanent jobs in Canada since 1994
When Wal-Mart Canada opens a store in a new community there is approximately an increase of 200 construction jobs and 200 permanent jobs, allowing more people to work. ("Setting the Record",2004)
Advantages for Employees
FACTS
Economic Impact in America
Disadvantages for Employees
•A key concern in the debate over the economic impact of Wal-Mart’s expansion is the effect it has on workers’ wages
•Wal-Mart jobs tend to be lower paying then comparable retail jobs. This is due to Wal-Mart’s aggressive cost cutting as well their aggressive battle against the unionization of their employees
•In Canada, the average hourly wage for a Wal-Mart sales associate is $10.19/hour, for a cashier $9.68/hour, and for an overnight stocker $12.73/hour ("Wal-Mart Canada",2012)
•Meanwhile, The Canadian average hourly earnings in 2011 was $24.81/hour for full time employees and $16.24/hour for part time employees ("Average Salary",2012)
•Most of the jobs created by Wal-Mart are part time positions which do not offer benefits. Canadians rely heavily on benefits for services not covered by goverment insurance such as prescription drugs, dental work, eye care, and disability insurance

•In the U.S this is a bigger issue because citizens do not have universal healthcare and need to rely on private health insurance covered by an employer

Disadvantages For Employees Cont.
•Because many competing companies try to benchmark their employee wages and benefits to Wal-Mart this leads to declining benefits and wages for all workers
FACT
Disadvantages for Employees Cont.
Working Conditions and labour law violations:
• In 2004 the New York Times reported Wal-Mart guilty of “extensive violations of child labour laws and state regulations" requiring time for breaks and meals” as well as instances requiring minors working to late, during school hours, or for too many hours in a day. ("Wal-Mart's impact on America's",N.D)
•In the year 2000 Wal-Mart was cited for 1436 violations of Maine’s child labour laws ("Wal-Mart's impact on America's",N.D)
FACT
Disadvantages For Employees Cont.
Anti Union Efforts:
•Wal-Mart uses extensive measures and considerable resources to squash any attempts by their employees to organize a union. They have been very successful

•There are no unionized Wal-Mart stores in the United States and only a few in Canada
•The few Canadian stores that have been unionized have not been able to get a collective agreement (as of 2005) (Adams,2005)

•Because of Wal-Mart’s huge public presence, their behaviour towards unions has an effect on other Canadian businesses causing them to move more towards an anti union direction
Positive Impact on Goverment Revenue
Overall local retail sales tax may increase with the coming of a new Wal-Mart due to the wide range of products they offer (Renkow,2005)







Wal-Mart claims that they benefit the community by bringing in property tax revenue both from its own stores and by the new development that surrounds their stores
Negative Impact on
Goverment Revenue
•Although a new Wal-Mart store will collect large sales tax revenue it comes at the expense of lower tax revenues from other businesses where customers would have purchased goods

•If shoppers buy the same goods at lower prices it actually decreases the amount of sales tax revenue collected (Renkow,2005)
•Any increase in property tax revenues due to Wal-Mart is counteracted by the decreases in lost businesses in downtown shopping districts

•For Example: The Wal-Mart Super Center and surrounding development on Rymal Road and Centennial, in Hamilton, increases tax revenue in its area but this is offset by the deterioration of business and property tax values in downtown Hamilton
Negative Impact on Government Revenue Cont.
•Wal-Mart also causes increased expenses for local governments who have to provide new public services to the Wal-Mart when it is built in developing areas

•It cost the tax payers money to provide transportation, police, fire protection, and waste management services to new suburban areas (Renkow,2005)

•Government and taxpayer expenses also increase when governments have to provide social assistance to workers who are unemployed or have low incomes

•In the US this has a much bigger impact since the government must subsidize low income families with Medicaid (Bernstein and Bivens,2006)
Savings = More Cash to spend on other goods
A study conducted by an economist at the University of Missouri concluded that for every 100 jobs created by Wal-Mart 50 retail jobs and 20 wholesale jobs are lost (Renkow,2005)
Decreased Wages and Benefits
Conclusion
The opening of a new Wal-Mart in a community affects individuals, businesses, and goverments
Wal-Mart is the largest retailer in the world. With over 300 stores in Canada and plans to spend another $500 million on new stores it definitely has a big impact on the Canadian economy

Some of these effects are positive for certain groups, such as consumers

Other groups are negatively affected such as, competing stores and employees
After examining the pros and cons of Wal-Mart`s impact on different members of society one is forced to wonder "Is Wal-Mart really worth the low prices?"
References
Adams, R. (2005). Organizing Wal-Mart: The Canadian Campaign. Just Labour.
Retrieved January 14, 2012, from http://www.justlabour.yorku.ca

Average Salary in Canada. (2012). Living in Canada. Retrieved January 14, 2012, from
http://www.livingin-canada.com

Bernstein, J., & Bivens, L. J. (2006, June 15). The Wal-Mart debate: A false choice between prices and wages. Economic Policy Institute. Retrieved January 14, 2012, from http://www.epi.org/publication/ib223/

Ghemawat, P., & Mark, K. A. (2006, August 23). The Real Wal-Mart Effect. Harvard Business School Working Knowledge. Retrieved January 14, 2012, from http://hbswk.hbs.edu/item/5474.html

Moberg, D. (2011, April 28). Wal-Mart's Shocking Impact on the Lives of Hundreds of Millions of People.| AlterNet. Retrieved January 14, 2012, from http://www.alternet.org/economy/150781/

Renkow, M. (2005, November 1). Wal-Mart and the Local Economy. NC State Economist. Retrieved January 14, 2012, from http://www.ag-econ.ncsu.edu/

Setting the Record Straight. (2004). SourceWatch. Retrieved January 13, 2012, from http://www.sourcewatch.org/index.php?title=Setting_the_Record_Straight

Walmart Canada Salaries in Canada. (2012). Glassdoor. Retrieved January 14, 2012, from http://www.glassdoor.com/work-salaries-wages-canada.html

Wal-Mart’s Impact on the Canadian Economy. (2009, May 6). Newsflavor. Retrieved January 7, 2012, from http://newsflavor.com/opinions/wal-mart%E2%80%99s-impact-on-canadian-economy/

Walmart's Impact on America's Economy, Environment, and Communities. (n.d.). Local 881 UFCW .. Retrieved January 14, 2012, from http://www.local881ufcw.org/PDF'S
“Walmart is an information technology operation masquerading in the form of a mass retail chain.”



Universal Bar Code




RFID


Case of Rubbermaid
Rubbermaid was made popular by the quality of its merchandise
Fortune Most admired Company in 1993
Walmart pressurized to bring down the prices
From their on came the downfall of Rubbermaid.
At last they had to auction their machinery




loyalty is not a priority
low prices are

There are a small number of big competitors.
High barriers to entry into the market once Wal-Mart penetrates a market.
Wal-Mart has control over outlets, they give other retailers the fear of price wars, cost advantages, and a control over supplies.

oligopolistic market structure

Walmart operates internationally under 55 different names, including Walmex in Mexico, Asda in the UK, Seiyu in Japan, and Best Price in India.



90 percent of all Americans live within 15 miles of a Walmart.

An additional Walmart Supercentre per 100,000 residents increases average BMI by 0.25 units and the obesity rate by 2.4%.


In 2000, Walmart was sued 4,851 times -- about once every 2 hours.

China's exports to Walmart accounted for 11% of the growth of the total US trade deficit with China between 2001 and 2006.



This year, everyone in the world will make an average of 1.1 purchases at a Walmart.

The average U.S. family now spends more than $4000 a year at Wal-Mart.


List of largest companies by revenue


Successful supply chain management strategy
Paradigm shift between "manufacture-to-supply" to "manufacture-to-order“.
Retailers have become more power powerful than suppliers.






Key Components of Growth Strategy



Powerful retailer impotent manufacturers

"Wal-Mart calls the shots," says John Lehman. "'If you want to do business with us, if you want to stay in business, then you're going to do it our way.' And it's all about driving down the cost of goods.“




One-sided bargain

Walmart Growth Strategy

Low prices high Sales
Eye popping opening price point




Walmart’s Invasion

1960-Sam Walton opens his first Walmart in Rogers, Ark.
1970-Walmart becomes a publicly held company. The stock is offered at $15 but sells at $16.50 per share
1990-Walmart becomes America's No. 1 retailer, with sales of $32.6 billion
2000-Walmart ranks No. 1 on the Fortune 500 list for the fifth time since 2002

Walmart Timeline

How big is walmart

If Walmart's more than 8,500 stores were put in one place, they would take up more than 32 square miles -- as much as 15,300 football fields.
If Wal-Mart was an army, it would be the second largest military on the planet behind China.


What is Wal-Mart

Walmart's $469 billion in revenue last year makes it the 23rd-largest economy in the world, bigger than Sweden.




Universal Bar Code




RFID


There are a small number of big competitors.

High barriers to entry into the market once Wal-Mart penetrates a market.

Wal-Mart has control over outlets, they give other retailers the fear of price wars, cost advantages, and a control over supplies.

OLIGOPOLISTIC MARKET STRUCTURE



Powerful retailer impotent manufacturers


"Wal-Mart calls the shots," says John Lehman. "'If you want to do business with us, if you want to stay in business, then you're going to do it our way.' And it's all about driving down the cost of goods.“




One-sided bargain

Walmart operates internationally under 55 different names, including
Walmex in Mexico,
Asda in the UK,
Seiyu in Japan, and
Best Price in India.



90 percent of all Americans live within 15 miles of a Walmart.


An additional Walmart Supercentre per 100,000 residents increases average BMI by 0.25 units and the obesity rate by 2.4%.


How big is

If Walmart's more than 8,500 stores
were put in one place,
they would take up more than
32 square miles -- as much as
15,300 football fields.

If Wal-Mart was an army, it would
be the second largest military on
the planet behind China.


This year, everyone in the world will make
an average of 1.1 purchases at a Walmart.

The average U.S. family now spends more
than $4000 a year at Wal-Mart.


List of largest companies by revenue


What is Wal-Mart

Walmart's $469 billion in revenue
last year makes it the 23rd-largest
economy in the world, bigger than
Sweden.


Successful supply chain management strategy

Paradigm shift between "manufacture-to-supply" to "manufacture-to-order“.

Retailers have become more power powerful than suppliers.






Key Components of Growth Strategy


Case of Rubbermaid
Rubbermaid was made popular by the quality of its merchandise
Fortune Most admired Company in 1993
Walmart pressurized to bring down the prices
From their on came the downfall of Rubbermaid.
At last they had to auction their machinery




LOYALTY IS NOT A PRIORITY
LOW PRICES ARE

Walmart Growth Strategy

Low prices high Sales
Eye popping opening price point




In 2000, Walmart was sued 4,851 times -- about once every 2 hours.

China's exports to Walmart accounted
for 11% of the growth of the total US
trade deficit with China between
2001 and 2006.



Walmart’s Invasion

1960-Sam Walton opens his first Walmart in Rogers, Ark.

1970-Walmart becomes a publicly held company. The stock is offered at $15 but sells at $16.50 per share

1990-Walmart becomes America's No. 1 retailer, with sales of $32.6 billion

2000-Walmart ranks No. 1 on the Fortune 500 list for the fifth time since 2002

Walmart Timeline

Walmart
“Walmart is an information technology operation masquerading in the form of a mass retail chain.”
Always Low Prices
What makes Wal-mart so attractive?
It lives by the slogan; ALWAYS LOW PRICES
It claims it saves the average american household 2500 dollars every year.
Wal-mart has 6000 suppliers sourced form 70 countries. of these 6000, 80% produce in China at Wal-mart's urging, in an effort to cut cost.
"China and Wal-mart are a venture made in heaven" This is according to the PBS documentry:is Wal-mart good for america.
So Cheap!!!

currency devaluation by 40%
govt subsidies
worker underpaid
The yuan has an important role in keeping China's economy competitive. Why? China keeps the yuan pegged to a basket of currencies, most notably the U.S. dollar. China does this to keep its products cheaper than U.S. products, thus increasing its exports to the U.S.
Threat to the Environment - Wal-Marts range in size between 14,000 to 21,800 sq metres. That is only the building or ‘box’ itself. The parking and other service areas for container-size trucks occupy another 1.5 times the land area. The entirety is one enormous paved site devoid of almost any but a few token trees. It is a heat island and, as such, an environmental disaster for customers and the general neighbourhood.

Threat to the Environment
Wal-Marts range in size between 14,000 to 21,800 sq metres. That is only the building or ‘box’ itself. The parking and other service areas for container-size trucks occupy another 1.5 times the land area. The entirety is one enormous paved site devoid of almost any but a few token trees. It is a heat island and, as such, an environmental disaster for customers and the general neighbourhood.

Wal-Martisation of India(contd.)
Wal-Mart in India

The FDI dilemma(contd.)


Protests had prevented Walmart’s entry into retail, but, in 2007, it did get a backdoor entry for whole sale only through a joint-venture with Bharti.

Their stores go by the names of Easyday and Best Price Modern Wholesale.

In 2011 the cabinet decided to allow 51% FDI in retail. After considerable opposition, the decision was rolled back. The Government has however continued to announce its commitment to a policy for promoting FDI in retail, a codeword for Walmartisation of the Indian Economy.

In 2006, it was decided that instead of having to seek FIPB approval, FDI up to 100% would now be allowed under the automatic route for wholesale cash and carry trading. For Walmart and the government of US and India, Walmarts profits come before people and democracy.



The FDI dilemma

A foe to small retailers - Wal-mart’s intrusion will destroy millions of livelihoods in mandis and wholesale markets. In the mandis the retailer can choose to buy from hundreds of traders. With Wal-Mart farmers will have only one buyer and consumers will have only one seller. There is no reason to imagine that Wal- Mart will not destroy India’s small, independent retail as it has done in the USA.

Wal-Martisation of India(contd.)

End of localisation - If Wal-Mart was our local neighbourhood store, carrying only locally produced items, it would be different in every region of every country and it would not be a super centre. It would be a separate shop for different things—a sari shop, a bangle shop, a shop for electrical goods, a shop for vegetables.

Wal-Martisation of India(contd.)

India’s  small farmers would bear more losses.
According to Food and Agriculture Organization, the dominance of global supermarkets would lead to consolidated supply chains wherein these giant food processors and retails would get increasing power to set standards, prices and delivery schedules.

Wal-Martization of India:
A Threat to Economy and Ecology and Democracy


India is the second fastest growing economy in the world.
Cultural habit changing (acquiring western look).
Changing attitude of people.
Increasing awareness and spending on grooming and lifestyle .
Liberalization.


Why India?

In 2000, Walmart was sued 4,851 times -- about once every 2 hours.


Full transcript