Wal-Mart Affect on Economy

Introduction

Wal-Mart Company operates retail stores in different formats worldwide. In United States of America, the retail formats implemented by the company include supercenters, discount stores, neighborhood markets, and Sam's Clubs. In the global arena, the company operates in El Salvador, Argentina, Canada, Chile, Brazil, China, Guatemala, Costa Rica, Honduras, Japan, Puerto Rico, Mexico, India, Nicaragua, and the United Kingdom. The company's headquarter is located in Bentonville, Arkansas. As of today, the company employs nearly 2.1 million people. Since operating in a highly competitive international market, the company is experiencing several risks, including market risk, commodity risk, foreign exchange risk and interest rate risk. Wal-Mart implemented its brand name by having a joint venture with Shenzhen International Trust and Investment Company in 1995, and kept their model as “Everyday Low Price”, but it had to become accustomed to the local environment (Hicks 2006, 23).

Thesis

The aim of this paper is to analyze and describe how Wal-Mart has created a monopoly in the retail industry. The paper argues about various problems created by the company especially related to employment and economy. The paper focuses on the weaknesses of Wal-Mart. The paper discusses various employment and other problems created in the economy affecting it in a negative way. The paper also focuses how Wal-Mart is destroying competitor's businesses and abusing employees and labor in other countries.

Relationships with Wal-Mart

Wal-Mart was more concerned in building relationships with its suppliers and, it has an electronic data system to manage its stocks. Their major competitor is RT-Mart. Wal-Mart also shifts many of the costs of its low wages onto the public. Wal-Mart provides big sales/purchasing volume to attract suppliers to accept the contract with little profit. Many cases show that businesses have declared bankruptcy after their long-term relationship is over with Wal-Mart. Reports show that, in countries where Wal-Mart failed to establish advantageous bargaining power over manufacturers, such as in Germany and Japan with manufacturer-oriented cultures, Wal-Mart lost the competition war against local retailers. The competition game that the monopolistic retailer, represented by Wal-Mart in the present paper, plays against its manufacturers will be demonstrated in the following sections to theoretically examine the income effect and productivity effect. (Basker 2007, 177).

We exclude the cluster effect from examination, because it is beyond the scope of our design of a single retailer game. Wal-Mart has a complex relationship with governments at various levels. On one hand, the company has made use of government subsidies and special tax treatment. In 2005, Wal-Mart supported an increase in the minimum wage and in 2009 joined with the SEIU and the Center for American Progress to call for employer mandates for health coverage.'? At the same time, some states and localities are working to make Wal-Mart entry prohibitively onerous through laws imposing special taxes and requirements on firms with certain size characteristics; these laws appear to target Wal-Mart specifically (Carden 2009, 450).

Employment by Wal-Mart

Still, despite this mountain of evidence, it's hard to counter the impression that Wal-Mart brings jobs. People tend to ...