Wal Mart Offer Products example essay topic

Is Wal-Mart Good for America? Wal-Mart started out as a five and dime store by Sam Walton back in the 1950's in Rogers, Arkansas. From those humble beginnings, Wal-Mart is now the world's largest corporation passing the likes of U.S. Steel & GM with over $256 Billion in sales for one year announced at an annual stockholders meeting. What makes Wal-Mart so successful?

The rise of technology and the explosion of the global economy, coupled with the effort of keeping prices as low as possible has propelled the conglomerate into becoming the world leader in logistics. They were one of the first to understand the power of the barcode. They also shifted the industry from 'Push' to 'Pull' production, meaning retailers would decide what and how much a manufacturer should produce. Due to the power possessed by Wal-Mart, other companies and suppliers have set up satellite offices around their corporate headquarters in Bentonville, Arkansas.

Rubbermaid, stationed in Wooster, Ohio, wasn't well known until their variety of products donned the shelves of Wal-Mart. In 1994, they were voted as the most admired company in America for its quality due largely to its partnership with Wal-Mart. Raw materials among other materials of production increased for Rubbermaid which meant a price increase to all of its retailers. Wal-Mart wouldn't accept the price increase and subsequently dropped a number of Rubbermaid products, which began the decline for the company. Newell, a rival, bought out Rubbermaid for $5.8 Billion. The original plant in Wooster auctioned off all of its equipment and closed down.

In 2004, Wal-Mart was voted as the most admired company in America for its cost-cutting strategies. Wal-Mart will feature a particular brand of a product and its opening price-point will be the rock bottom price, which means its lower than what any competitor can offer. As a customer looks at other brands for the same product, the price associated is not necessarily lower then what a competitor could offer, but the customer believes it is because of the first item they looked at. How can Wal-Mart offer products at such a low price, yet still make high profits for shareholders? President Clinton signed a trade agreement with China opening the gates to an untapped market. China pays it's workers about 30 to 40 cents per hour, which in turn drives down the cost for foreign goods.

Wal-Mart can make between 60 and 80% profit on foreign goods, only 20% for domestic. Wal-Mart has 35 super centers open in China alone and where they go, so does its supplies. Having over 6,000 supplies, 80% of them now have stations in China. The reverse auction system has played a key role in negotiating prices for products. They will gather four to six suppliers in a room and offer their business to the lowest bidder. Twenty years ago, Shenzhen was nothing but agricultural land.

Today, largely in part to Wal-Mart, it's the third largest port in the world. The U.S. last year alone accumulated a trade deficit of over $120 billion to China. Why is America buying so much from China? As many companies, like Thomson / RCA, suspected, the Chinese were price dumping.

Five Rivers Electronics sued the Chinese for price dumping, which forced many companies out of business. Wal-Mart sided with the Chinese, but FRE won the lawsuit immediately raising prices on imports. However, it was too late for some companies. Thomson / RCA closed its doors in Circleville because they were too deep in the hole to recover.

Ironically, Wal-Mart is opening a plant next to the lot once inhabited by Thomson / RCA. Many side with Wal-Mart's tactics of free-market domination. Brink Lindsey, economist from the Cato Institute, says Wal-Mart is good for America. Those sentiments are echoed by Bob McAdam, VP of Wal-Mart.

He says by providing cheaper prices on products, it raises the living standards for everyone. Some disagree by stating jobs are lost when companies are forced to shut down because they can't compete fairly.