Wal-Mart: The High Cost of Low Price
Class: Intro. To International Business (BBB4M1)
Date: September 24, 2007
The Assignment: Watch this video about Wal-Mart and write an essay about why Wal-Mart is evil. The more flashy, the more marks.
Wal-Mart is accused of doing several things to maintain their low prices. The first of these is choosing to locate their stores in towns where other large retail businesses are not present in order to decrease competition. Instead, the consumers in these towns are shopping at small shops, referred to in the documentary as “mom and pop stores”. When a Wal-Mart is built in these small towns, the mom and pop stores go out of business because the consumers begin to shop at Wal-Mart instead. By eliminating the competition in this area, Wal-Mart is able to keep low prices because all the business is going to them.
Many Wal-Mart employees in the documentary express their dissatisfaction with the store. They are not paid well and are often unable to afford the insurance that is offered to Wal-Mart associates. Instead, they are forced to turn to government-funded programs like Medicaid. The documentary claims that thousands of Wal-Mart workers in every state use Medicaid or other similar services. Wal-Mart associates are also strongly discouraged from working overtime, and when a worker does work overtime, the time the spent is not recorded and they are therefore not paid for it.
Wal-Mart has been fined millions of dollars and some stores were not finished being built because of environmental violations. Wal-Mart saves money by ignoring regulations because they do not ensure that the proper safety rules are being followed and that the proper equipment is in place.
Finally, Wal-Mart is accused of manufacturing their products overseas in developing countries. The workers there are paid very little and the products they make are sold in Wal-Mart for prices sometimes over 80% higher than what it costs to manufacture. One product show in the movie cost 18 cents to make and was sold in Wal-Mart for nearly $15. The workers also are made to live in a building owned by the company, and if they choose to live elsewhere, they are still required to pay for the room.
In the documentary, the Walton family is portrayed as greedy. Five of the members of the Walton family shown in the video are each worth approximately $18 billion separately, while their jet fleet is said to cost upwards of $125 million. According to the documentary, the family has given less than 1% of their money to charity, while Bill Gates has given 58%. However, upon further investigation, it can be found that the Walton family has donated enough money to place them in the top ten of Business Week’s 2004 “50 Most Generous Philanthropists” list only nine spots behind Bill Gates. While the Walton family’s net worth is considerably larger than all the other philanthropists on the list, they earned their money, even if some believe it was through sneaky business practices, and they are allowed to spend their fortune as they please. While giving money to charity is certainly a worthwhile cause, it is up to the individual to decide whether or not to donate their money.
I am currently an occasional shopper at Wal-Mart, and will continue to be, even after seeing the documentary. To most customers, one of the most important deciding factors when purchasing an item is the price, and if Wal-Mart happens to have the lowest price, I will purchase it from them.
I believe that many of the negative points about Wal-Mart have been exaggerated. For example, towards the end of the documentary, crimes that have been committed in Wal-Mart parking lots are examined. However, these crimes can happen anywhere, not just at Wal-Mart. Several clips from news reports about the violent acts that have happened in Wal-Mart are shown, and the viewer will often be surprised by the sheer number of incidents. However, when compared to the total number of crimes committed, the amount that happen in Wal-Mart stores would only account for a very small percentage. This is not shown in the documentary, however, because it does not prove their point, so this fact has certainly been exaggerated. Regarding the overseas manufacturing, it’s very possible that these working conditions are much better than other alternatives, so this may have been exaggerated as well.
I do not believe Canadians should stop shopping at Wal-Mart and shop at other businesses instead. It is very possible that businesses like Zellers or The Bay also employ some of the same tactics that Wal-Mart does, but they are less publicized. Switching stores would therefore be useless, because wherever you shop, you could be supporting sweat shops, racism, low wages, and other things Wal-Mart supposedly is guilty of.