Wal-Mart - Good vs. Bad

The giant retailer store Wal-Mart has a history of over forty years of successful business. Its first store opened in 1962 in Arkansas and in 1979 it already switches to a computerized inventory system that tracked individual items. This innovation was a success at that time, when such technologies were not widely implemented. They were beginners in this sphere, putting a lot of money into development of IT improvements in their supply chain. Year1983 the bar codes are printed on most goods, Wal-Mart introduces checkout scanners in all its stores. This enables them to track inventory numbers for individual items at the point of sale which in turn allowed headquarters to more easily sum up sales and inventory data at its centralized IT department. In five years Mal-Mart has another innovative option in mind in order to improve the inventory data collection and processing, they are installing satellite communications network. They have been very successful in managing their inventory supply system running smoothly, as they have been investing heavily and what is more important earlier then their rivals in cutting edge technology. This way of conducting business led Wal-Mart in being a number one supplier not only to customers but in a business-to-business environment.

With the creation of its first e-commerce Web store Wal-Mart gained even larger share of their market. It used to use a dial-up internet line in order to process orders from their suppliers; the same process had to be done from suppliers’ side as well. Starting 2002 Wal-Mart again changes the way of communicating with its suppliers and requires them to install a new electronic data interchange system. This EDI system is provided Isoft Corp., Dallas, and offers business to use AS2 software package. Needless to say that this software gives a lot of advantages, otherwise Wal-Mart would not even consider using it. This new installed system allows businesses to have faster, cheaper and more accurate transactions between suppliers and retailers. A lot more could be said about Wal-Mart’s successful strategic implementations and love of the customers. Their philosophy can be summed up by the Wal-Mart’s father Sam Walton: "The secret of successful retailing is to give your customers what they want." It is a very appealing statement for the customers, who want their favorite "low prices everyday ". There is also the other side of the coin which explains the Wal-Mart phenomenon better than the simple concept of law prices. The major problem associated with Wal-Mart that has been roaring throughout America is the employee issue. A simple example of unfairness toward the potential workers is a hiring process. Many workers admitted they have had to sign forms agreeing that they would not support any effort to unionize the store, which is a definite violation of federal law. In case if someone refuses to sign the paper he/she will not be employed, taking into consideration that most of those who are trying to get a job are not very skilled or educated and most probably have agree to the rules.

Although Wal-Mart has a huge assortment of goods, recently it has expanded its sales in the grocery sector. This strategic move caused a lot of problems with the workers of this division as most of them are unionized, thus protected in many instances. On the other hand Wal-Mart being the biggest private employer in the US and refusing its workers to enter unions has more advantages than any existent union. Taking for instance California, where Wal-Mart Corporation built a number of famous Supercenters, union members of grocery sector were on strikes for months trying to defend their rights for a decent wage and health plan. The result however was disappointing, as their employers had to give in to the new conditions of business brought in by Wal-Mart. For the grocers all over the States not only in California, the wages have been cut down and health plans annihilated. The issue of Mal-Mart affecting so much the whole retail and grocery industry in America, and other countries where it operates, is a problem that has to be solved in the nearest future. Despite that the crisis of Wal-Mart employees is a huge concern. In his recent speech H. Lee Scott Jr., the chief executive officer of Wal-Mart, argued that Wal-Mart is a force for good in the economy. He claimed that the company is good to its employees paying high wages. He gave a number average 10$ per hour, which is double of a federal minimum wage. He also mentioned that their wages are compatible with most of the retailers throughout the country, with only one exception of those in rural areas. The real picture however looks “a bit” different. Those 10$ have little to do with ordinary workers, because they were derived from the sum of all wages, which means that million dollar salaries of the executives were considered as well. In reality an average sales clerk at Wal-Mart gets $8.50 an hour, or about $14,000 a year, which is about a $1,000 under the government's definition of the poverty level for a family of three. April Hotchkiss, for instance who interviewed by the Nation magazine, makes $8.33 an hour as a clerk in a Pueblo, Colorado, Supercenter. She had to have her healthcare costs paid for by the state's program for the needy. She says that she dreams of the day she can stop working and shopping at Wal-Mart. April confided: "Whenever I'm able to quit this place, and find something better, I'm never going to set foot in another such store again". This is a look from the inside of the "low prices" candy. It is painful to realize that we, who shop in Wal-Mart, are depriving others of being treated decently. Or is it a problem of greediness of those in charge of the corporation?

Another point being argued by the Chairman was the claim that Wal-Mart is just like everybody else. Certainly they are, after they have made everyone near them turn down the wages and lower overall working conditions. Wal-Mart has been the cause of many supermarkets closing down and consequently people losing their jobs, because they are building Supercenters which display appealing prices. It follows that those who have lost jobs have to find them some place else and often they end up as a Wal-Mart employee. The logic behind their moves is apparent however labor unions and other social organizations have been helpless protesting against the giant.

Lee Scott mentioned that Wal-Mart is doing great at offering their workers to have a full time job, while other retailers mainly supply hourly positions. Now, it has to come clear that for Wal-Mart the term "full time job" means different number of hours than for the rest of the world. In Wal-Mart they define it as a 34 hour week, instead of common 40. Clearly the company incurs lesser spending, for the employee it means that they will hardly get any premiums for health insurance that they are offered. According to Simon Head, director of the Project on Technology and the Workplace at the Century Foundation less than half of Wal-Mart's employees can afford even the company's least-expensive health plan. This depressing information can only mean that millions of people live below poverty line and can hardly make enough money to ever get out of this catch 22. It is true that Sam Walton once figured out how to make money out of poverty of others and how to make more poverty to grow even more. Although Wal-Mart claims that absolutely everybody shops at their stores even people with more then $100,000 a year, the research conducted by Andrew Franklin, an economist at the University of Connecticut, proves different. A 2003 study showed that 23 percent of Wal-Mart Supercenter customers live on incomes of less than $25,000 a year. More than 20 percent of Wal-Mart shoppers have no bank account, long considered a sign of dire poverty and almost half of Wal-Mart Supercenter customers are blue-collar workers and their families, 20 percent are unemployed or elderly.

With all the technological virtues brought by Wal-Mart corporation into modern business world one cannot but agree that it’s presence on the market has pushed many economies to a higher levels. Their innovative ideas and creative solutions have proved that customers can be satisfied by the goods offered at lower prices. We have to ask ourselves though, what is this "lower" price that somebody else has to pay? The multiplicity of this issue cannot be solved easily, rather many forces have to come together to protect those who are in need.

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