• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Is Wal-Mart Too Powerful?

Extracts from this document...


BPS 6201 7/13/04 Is Wal-Mart Too Powerful? Wal-Mart has quickly become a business in which many people and groups depend, including stockholders, consumers, employees, and suppliers. The issue is whether or not Wal-Mart has created a dependency that is a crutch on society and the economy, or has Wal-Mart demonstrated a fine application of capitalistic principles in business. The issue can be explained by examining the impacts of Wal-Mart on its stakeholders. STAKEHOLDERS WAL-MART'S IMPACT REASON Stockholder Positive * Wal-Mart's profits have increased 13% from last year to $9.1 billion.1 Over the last 5 years, EPS has increased by 15.45% and dividends by 18.36%2 Consumers Positive Negative * By offering discount prices (at times 14% lower than the competitors), the consumer has more purchasing power. * Consumers have a product selection limited by Wal-Mart as other retailers go out of business Suppliers Positive Negative Negative (Potential) * Wal-Mart is the largest retailer/customer for consumer product manufacturers. * Product integrity/design is compromised by the Wal-Mart influence * Have to maintain production schedules dictated by Wal-Mart * Forced to outsource production overseas to reduce production ...read more.


At the same time Wal-Mart is offering the consumer market drastically lower prices, which affords them more purchasing power. When viewing the core of Wal-Mart's business, it has created this empire within the boundaries of the law. Rights Theory As a law-abiding corporation, Wal-Mart has the right to operate freely within this country. There are no laws forbidding them from selling products at lower prices than their competitors, and as long as the employees are paid at least the government mandated minimum wage, Wal-Mart can continue to optimize stock growth and value. That doesn't mean that this corporate giant has not infringed upon the rights of others. As part of their cost efficient strategies, Wal-Mart has continued to pay their employees lower wages than the competitors. When the competitors can no longer afford to stay in business next door to "everyday low prices" employees are forced to work at Wal-Mart for a much lower wage. By Wal-Mart shutting down many local businesses, employees have lost their freedom to choose their employment. ...read more.


However, a slump for Wal-Mart would put control back in the hands of suppliers and create equity amongst competitors. On the other hand, a wage increase may benefit Wal-Mart by putting the money into the pockets of 1.4 million people who will turn around and be able to spend more on products in their stores. This would give a benefit to the employees, while maintaining the status of consumers and shareholders. Social Contract Wal-Mart has a responsibility to view their overall impact on society. So far Wal-Mart has upheld customer and shareholder expectations, but they have failed to look beyond that point. From a group perspective using the stakeholder chart above, the overall impact of Wal-Mart has a negative effect on society. Wal-Mart currently faces many hardships in the form of lawsuits, opposition and injunctions to prevent new construction, and bad publicity. Adopting new strategies that provide a more equitable distribution of profits and wealth between all stakeholders could eliminate these hardships. 1http://news.yahoo.com/news?tmpl=story&u=/afp/20040712/bs_afp/us_companies_fortune_040712171227 2 http://yahoo.investor.reuters.com/MG.aspx?target=/stocks/financialinfo/growth/rate&ticker=WMT 3 BW Online. "Is Wal-Mart Too Powerful?" October 6, 2003. 4 http://media.corporate-ir.net/media_files/IROL/11/112761/corpgov/ethics1.pdf 5 http://zmag.org/content/showarticle.cfm?SectionID=47&ItemID=4987 ?? ?? ?? ?? ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Structures, Objectives & External Influences section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Structures, Objectives & External Influences essays

  1. Free essay

    Business Ethics

    Children who start smoking don't think they'll be smoking for life Smoking at work This is another ethical issue that the business must consider for example one employer made smokers work extra hours to make up for the breaks compared to non-smokers.


    * The ownership of ASDA is settled, but WAL-MART could choose to sell them at any time. ASDA / WAL-MART have to consider the above benefits and constraints and make sure they don't bend any rules and/or regulations. If they were to bend any rules and/or regulations, they could end up in court and be in serious trouble.

  1. The Legal Eagles

    An unlimited company is one, which is registered under the Act but without any limit on the liability of the members. If an unlimited company is dissolved the members are personally liable for the full debts of the company. An unlimited company is very rare.

  2. Analysing Ryanair, Europe's largest low fares airline.

    "In view of these increased opportunities, Ryanair has agreed with Boeing to convert 3 of our rolling 50 option aircraft into firm deliveries during spring 2003 (making a total of 13 new aircraft to be delivered in advance of summer 2003).

  1. Comparison of stakeholders interest and influence. Apple vs. Mercedes Benz

    Apple Inc. Customers ? Customers know the biggest weakness of Apple, which would be time as technology constantly changes, Apple has to keep up with it and research and develop the latest gadget. Competitors are also dealing with the same issue.

  2. D2: Analyse the importance of legislative and regulatory controls on food retailers

    Passing sentence, the magistrates said it was Tesco's guilty pleas that had kept the case out of crown court. All these acts are under the health and safety act 1974. Health and safety executive Health and safety executive Is the national independent watchdog for work-related health, safety and illness, it

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work