Walmart: can bigger be better?

Case Study
BUSI 3704A- The Environment of International Business
November 13, 2014

Sama Kurim 100889158

Contents

Introduction.............................................................................................................................. 1-2
Analysis.................................................................................................................................... 2-4
Conclusion................................................................................................................................... 4
Bibliography................................................................................................................................. 5
Appendix A: Academic Integrity...................................................................................................6
Appendix B: Marking Rubric........................................................................................................ 7

Introduction

Wal-Mart is the largest retail store in the United States, and is larger than any other retail chain in
the world. According to the Fortune 500 index Wallmart is classified as the one of the most
admired companies in the world and that they holds the number one spot, ranked by its total
sales Wallmart operates more than 4,900 retail facilities in the US and outside the U.S. and it
operates more than 6,100 retail units in 26 countries (lolliegaginde, 2014). Wal-Mart provides
general merchandise: family apparel, health & beauty aids, household needs, electronics, toys,
fabrics, crafts, lawn & garden, jewelry and shoes. Also, the company runs a pharmacy
department, Tire & Lube Express, and Photo processing center as well (company profile , 2014)

Walmart international locations in the blue; the cities of former locations shown in red.

Last year 2013, Wal-Mart had revenues of $469.1 billion with sales growth at 4.34% and
a net income of 17 billion. Walmart employs 1.3 million in the U.S. and 2.2 million associates
around the world (Wal-Mart Stores Inc., 2014)

Analysis
Walmart manages their business processes to produce an overall positive impact on
society by selling high quality and brand name products at the lowest price; however this cost
cutting is associated with poor ethical standards such as Wage issues, poor workers benefits, shift
scheduling, and workplace rights abuses (How Walmart's Low Wages Cost All Americans, Not
Just Its Workers, 2013). Walmart pays less than any other retail firms, a study found that Walmart
workers earn an estimated 12.4% less than retail workers as a whole and 14.5% less than workers
in large retail in general. Average Walmart Associate makes just $8.81 per hour. An employee
who works as full-time (34 hours per week) makes just $15,500 per year. This means that so

many of people who work full-time at Walmart still live below the poverty line (the walmart 1%,
2014). Most employees at Walmart are not entitled to any benefits, such as Walmart no longer
offers health insurance coverage to employees who work less than 24 hours per week, and this
because they are trying control the rise in a health care costs (the wall street journal , 2014).
Furthermore Wal-Mart is not allowing its workers to unionize. At this time, Wal-Mart is almost
entirely non-union, and wishes to remain that way. They believe that going union would hurt
their bottom line, and will no longer be the largest retail chain in the world (UFCW, 2014).
For Walmart to stay as a powerful company and loved by their customers they need to
keep selling their customers high quality and brand name products at the lowest prices. But what
customers do not know why Walmart is charging them lower prices and how they are benefited
by doing so. Walmart relies on outsourced supply chain to deliver cheaply made products. This
system puts relentless pressure on suppliers to cut costs which often leads to workers in the
factories that produce Wal-Marts goods in an Asian country for example to squeeze down labor
costs, sometimes as low as less than a dollar per hour. Therefore, it is hardly surprising that these
low prices are obtained through low wages and unsafe working conditions (Wal-Marts China
Connections, 2011)
Furthermore, it is clear that Wal-Mart is growing and gaining international power but its
expansion strategy internationally has been aggressive and powerful. Wal-Marts expansion is
forcing other smaller business to close their doors because they are not able to match Wal-Marts
prices or diverse range of products. Also because Walmart is broken up into different specialized
department such as a pharmacy, grocery section, electronics, car garage and other departments
which makes it difficult for small stores to compete (the walmart 1%, 2014).

During the difficult phase of economic downturn in 2008 Walmart had a huge
opportunity. In recession, when most of the retailers were struggling for their survival; Walmarts
sales were growing more and more. Walmart's advantage during the recession was their low
prices in which attracted the middle classes customers who would once have considered the store
have little prestige and poor in quality (morrison). Also the food-stamp program which provides
food purchasing assistance for low and no income people living in the US has been a kind of
blessing for Walmart. According to the companys estimate Americans spend about 18 percent of
all the food stamp dollars at Walmart, and thats about $14 billion of the $80 billion congress set
aside for food stamps in 2013 (Walmart Is One Of The Biggest Beneficiaries Of Food Stamps,
2013).

Conclusion
In conclusion, Wal-Mart is the number one retailer in the United States and classified as
the one of the most admired companies in the world, they have been expanded into many other
sectors of the marketplace which caused many local businesses to shut down. The company's
competitive strategy is to dominate every sector where it does business. Its strategy is to sell high
quality and brand name products at the lowest price, Walmart strategic moves can ensure
continuous success even during the worst phase of recession, and when shoppers become more
concerned about price, theyre more likely to turn to Walmart. However using low price strategy
is giving them a negative image since their cost cutting is linked with poor ethical standards such
as Wage issues, poor workers benefits, shift scheduling, and workplace rights abuses. In order for
Wal-Mart to stay at the top of their game and follow the company strategy and achieve their key

policy goals, they are going to have deal better with their workers and make sure they guard their
reputation well.

Bibliography
company profile . (2014). Retrieved from walmart:
http://walmartcanada.ca/Pages/About%20Us/168/168/168?lang=en
How Walmart's Low Wages Cost All Americans, Not Just Its Workers. (2013,
december 18). Retrieved from Business:
http://www.huffingtonpost.com/2013/12/18/walmart_n_4466850.html
lolliegaginde, U. B. (2014, septmber). Overview of the organization of Wal-Mart and
goals. Are theses effective goals? How should they plan to achieve those
goals? Retrieved from writework: http://www.writework.com/essay/overvieworganization-wal-mart-and-goals-theses-effective
(n.d.). walmart, can big be better? In j. morrison, the global business enviroment (p.
422).
the wall street journal . (2014, october 7). Retrieved from Wal-Mart to End Health
Insurance for Some Part-Time Employees: http://online.wsj.com/articles/walmart-to-end-health-insurance-for-some-part-time-employees-1412694790
the walmart 1%. (2014). Retrieved from Top Reasons the Walton Family and Walmart
are NOT Job Creators: http://walmart1percent.org/issues/top-reasons-thewalton-family-and-walmart-are-not-job-creators/
Top Reasons the Walton Family and Walmart are NOT Job Creators. (n.d.).
Retrieved from the walmart 1%: http://walmart1percent.org/issues/topreasons-the-walton-family-and-walmart-are-not-job-creators/
UFCW. (2014). Retrieved from Walmart Workers Canada:
http://www.ufcw.ca/index.php?
option=com_content&view=article&id=51&Itemid=90&lang=en
Walmart Is One Of The Biggest Beneficiaries Of Food Stamps. (2013, october 31).
Retrieved from business: http://www.huffingtonpost.com/2013/10/31/walmartfood-stamps_n_4181862.html
Wal-Mart Stores Inc. (2014). Retrieved from market watch :
http://www.marketwatch.com/investing/stock/wmt/financials

Wal-Marts China Connections. (2011, april 19). Retrieved from the american
prospect: http://prospect.org/article/wal-mart%E2%80%99s-chinaconnections

Appendix A
Declaration of Academic Integrity
BUSI 3704 A: The Environment of International Business
Fall 2014
Individual Case Study
The University Senate defines plagiarism in the regulations on instructional offences
as: to use and pass off as ones own idea or product work of another without
expressly giving credit to another.
Borrowing someone elses answers, unauthorized possession of tests or answers to
tests, or possession of material designed in answering exam questions, are also
subject to university policy regarding instructional offences.
Photocopying substantial portions of a textbook (e.g. more than 1 chapter or 15% of
the total page count) without the publisher's permission is another misuse of
intellectual property, and is also a violation of Canadian copyright law. Access
Canada's web site provides guidelines on legitimate copying.
I declare that the work submitted herewith is my work. All sources have been
referenced in the footnotes, endnotes or bibliography. This work has not been
shared with anyone.
Please indicate here the referencing style you have adopted (e.g., APA,
MLA, etc.):..
Student Name & Student ID

Signature of student
The student must sign to receive a
grade

Due Date

Date and hour received, if late.

Penalty for delay, if applicable
Instructional offence cases must be referred to the Associate Dean (Undergraduate
Studies); individual solutions are not permitted.