Walmart Negative Effect

2430 Words10 Pages
Introduction: In 1950, Sam Walton opened Walton’s 5 & 10; a convenience store aimed at providing customers with low cost goods. Unlike other convenience stores of its time, Sam Walton gained a competitive advantage by implementing innovative business models within his operations and finance departments (complex supply chain management and low profit cost-cutting schemes, respectively). Over the next 65 years, Wal-Mart grew to be the largest corporation in the United States with over 5,000 stores and a staggering 1.2 million employees. In fact, Wal-Mart’s staff accounts for 1% of the United State’s working population (Blodget, 2010). Unfortunately, such an enormous presence, combined with negative reviews, has turned Wal-Mart into the…show more content…
“For every $100 spent in the local owned businesses, $68 stayed in the local economy while [Wal-Mart] only left $43 to re-circulate locally” (De Blasio, 2011). The implications of this means the chances of success are drastically lowered for local entrepreneurs. Wal-Mart reduces the number of jobs within a community. Dr. David Neumark, an economist at the University of California at Irvine, studied the economics of Wal-Mart and concluded that for each new job that Wal-Mart creates, 1.4 existing local jobs will be lost (Neumark et al, 2007). Additionally, because Wal-Mart pays most of its retail employees minimum wage, the spending power that workers once enjoyed at previous jobs is also reduced. The implications of this means that for each time Wal-Mart opens a new store, local employment and consumer spending power in the community is reduced. Organizational Implications Wal-Mart’s existing operations are wrong (ethically and/or organizationally) depending on personal opinion. There are two potential camps of thought. First, many believe Wal-Mart’s lack of social responsibility for the local community is wrong. Alternatively, some believe Wal-Mart is merely following a capitalistic view in which achieving increased sales, regardless of how it affects others, is acceptable. For this reason, Wal-Mart may or may not be violating any codes of conduct. If Wal-Mart does have a responsibility towards their community,
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