Reference no: EM132295280
Case study-Walmart and Globalization
A 2004 Frontline documentary on PBS chronicled the rise of Walmart to the global giant it has become. In the past few decades, Walmart has been transformed from Sam Walton's 5 & 10 stores to the model for companies operating in a global economy. Duke University business professor Gary Gereffi said, " Walmart is one of the key forces that propelled global outsourcing- offshoring of U>S> jobs-percisely because it controls somuch of the purchasing power of the U>S> economy." The rise of Walmarts has changed the balance of power in the world economy from manufacturers to global retailers. Walmart's defenders argue that their unprededented efficiency and productivity that keeps costs as low as possible and enables them to keep prices lower, not only gives them a competitive advantage but is good for the poor who must make every dollar stretch as far as possible. They have experienced growth in sales from $1 billion in 1979 to roughly $250 billion in 205, which the company argues cannot be considerated in any other way but as good for the world economy. But critics of Walmarts and other stores like it insist that these benefits to the consumers come at a costs to the workers, not only at Walmarts but at many of their suppliers. Their wages are lower than the industry standard (in fact the pay and benefits are so low that store managers have all the public assistance agencies on their Tolodexes so that they can easily refer to them) and according to critics they pay virtually no pension or retirement benefits, have substandard health care benefits and buy a high percentage of their merchandise from low-cost producers in China. Critics argue that the way in which they use their leverage to squeeze suppliers forces American manufacturers to export their jobs overseas in order to keep their costs down. In addition they are charged with being primarily responsible for the trade deficit with China. Critics argue that on balance Walmart is not good for America.
1. After viewing the Frontline program, do you think that Walmart is good for America? Why or why not? Considering some of the arguments in this chapter, is "good for America" the right question to ask? Why or why not?
2. Do you think that Walmart has any obligation to preserve American jobs? If so, on what basis?
3. If Walmart is good for consumers by keeping prices low, do you believe that the impact on workers is acceptable, given Walmart's benefits to poor consumers? Why or why not?