One of the key concepts that Sam Walton has employed is the “Buy it Low, Stack it High and Sell it Cheap (42). ” This is one key concept that has remained in the consciousness of most major businesses today. While there are certain sectors that try to seek quality, the diversity that Wal-Mart offers has allowed Sam Walton to find a niche with over 90% of the purchasing public. This has in turn made Wal-Mart the global phenomenon that it is today. One thing that most businesses can learn from Sam Walton is the boost that his store provides by improving the productivity and efficiency of the domestic retail sector.
As shown in the previous section, Wal-Mart has been able to capitalize on the global supply chain that it has created which translates into greater savings for its customers and higher sales for the company. With supply chains in South America and much of Asia, particularly China, Wal-Mart effectively reduces the cost of goods and the real time Point of Sale system that they have installed accurately predicts the demand for goods thus ensuring there are very few overruns. One of the other methods by which Wal-Mart has sustained its growth and silenced its critics is by creating a unique market niche.
Wal-Mart is associated with lower prices and is decidedly the epitome of American Consumerism. This role and image is something that Wal-Mart carefully protects ensuring that it maintains its industry lead. In an economy where every cent counts and every second is money, the efficiency of the Wal-Mart supply chain is well documented. Most recently in Thomas Friedman’s book entitled, The Flat World, where Wal-Mart has been mentioned as one of the prime movers in the creation of the flat world through the supply chains that it has effectively set up. As such, the continued success of Wal-Mart is based upon keeping the ideas simple.
There are no complex ideas that are introduced and no secret short cut formulas that are used. It was simply hard work and a keen understanding of what makes the consumers happy. At the end of the day, what really matters is if one can keep the buyer coming back to purchase more items or not. RATIONALE & DISCUSSION: The size of Wal-Mart is such that it can do more than just cause ripples in a pond. In one of the world’s largest job markets, the Wal-Mart effect is that it can also lead to small business running into bankruptcy or adding to unemployment in the area.
One study shows that the mere entry of Wal-Mart into a local area had the effect of increasing the poverty rate among residents. Counties that had Wal-Mart stores in 1999 were found to have increased rates of poverty than other counties that had a lower number of Wal-Mart outlets or none at all (Basker 177). Between the years of 1987 and 1998, it was also shown that the areas where the Wal-Mart stores were placed immediately experienced higher poverty rates, increasing the average level for the area to 0.204 as compared to those of other counties that only had 0. 099 (Basker 177).
These studies show that while Wal-Mart has been shown to be good to the consumer by increasing the disposable income and by lowering the prices, the effect is not necessarily good. It can lead to increases in poverty and unemployment rates (Basker 177). The effect that this proves, however, is that wherever a Wal-Mart opens up or whatever policy it decides to implement, there will always be a Wal-Mart effect.