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Wal-Mart’s Economic Impact

Wal-mart- the world’s largest retail company has continuously upholding its mission to provide high quality products at a lower price. With their tag line “Always low prices”, Wal-mart has not only providing the bulk of the goods in the market but also providing jobs for most of the people in the economy. Imagine the labor market without Wal-mart, there would be 1. 9 million people unemployed in the economy. Even if there are news saying that Wal-mart pays their employees at a minimum rate it would be much better than having no job and receives no salary at all.

In other words, Wal-mart still helps our workers in uplifting their welfares. Without Wal-mart, around 2 million people would have no job. Moreover, it was already proven that the job lost from Wal-mart’s operational expansion was offset by the number of jobs that they created. It is said that around 100 addition jobs are being created on the first year of an entry of Wal-mart to a certain market and after the five years, considering all the businesses that exits to the market due to the said entry of Wal-mart, leaves a net gain of 50 jobs in the market (Basker 1).

Aside from giving jobs to the economy, Wal-mart has been offering great job opportunities to its employees like sending their managers to seminars and workshops to enhance their leadership skills as well as giving health benefits to their employees by less than $1 a day and a lot of benefits like discount cards, profit sharing opportunities to associates, vacation pay, free membership on SAM’s Club, financial educational programs and a lot more (“Benefits” 1).

There may be issues regarding on the “credibility” of Wal-mart in providing the said benefits but by the start of this year, Wal-mart made a statement that they are doing their best in solving the said issue (Gogoi 1). Moreover, there are only less significant employees that have a problem on the provision of the said benefits of Wal-mart. On the other hand, just recently, Wal-mart is having a problem on the condition of their profit and sales rate.

But despite the said problem, the Giant retailer still manages to find ways on how to minimize the ‘unwanted’ effects of the economic factors such as inflation and interest rates (Pallavi 1). Wal-mart, as most of the analysts say, has been feared by its competitors not because of their great market share and influence but rather because of their “operational innovation”. In short, Wal-mart knows what they are doing; they are pretty sure of their actions, they have the ‘know-how’ of every operations and continuously implement changes whenever it is needed.

These factors contributed to the success of Wal-mart. But the question now is, in economic point of view, is Wal-mart really a great help to our economy? What is the effect of the operation of Wal-mart to the societal welfare with regards to some microeconomic factors like elasticity, monopoly, efficiency, deadweight loss and a lot more which are vital in assessing the performance of the economy? Price Elasticity Most of the products that Wal-mart is selling are classified as normal goods, therefore price elastic goods.

This means that the more Wal-mart offer lowers priced products, the more customers would demand for their products. The elasticity of the goods that Wal-mart is selling helps their sales to be on its stable level since customers will continue to buy to them. Any slight changes in the price level would instantly affect the demand of the consumers due to the availability of substitute goods and other retail stores in the market.

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