Negative Effects of Wal-Mart

Negative effects of Wal-Mart

Imagine you are visiting one of the Natural Seven Wonders in the World, the pyramids and right next to the pyramids are a McDonald's and a Wal-Mart. The traffic is horrendous and the set-up of these places have them looking the same way they do in America. Large corporations are not helping, but are hurting our economy and homogenizing the entire world. This concept is what one might call globalization.

"Globalization often functions as little more than a synonym for one or more of the following phenomena: the pursuit of classical liberal (or "free market") policies in the world economy the growing dominance of western (or even American) forms of political, economic, and cultural life ("westernization" or "Americanization")." (Scheuerman 2006) Globalization is a very controversial issue with many different opinions whether it exists and what it, it actually is. Whether or not it is globalization, two extremely large corporations Wal-Mart and McDonald's are changing the way the rest of the world looks and runs. Both of these companies are perceived to be helping lower income families, but are really bringing a negative effect to the communtity around them.

Wal-Mart the leading discount retailer throughout North America and is beginning its impact on the rest of the world was established in Bentonville, Arkansas in 1962. Mr. Sam Walton the founder of Wal-Mart and his company came up slowly and it was not until the 1970s that his company. "In the 1980s, Wal-Mart becam a major player in the retail business. From 1980 to 1989, Wal-Mart's sales jumped from $1 billion to 26 billion" (Wal-Mart.com 2007). Wal-Mart is currently selling in 13 markets across the world. Wal-Mart currently employs 1.8 billion employees worldwide. (Wal-Mart.com 2007) While this seems like the American Dream company it is not without its problems.

Most communities become excited when a Wal-Mart comes to their town. A person might appreciate the "Everyday Low Prices" that Wal-Mart advertises, but these prices come at an extreme cost to the community and the rest of the world. There is a question to be asked about how Wal-Mart can afford to sell cheaper than most of its competitors. There are three reasons that this possible. First, Wal-Mart has grown to be such a powerful entity that can control the prices that its vendors actually charge. In "Wal-Mart: The Face of Twenty-First Century Capitalism" (Lichtenstein) the essay Wal-Mart and the Logistics Revolution by Edna Bonacich explains how the Wal-Mart companies controls what its vendors can charge. It goes on explain how Wal-Mart wanted a good deal from the Vlasic corporation on one gallon jar of pickles. Vlasic was struggling to keep producing at this price and was making approximately two cents a jar of profit. Vlasic tried to bring up the prices, but Wal-Mart did not allow them to. Finally after a period of time, Wal-Mart allowed them bring up the price. Vlasic was nearly facing bankruptcy. Huffy Bicycle Corporation was another company that was manipulated by Wal-Mart. Wal-Mart wanted to pay an unreasonable price for the bikes. Huffy was forced to move its sales overseas to China in order to compete. Huffy could not keep with the low price Wal-Mart wanted to pay and was forced to file bankruptcy. These two stories alone tell Wal-Mart's pull on its vendors. It is also a well-known fact that Wal-Mart keeps its vendors in check and forces them to drop the prices of their products by five percent each year. With Wal-Mart's demand for lower prices to bring to its customers, vendors are forced to find cheaper alternatives to manufacturing in America.

With the Federal Minimum Wage in America $5.15 /hour (www.dol.gov) and the minimum wage in countries like China being as low as $45.38 a month (China Labor Watch ORG) , it is no wonder why labor and the cost to manufacture is cheaper to send overseas. In 2003 Wal-Mart accounted for about $1.3 billion worth of goods from China. This is an amazing 11% of the U.S. total. (Lichtenstein) As the competition of lower prices continues, the search for cheap labor will dominate. So much for Wal-Mart's claim of "Buy American, Shop at Wal-Mart. The money that it costs to produce an item is no longer kept in the United States. The conditions of the Chinese factories is sub-par. One might remember the debacle involving Kathie Lee Gifford and her Wal-Mart product that were made in Chinese Sweat Shops. Similar reports have stemmed across the news over the past year exposing conditions of low pay and long hours. There have been occurrences in Shenzhen, China where workers were not paid their benefits for three months; and another occurrence in the Guandong Province where if workers did not meet a quota of products completed, they would not receive their