Final Exam: Wal-Mart

Final Exam
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Basically, it is known that Wal-Mart is a low cost company, though I disagree with this fact due to reasons stated below. In the real sense, Wal-Mart’s low price strategy is accompanied by high cost implications in other aspects of managing business operations. Wal-Mart contends that it is giving consumers what they need every day at low prices, but the bottom prices have high costs. It is evident that Wal-Mart is not only depressing low wages, but also draining consumers from local retailers whereas in actual sense not increasing consumption. The impact has resulted into financial loss of $14 million of economic output including $14 million in lost wages in the past 20 years since Wal-Mart started it operations. The company experiences problems in achieving success because of its inability to achieve synergy and inadequate target evaluation.
While economists say that Wal-Mart is successful in its business performance because the company sells products which consumers need at low prices; thus satisfying customers’ needs and wants, I argue that the company’s lower price strategy draws consumers away from small-scale businesses in the streets; therefore hurting small businesses at the local town-communities. The company adopts low price strategy to avoid excessive competition. I can testify that Wal-Mart business operation is hurting the economy of United States due to its excessive dependence on Chinese products. The company is that largest importer in United States in several categories like fast-moving consumer goods and electronic products.
Wal-Mart has adopted predatory pricing, which is a pricing strategy that sets very low prices. This strategy is harmful because it drives competitors (especially small businesses at local streets) out of the business. Wal-Mart has been criticized of selling products at very low costs. Competitors have tried several times to sue Wal-Mart for its predatory pricing. While Wal-Mart claims that setting low prices is its strategy for making profits and maintaining efficiency, this is an ill motive scheme that the compa...