The Implications of Wal-Mart on Local Economies - Essay Example

The Implications of Wal-Mart on Local Economies Affiliation: Wal-Mart is one of the leading retail corporations in the world. It has earned this position as a result of its revenue generations, locations of operation and the number of workers employed in its various stores. The company engages a sophisticated chain of product supply and management, allowing it to cut operational costs and therefore offer affordable products. The local economy faces both positive and negative implications from the business undertakings of Wal-Mart.

Person 1 notes that the implications of the company on the local economies can be evaluated on economic and fiscal basis. The other five people agreed to this, but Person 2 added that cultural, social and political implications are likely to be experienced in relatively low magnitudes. The economic implication of the company received great support from the team. However, Person 3 asked Person 1 to elaborate on the fiscal implication of Wal-Mart on the local economies. Person 1 went ahead to say that the state and the federal government earns tax revenues from businesses.

With the performance of Wal-Mart, the local governments receive increasing tax revenues from both sales and property taxes (Basker, 2005). A portion of this goes to the federal government, thereby boosting national economic welfare. However, there may be competing firms that are outperformed by the company, thereby limiting the diversification of tax base for the government. The company may also demand more waste management, security and fire services, thereby increasing its cost of operation.

This is likely to reduce taxable revenue. Person 3 notes that there are implications to the consumers. The company establishes an efficient producer-consumer connection, thereby making products readily available to the consumers. Prices are also lower than those of many rival stores. The company offers a variety of consumer products under one roof, reducing movement and transaction inconveniences for consumers. Person 4 comes in and says that other retail stores are significantly affected by Wal-Mart operations, either negatively or positively.

Specifically, Person 4 notes that competing retail stores are face closure threats as more Wal-Mart stores are set up. The competitive advantage of Wal-Mart is hard to break. However, firms that offers different products from those of Wal-Mart benefit from the company’s operations. Wal-Mart builds a customer base for them. Person 5 considers employment implications that emerge from Wal-Mart operations. Locals benefit from high employment opportunities that the company creates across different locations.

Labor demand for the various Wal-Mart stores comes with a competitive remuneration for workers. Companies that pay their workers poorly face the threat of losing their employees. These companies are therefore forced to increased wages and salaries for their workers, even when their production capacities and performance does not provide for such a move. Wal-Mart is therefore a controlling unit in its industry of operation. Person 6 acknowledges the contribution of the other group members, and chooses to highlight the corporate social responsibility of Wal-Mart.

The company is committed to giving back to the society through charity programs (Basker, 2005). It also runs specific shopping days at certain times in a year, where prices are discounted to encompass a small token for the products bought. The company is sensitive to consumer satisfaction, and it therefore runs market research and takes consumer feedback as a means of enhancing its relationship with the society. In other words, the company values the society and embraces the fact that the society keeps it going, at both local and international context.

Reference Basker, E. (2005). Job Creation or Destruction? Labor Market Effects of Wal-Mart Expansion. Review of Economics and Statistics 87(1): 174-183.