Analysis of Wal-Mart Effect by Charles Fishman - Book Report/Review Example

Reading Response: “Wal-Mart Effect” by Charles Fishman Part Important Aspects a) Shopping Fishman explores Wal-Mart strategies of providing consumers with adequate shopping space, connecting with suppliers, and handling stiff competition in its capacity as the biggest company in the world. The concept of mega shopping was conceptualized in a better way by Wal-Mart. According to Fishman, shopping was perceived as a normal routine until the Wal-Mart’s establishment that changed the retail industry (6). Retail industry revolution that was induced by Wal-Mart led to a change in the consumer behavior with most customers embracing new shopping habits. Wal-Mart redefined the retail concept through the implementation of under-one-roof shopping; hence, customers can purchase good of all categories at one store. Additionally, Wal-Mart introduced new pricing strategies that aimed at selling the store’s goods and services at a minimal price, which have been an effective in attracting and maintaining customers as well as its competitive position in the market. b) Business Venture, Supply-retailer relationship, and Competition Fishman discusses the idea of business venture in chapter five of his book in a sharp retrospective manner detailing the manner in which Wal-Mart relates with its chain of suppliers. Wal-Mart is substantially good at undertaking retail business not only in small quantities, but also in bulk. Remarkably, a supply company is obligated to align it goods with the retailers’ demands and needs. However, it is quite challenging to meet and maintain all the retailer needs and demands, which necessitate a supplier to be flexible at all times to meet Wal-Mart’s ever increasing good demands. Supplier’s failure to maintain flexibility and meet the demands leads to a poor supplier-retailer relationship, which eventually result in poor profits as well as decreased reinvestment opportunities. For example, Snapper Lawnmowers took the risk of cutting its links with Wal-Mart that lead to a 20% loss of its business partners. Fishman indicates that Snapper Lawnmows only reinstated their supply to Wal-Mart after meeting flexibility requirements as well as supplying high-quality products and services (22). Fishman’s book explains the best ways to compete with a mega-corporation such as Wal-Mart. Notably, it is challenging to compete with Wal-Mart, but Fishman provides incentives that other competitors may apply to counteract Wal-Mart’s competitive strategies. Fishman explains a plan that does not focus on price of necessities to potential competitors, which can be effective in competing with Wal-Mart. Focusing entirely on price may lead to negative implications for potential retailers business because the price affects both customers purchase behavior and the business profit margins. A prospective competitor can focus on quality, design, fashion, total cost ownership, and status to compete effectively with Wal-Mart. Additionally, a competitor can implement higher pricing strategies in the market compared to Wal-Mart. Although increased prices may lead to reduced number of customers, the competitor is assured of higher profits that can be used for expansion and provision of higher quality goods compared to Wal-Mart. c) Wal-Mart’s Secret Operation Strategies critics Wal-Mart’s success is associated with the ability of maintaining its secrets pertaining operation strategies for the last four decades. The corporation’s information on its pricing structure has been debated for some time with no solid comprehension of the strategies it uses to offer low prices to consumers while making profit concurrently (Fishman 23). Remarkably, Fishman’s argument implicating that Wal-Mart operates an absolute controlled economic organization has no validity because it is listed on New York Stock Exchange its corporate savings and investments. Wal-Mart competitors such as Wal-Mart such as TESCO, Carrefour, Costco, Target, and Amazon have further criticized its operations overall accountability. Economies are struggling to sustain the job market by eliminating qualified and skilled individuals. Fishman describes Wal-Mart as a company that has strived to provide jobs for many employees from various parts of the world. Initially, Wal-Mart started with a 100 jobs-increment to boost the capacity of the economy to offer employment (Fishman 11). Fishman further indicates that Wal-Mart employed more workers every year for five years after its establishment while other retailers were struggling with maintaining their operations. The company has sustained a trend of offering consistent jobs in the retail outlets. Employment has been a main objective of Wal-Mart whereby it has expanded its workforce to two million employees. However, Fishman notes that increasing the number of employees can reduce the profit margin of the company due to high wage rates and healthcare costs for the employees. Consequently, this has led to a persistent criticism of the strategies used by Wal-Mart to secure profits while maintaining a large number of employees. Fishman criticizes Wal-Mart associating the rising poverty in United States with the operations of Wal-Mart. He refers to a study by Stephan Goetz that found a correlation between Wal-Mart’s operations and family poverty rates in the 1990s. Wal-Mart has a significant effect on the economy; hence, its poor cultural history of offering low wages to the employees contributes to poverty. Well-known strategies for the corporation include a customer’s affordability, sustainability, and collaborative environmental plan featuring a Green Supply Chain, which critics perceives as insufficient for making up for the negative effects Wal-Mart has on the economy and Americans. . Part 2: Misunderstood Aspects a) Wal-Mart’s Effect on U.S. Economy Fishman brings up conflicting issues about Wal-Mart’s effect on U.S. economy. Wal-Mart is recognized as an integral contributor to the US economy. Not only does it pay huge tax costs, but also meets a wage rate recommended by the government. Fishman asserts that the effect of the Wal-Mart is dramatic to the economy of United States (p.11). Economists have tried to ascertain the impact of Wal-Mart to the economy with respect to the way it creates jobs and affordable prices at the expense of the rival retailers. Fishman does not have concrete evidence of the rationale why Wal-Mart effect on the economy is profound with most of his work associating the corporation with negative economic effects. Wal-Mart was established on strategies meant to maintain its market position for decades and not competing with other retail businesses. Fishman indicates that the pricing structure of the company affects both Wal-Mart consumers and that of other retailers in an ambiguous manner it is not understood from the book how that would have an effect on the economy. The author fails to describe clearly the effect of grocery inflation rate in reference to Wal-Mart, which would have been an explanation of the corporation’s direct effect on the economy. b) Employee relationship Fishman’s interpretation about employee treatment at Wal-Mart is substantially confusing whereby he describes Wal-Mart’s working environment as friendly. On the contrary, he indicates that the company has been fighting labor relations litigations since 1993. Many workers have left Wal-Mart citing unjust treatment from the strict supervisors (Fishman 18). Wal-Mart’s employees have a negative perception of the treatment by the company’s workforce leadership. The negative impression is based on the low wage rate contributing to poor living standards. The salary is not commensurate to many responsibilities given to the employees with economic reports indicating that Wal-Mart will likely curve the competition based on the wage rate and healthcare bills that offset its ability to meet labor costs. This may depict Wal-Mart as friendly to its workforce, but considering it does not have an adequate wage rate evokes conflict among readers. Wal-Mart creates jobs for Americans to create efficiency in its operations. Fishman reveals that the company phases out competition from upcoming or existing retailers, which result in loss of potential jobs (p.18). He is convinced that the net number of jobs it creates for the employees surpasses the number that other retails lose. Fishman’s integration of research findings indicating that Wal-Mart destroys employee desire to work in the corporation by creating a low wage rate is confusing. The impact on wage rate in United States goes beyond the influence of wage rate unleashed by individual mega corporations. Fishman should convince the reader with solid evidence from research that indeed introduction of stores and overall treatment of employees goes down by 2%-5%. Subsequently, he fails to explain to the reader the inter-relationships of various economic factors that may contribute to low wages in Wal-Mart. Part 3: Did Charles Fishman intend to change public perception of Wal-Mart’s accountability and credibility? Fishman appears persuades the public to adopt a particular perception and image about Wal-Mart. An integral part of the book details how the company manages to trounce its rivals. The company has employed successful initiatives to retain its workforce at the same time creating more jobs. Wal-Mart is perceived as a company that allocates supply tender to flexible suppliers who are able to can meet the volume demands in all supply chains (Fishman 25). The author explores a market struggle that has affected the retail industry leading to changes in pricing strategies and boosting the efficiency of the supply chain. Though the author does not dwell on how Wal-Mart treats its employees, the company has been engaged in a few labor relations lawsuits. Fishman aim is to influence the public to percive company as one that is beneficial to the free market and treats the suppliers fairly. Remarkably, the public develop an impression that the company has a set of core values that must be upheld by vendors, employees, and stakeholders. The company has faced challenges in a bid to control the market, offset competition, and reduce prices for the consumers. The priority of Wal-Mart is to have a clientele that enjoys fair prices enabling every citizen to be in a position to purchase basic goods under a revolutionized shopping experience. Wal-Mart’s principles are in the spotlight to show that it has a defined procedure on how it carries out its operation with suppliers and consumers. Additionally, the book seems to influence the public in developing an unbiased perception of a company, which prioritizes unleashing lower prices for the consumers rather than competition with other retailers. Most Americans and economies have developed a negative impression of Wal-Mart’s operations, but Fishman focuses on changing this negative impression. The company has had an intense impact on the retail price in America and other economies where it sells its retail merchandise. Fishman indicates that Wal-Mart also caters for consumers who purchase goods elsewhere at an eight to forty percent rate. Consumers savings add up to $263 billion while household costs are less than $2300 irrespective of the merchandise source (Fishman 23). Consequently, the author convinces the public that Wal-Mart makes shopping an enjoyable task because they would still make the savings when they are getting their goods from different outlet. Fishman creates an image of a company that has been in close connection with suppliers and employees. He utilizes revelations given by former employees and suppliers of Wal-Mart to convince the reader that the positive effects outweigh the bad by far. The company is known to have forced Nelson Sprinkler Company out of business by pressuring it to cut down its prices and improve the quality of products. The company should create an innovative platform for cutting costs and lower prices with respect to prime needs in today’s economy. Work Cited Fishman, Charles. The Wal-Mart Effect. New York: Penguin Press, 2006. Print. Read More