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Essay on The Effects of Wal-Mart's Cost and Pricing Structure on the U.S. Economy
Abstract
The purpose of this paper is to illustrate the impact of the Wal-Mart’s cost and pricing structure on the U.S. Economy.
Introduction
Wal-Mart is currently the largest retailer in the world. With more than 4,500 stores, Wal-Mart generated $240 billion in sales, which accounted for a little less than 2.5 percent of the U.S. gross domestic product in 2002. Wal-Mart's success, however, is not universally admired. In fact, it is often accused of engaging in anticompetitive business practices.
As of January 2005, Wal-Mart employed 1.3 million people in the United States. Wal-Mart's corporate headquarters are located in Bentonville, Arkansas. Apart from retail locations, it operates 99 Distribution Centers and Transportation Offices in the United States. Internationally, Wal-Mart employs over 410,000 people (excluding Japan) for a company-wide total of 1.7 million employees. Wal-Mart also operates the largest real estate company in the United States, with an entire division devoted to building new stores, selling old stores, and developing shopping centers around its stores. In addition to its wholly-owned international operations, Wal-Mart owns a 42% stake in The Seiyu Co., Ltd. in Japan, with a proposed US$597 million to increase its stake to 50%. This purchase is subject to the shareholders vote in December 2005.
Impact of cost and pricing on the U.S. Economy
It has been clear that Wal-Mart is following the strategy of low cost and low pricing both which has been critized by many critics all across the country, but this issue has both sides of the coin, when it has the positive impact along with it, it also has negative impact on the U.S. economy.
Low Wages means high cost to tax payers.
By keeping unions at bay, Wal-Mart keeps its wages low – even by general industry standards. The average supermarket employee makes $10.35 per hour. Sales clerks at Wal-Mart....
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