Sociology Wal-Mart - Essay Example

Sociology 269 Final Research Paper (Wal-Mart) Executive Summary Wal-Mart Company has developed stable retail outlets in the United States, offering the most competitive prices of goods in the country. In their strategic approach of making sure that they win the customer’s confidence, the company applies technological innovation, trade liberalization, division of labor, and capital internationalization, in doing their business. Through such practices, the company has designed measures such as lowering the prices of goods. The company understands that without being competitive in the market, they could not enjoy the advantages of globalization, because the mega- corporations would use their economic strength to outdo the medium and small enterprises. In this research, the aspect of globalization that was carefully considered and analyzed was prosperity, in which the organization formulated policies and practices, which would make sure they succeed in the business operations. It was only through ethical business practices that the company made sure they become sustainable in the free and competitive market. At the end, the company was able to maintain their profitability despite the low prices of their goods. Apparently, this was possible because of increased sales, as the people preferred such cheaper products, which are of substantial quality and locally available in the country. Introduction Wal-Mart is one of the few corporations offering their products at relatively low prices in the market, compared with their competitors. Perhaps, this could be a strategy to have a large number of customers. In economic circles, globalization is the major concern of most large corporations (Baylis and Smith 28). However, the market forces are unfettered, thereby making the situation more controversial and difficult to understand. Indeed, globalization has led to increase in information exchange, making the corporations to learn the people’s purchasing power (Balaam and Veseth 210). This would in turn enable the company to formulate strategies, which enable them to make profit from the vast market. Due to globalization, most corporations would relocate to places where the cost of doing business is cheap, for example, labor, transportation, taxation is relatively low and security is guaranteed (Went 16). Primarily, this would occur in developing countries where environmental laws are weak and the corporations could generate more income from the business operations. Therefore, the research is about the reasons accounting for the high profit at Wal-Mart Corporation despite the low prices of their goods. Problem Statement Globalization has various impacts on the operations of different companies. Sometimes, the company might enjoy certain benefits, while in other cases, there might be disadvantages. However, in the case of Wal-Mart Company, selling cheap products does not reduce their profitability. There could be several explanations to the issue that only a study might unveil. Therefore, the research, examines the reasons explaining this difficult situation. Specifically, the problem to be investigated is why they can offer cheap goods without losing profit? Finding a solution to the problem would give explanation and justification of the practice. Hypothesis Ho: Selling cheaper products has no significant relationship with globalization. H1: Selling cheaper products has significant relationship with globalization. Selling Cheaper Products and Globalization Globalization has failed to harmonize business operations since most corporations have to put workable internal structures, which would guarantee continuity of their business (Baylis and Smith 32). For example, Wal-Mart’s globalization strategy was characterized by low prices of goods, which were available in mass for the local consumers (Kilborn 1). This, indeed, ensured that their customers had a variety of high quality goods, with competitive prices to choose from. The company considered the impacts, which globalization might have on their business operations and formulated ways of countering them. In essence, the corporation targeted average and low income earners, who are the majority locally and in the global arena (Balaam and Veseth 210). Notably, this group of people would prefer to purchase goods that are relatively cheap and friendlier to the pocket and within the local market (Kilborn 1). Since the corporation’s management had realized that they could only achieve sustainable growth through globalization, they had to make sure that corporation reaps from positive strategies in the global market (Hornblower 1). Therefore, they decided to lower their prices to attract more prospective clients. Usually, economic growth favors the low income earners; similarly, it is through global trade that the world could achieve sustainable growth. Besides, research has shown that open global trade, financial integration and liberalization lower corruption and result to prolonged economic growth (Hornblower 1). The management of Wal-Mart realized that through low prices of their good, they would secure the number of customers necessary for sustained economic development. Indeed, they achieved this, because their customer base was broadened as most people would like to associate with low prices. Notably, the raise in world’s economic integration might not increase inequality, but would eventually bridge the gap between the poor and the rich, to form a large group of average earners, with relatively increased purchasing power (Baylis and Smith 35). As well, with the rising need for saving, many people would like to purchase goods of low prices so that they can have adequate savings. As a result, there was preference for Wal-Mart than other retail outlets (Kilborn 1). The increased sales made sure that the business made enough profit despite the low prices of their goods. Despite the revelation that globalization is a challenge to the medium and small scale enterprises, and mostly push them out of the market, Wal-Mart’s strategy of lowering prices has made them successful in the competitive market (Hornblower 1). They are still able to sell their high quality products to the consumers, who are willing to purchase the low cost products. Under the strategy, most of their competitors cannot outdo them even during inflation. In fact, during inflation, the company would reduce the prices further to suit their clients’ desires (Richardson 1). The company usually does that in response to the actions of other competitors in the retail trade. Sometimes, the corporation uses the Internet in disseminating the information relating to low prices of goods. Precisely, it is this kind of strategy that Wal-Mart has used to maintain its market share, despite the stiff competition from other large corporations. In addition, the company has created its micro-economic scale. Specific Globalization Aspect under this Study There are only two aspects, in which the world is polarized namely, prosperity and impoverishment. Considering the case of Wal-Mart, its globalization strategy has tailored towards the aspect of prosperity (Griswold 268). In close reflection on the two aspects, the business community becomes knowledgeable on the opportunities and challenges of globalization (Steger 61). Consequently, it becomes able to make informed decision about the best strategy that could enable the company to enjoy the benefits of globalization. Knowing that globalization has several uncertainties, the economic relation among different corporations and regions should be reliant on a “win-win” scenario (Imade 1). Under the scenario, the corporation makes sure that they benefit from that corporation. Wal-Mart, for example, underscores the importance of their consumers and other stakeholders, thereby, would make sure that they enjoy globalization benefits (Steger 69). In the company, technological innovation, trade liberalization, division of labor, and capital internationalization are the core concepts driving the business operation (Imade 1). Indeed, the company makes use of information revolution to innovate new ideas, such as the automation of transactions, advertising their services and prices of goods online, which are effectively implemented for the benefit of the company and the stakeholders (Richardson 1). This indicates that the company goes beyond the theoretical knowledge to practical approach in ensuring customer satisfaction (Griswold 274). Usually, it results to the stakeholder’s confidence that is necessary for the prosperity of business operations in the company. In addition, Wal-Mart had discovered that through adequate application of technological innovation, trade liberalization, division of labor, and capital internationalization, it would benefit from globalization. Particularly, the company liberalized its economic approach through enhancing customer relations and making their prices to be competitive in the market (Imade 1). As well, the company expanded its business size to protect its market from trade liberalization practiced by other mega-corporations (Richardson 1). According to the company official website, those were the ideals, which made the company to continue making profits despite expansion and global downturn. For instance, expansion of high technological application and information based operations defined the company’s globalization strategies within its business circles. Through such applications, there is increased efficiency and accountability of the workforce (Steger 77). Therefore, it saves time and ensures that the public is adequately informed. In addition, capital, services, labor, and goods in America, Europe and Asia are currently technology-based (Balaam and Veseth 210). Under division of labor, the company recognizes the uniqueness in people’s abilities, strength and experience. Therefore, recruitment into various departments consider the person’s skills and experience in doing a particular job description. Each department of the company needs people of different skills and expertise that could facilitate the process of production (Went 17). Through internationalization of capital, Wal-Mart has concentrated its capital and business operations in a few developed countries, including United States, Canada, and Britain among other advanced countries (Imade 1). Notably, the company understood that it is only in developed countries where capital internationalization would work, because of their capitalistic nature. In those advanced economies, the people have purchasing power and low prices are attractive to the buyers since it encourages saving. Therefore, concentrating the capital would lead to high return and profitability of the undertaking (Imade 1). The company also realized that through free markets, especially in capital, goods and labor, it could achieve a reasonable business development status despite unpredictable economic trends. In this regard, the company successfully made use of the free market economy to determine their prices of goods, in a manner that would appeal to their customers. That was the only assurance of gaining customer confidence in the competitive market (Hornblower 1). Indeed, for the company, their globalization strategy was a situation of win-win, where both the company and its stakeholders mutually benefit from the trade terms. Notably, the company globalization trend was inclined towards monopolization of the market, because, once they lower prices, the people would prefer to purchase good from their warehouses (Kilborn 1). The continuation of such practices would make sure that the company monopolizes the market and interfere with the operations of smaller enterprises (Balaam and Veseth 211). Testing the Hypothesis Considering the research findings, the alternative hypothesis stating that “Selling cheaper products has significant relationship with globalization” is accepted, while the null hypothesis stating that “Selling cheaper products does not have significant relationship with globalization” is rejected. Therefore, it indicates that lowering prices is a winning strategy that the companies should employ in order to remain competitive in a liberalized market. Moreover, increase in the need for saving makes the prospective customers to prefer low cost goods, which are of high quality for human consumption. Conclusion In summary, globalization does not have a particular impact on the company practices. It could lead the company to prosperity or impoverishment, depending on the strategic planning that they have put in place. Notably, the strategies that Wal-Mart Company had enforces such as advanced technological innovation, trade liberalization, division of labor, and capital internationalization, was a surety that it was destined for success. Through lowering of prices for their goods, the company became more competitive in the region than the giant corporations. This made the people to prefer the products since they were of high quality, home made and at relatively reduced prices. As a result, there were increased sales that guaranteed profit even at such low prices. In addition, low prices are attractive during the economic hardships, therefore, the company offering such terms would attract more potential customers than their competitors. It would be right to believe that the strategic planning leads to organizational success, because there would be systematic approach that the employees follow in delivering the desired outcome. In addition, there is a strong correlation between pricing methodology and the consumer preferences. Furthermore, globalization of business enterprises affects their sales, thus calling for urgent measures to address the impacts and ensure sustainability in the company. Works Cited Balaam, David and Veseth, Michael. Introduction to International Political Economy. New Jersey: Prentice Hall, 1996, pp. 210-211. Baylis, John and Smith, Steve. The Globalization of World Politics: An Introduction to International Relations. New York, NY: Oxford University Press, 2001, Print. Griswold, Daniel. “The Blessings and Challenges of Globalization” The World and I, September 2000, pp. 267-283. Publication. Hornblower, Sam. “Wal-Mart and China: A joint Venture.” pbs.org, 2011. Web. 29 Nov, 2011. Imade, Lucky. The Two Faces of Globalization: Impoverishment or Prosperity. globalization.icaap.org, 2003. Web. 29 Nov, 2011. Kilborn, Peter. Big Retailer: We must Buy American. N.Y. Times News Service. news.google.com, 11 Apr, 2011. Web. 29 Nov, 2011 Richardson, Tim. Introduction to Globalization.witiger.com, 2009 .Web. 29, Nov, 2011 Steger, Manfred. Globalization: A Very Short Introduction. New York, NY: Oxford University Press, 2009. Print. Wal-Mart. Wal-Mart. walmartstores.com, 2011 .Web.29 Nov, 2011. Went, Robert. Globalization: Neoliberal Challenge, Radical Responses, London: Pluto Press, The International Institute for Research and Education (IIRE), 2000, pp.16-19. Read More