Why Can Wal-Mart Offer Cheap Goods - Essay Example

8 October Term Paper Proposal Wal-Mart: Why can they offer cheap goods? Globalization is the fundamental characteristic feature of the present age. It has changed everything from the life of a poor man on the street of USA to the way corporations are functioning and conducting their strategic planning. In the past few centuries, there has been so much trade among countries that today, a vast majority of people on the face of Earth are spending the same lifestyle. Most of the people of China, Japan, India, USA, UK, Canada, Australia, UAE, KSA and several other countries are today living a similar life, which can fundamentally be attributed to globalization.

USA has traditionally welcomed multi-culturalism, which is a key characteristic feature of globalization (“Globalization”). But big corporate companies have served as catalysts for globalization. In an attempt to gain competitive advantage, corporate companies have started making using of globalization. Wal-Mart is one such corporate company which has made use of outsourcing as a key strategic function to widen its customer-base. This term paper aims at identifying the reasons Wal-Mart is able to sell its products cheaper than others.

Wal-Mart lists amongst the biggest retailers in the USA. Till 2004, there were 538 Sam’s Clubs and 1471 supercenters of Wal-Mart in the USA whereas the number of discount stores operated by Wal-Mart in USA was 1478 (“Global Strategy Analysis”). Outsourcing is the cardinal function of Walmart. “From the beginning, like other discounters, Walton had bought goods wherever he could get them cheapest, with any other considerations secondary” (Ortega 205). Wal-Mart has conventionally been outsourcing projects to companies that include but are not limited to Wipro and TCS (Mishra).

This is in addition to the wide-array of imported products that Wal-Mart has sold and made profits from in the past. Walton “increasingly looked to imports, which were usually cheaper because factory workers were paid so much less in China and the other Asian countries” (Ortega cited in Hornblower). Analyzing the strategy of Wal-Mart, the economist consultant A. Gary Shilling said, “What Wal-Mart is doing follows in the footsteps of Henry Ford. Ford said that if you don’t pay your workers enough, they are not going to be able to buy Fords” (Kilborn).

Wal-Mart has conventionally been releasing statements that they are enthusiastically interested in purchasing products made in America. Walton said, “[Wal-Mart] is firmly committed to the philosophy of buying everything possible from suppliers who manufacture their products in the United States” (“Wal-Mart boasts” 1). But their actions contradict their statements. This has been highlighted by numerous critics. Wal-Mart Stores Inc. shouldnt portray itself as a company committed to American-made goods if most of the clothing it sells is imported.

That was the complaint of some Wal-Mart shoppers on the companys home turf in Northwest Arkansas Friday, one day after labor and human rights groups charged that the retailer buys 85 percent of its apparel overseas.” (Arkansas Democrat-Gazette cited in “Wal-Mart and Outsourcing”). My term paper will tend to identify the reasons for which Wal-Mart is able to offer products at lower price than its competitors in the market. Works Cited: “Global Strategy Analysis: Wal-Mart.” 1 Mar. 2010. Web. 8 Oct. 2011. .

“Globalization.” N.d. Web. 8 Oct. 2011. . Hornblower, Sam. “Wal-Mart & China: A Joint Venture.” 2011. Web. 8 Oct. 2011. . Kilborn, Peter T. “Big Retailer: We Must Buy American.” N.Y. Times News Service. The Dispatch. 11 April 1985. Web. 8 Oct. 2011. . Mishra, Pankaj. “Wal-Mart to Start Outsourcing More to India.” Economic Times of India. 8 June 2009. Web. 8 Oct. 2011. . Ortega, Bob. In Sam we trust: the untold story of Sam Walton and how Wal-Mart is devouring the world. UK: Kogan Page, 1999. Print. “Wal-Mart and Outsourcing.” n.d. Web. 8 Oct. 2011. .

“Wal-Mart boasts made in USA. - Wal-Mart Stores Inc.s Buy American program – Special Section: The World of Wal-Mart - Company Profile.” 15 June 1992. Web. 8 Oct. 2011. .