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Walmart - America and the World Watch

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America and the World Watch
Wal-Mart has caused a revolution to the inventory systems by the use of computers. One
of the respondents in the clip named Mr. Smith, Wal-Mart takes customers considerations first
before the suppliers. Prices are fixed by the customers and then fixed at the customer rate to the
supplier. This is contributed by the fact that Wal-Mart fear that if they do not meet customer
demands, they may lose them. This approach has made turned manufacturers poor victims
because they are forced to sell their products at the lowest profits that may sometimes result in a
loss.
From the documentary, we can conclude that Wal-Mart is a representation of cost driven
low-priced approach towards competition. One of the commentators of the documentary
concludes that Wal-Mart’s model is winning out customers by using innovative technological
ideas to track sales, supplies and purchases.
The documentary outlines how Wal-Mart is employing the use of “opening price points”.
This are described as the cheapest items selected for each section which are advertised with large
signs on how the products are cheap. Mr. smith, one of the commentators, is amused on how
Wal-Mart is using such a trick to attract customers even though other products in the section may
be expensive compared to other stores.

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A former manager of Wal-Mart claims that once you have shopped in their stores, “they
got ya”. This is because they create a perception to the shopper that their products and services
are the cheapest in the market through opening price points. In the determination of whether Wal-
Mart is good for America, the conclusion will be “No” because Walmart takes advantage of both
the customer and suppliers. While some products are advertised as cheap, other products are
expensive than others in a particular section as compared to other chain stores. Wal-Mart is also
pushing manufacturers out of their respective industries because they are hardly making any
profits. Wal-Mart is giving advantage to emerging markets such as China a competitive
advantage because of their low costs of production implying that they can make profits even at
the lowest prices.
How important is China to the world?
From the documentary, most of the commentators are complaining China and the
pressure that is forcing manufacturers to move to other countries where the cost of production is
lower. The commentator gives the impression that it is unfair for Wal-Mart to make such huge
profits for goods manufactured from other countries like China rather than promoting products
manufactured in the US. China has the largest labor market that are lowly paid making the cost
of production lower. The commentator gives the impression that the US made a mistake when
they opened trade with China. This is because average American consumers cannot afford
American manufactured goods hence they will go for the Chinese products.
The documentary also suggests that China may overtake America economically. This
may be true because most of the main manufacturing firms in the US are outsourcing their
services to China hence making their own citizens jobless. China is growing economically and is
a major manufacturing zone in the world. China uses simple and cheap technologies in the

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manufacturing process hence resulting in low production costs. However, there is a compromise
in the quality of their products as the commentator notes.
China has also contributed to the increase of economic activities in the US because as
people save money by cheap imported products from China, the money saved is used in other
economic activities. This results in an increase of economic activities generally. One of the
respondents named Mr. Mishel claims that losses from trade are usually offset by gains from
trade and he believes that most people have lost from trade. However, Linder opposes Mishel
claiming that there is no valid evidence for trade benefits hence he concludes that the US is
losing out in international trade.
The documentary also shows a small town comprised of middle-income Americans who
have lost their jobs to the Chinese more so in the television manufacturing industry. There is also
an allegation that the Chinese are dumping their products in the American market below market
prices implying that they have to reduce their production costs so as to offer such prices and Wal-
Mart supports such practices. This has led to high unemployment rates among young people who
worked in small factories.
Does this surprise you? Explain
The model that Wal-Mart is employing in their business is worrying because of several
reasons. First, small and medium factories in the US are being shut down because of lack of
market. This has been contributed by China who is producing similar products at lower costs.
Wal-Mart is also importing most of the goods on their stores so as to satisfy the price required by
the customer hence pushing other chain stores off the market. Such unhealthy competition will
create a monopolistic type of market hence reducing competition in the long run. There is a

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