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The globalization of the world market has led to new experiences and opportunities for investors within the retail sector. Key among the beneficiaries has been Wal-Mart, which has managed to reap significant profits from having the opportunity to sell goods at very customer-friendly prices. Consequently, the company has been largely disruptive for the entire retail industry, forcing other players, some of whom are not directly involved in interaction with the consumers, to change their business approach for them to remain relevant in the market. Additionally, the company has forced some of the American companies to lose significant market sizes, primarily due to the company's decision to source some of the products from China.
Firstly, it would be important to appreciate Wal-Mart as an agent of progress. The company's sales volumes are a clear indicator that it has substantially increased the productivity in the United States economy over the years in which it has been in operation. One of the clearest explanations of the development is the reduced prices for the different product. In essence, a rational consumer will always seek to minimize the cost of consumption, and where the cost is too high, some consumers would prefer to forego the product in question. However, with the entrance of Walmart into the market, most consumers are now able to access whatever they wish at lower prices. According to the video, the company's introduction of a barcode system to manage the inventory ensures that there is a real-time update of what the company needs to restock on the shelves, ultimately ensuring that consumers will never miss whatever products they seek to access from the company.
However, the video also highlights that Thomson, a television-making company that was in its prime by the turn of the century has since had to downscale its production and look for markets elsewhere due to the influence of Wal-Mart. In this case, Wal-Mart sought to provide the lowest priced products to the consumers, which necessitated that the company seeks out the suppliers with lowest bids on the price of their good. The pressure to reduce the price of various commodities was pushed up the supply chain, in which case the manufacturer's cost of production would not sustain the price reductions. Ultimately, companies such as Thomson had to consider other markets. Ultimately, the change presented by Wal-Mart has also adversely affected the American companies previously operated in the country.
Notably, Wal-Mart has not only affected the retail sector in which it operates, but also other areas with the threat of product substitution from Chinese goods. For instance, its training of Chinese producers on how to meet the American production standards has led to an entry of Chinese suppliers into the American market, supplying goods that were previously made in the United States. This presents a challenge to other industries within the country owing to the loss of job opportunities for employees who may have to be retrenched as their American employers downscale their production.
In summary, Wal-Mart is not good for the American and World markets. It uses its position and size to bully producers into lowering prices to extreme levels since its low-profit margins are substituted by the company's size. Ultimately, the company uses its size to force changes in the market that could ultimately reduce the level of competition, giving consumers fewer choices, which could ultimately leave the company at liberty of adjusting the prices as it would find appropriate.
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