Wal-MartJoin now to read essay Wal-MartDiscuss the importance of changes in the external environment to an organization like WalMart.The discount department store industry has been a growing industry in the United States for years and WalMart has established itself as the leader of the pack. Fierce competition among retailers has forced down prices and has allowed WalMart to become the most dominant retailer in the US. Many changes in the external environment have made this possible.
Several economic trends beginning in the late 1980s helped WalMart to gain market share in the industry. The economic slowdown that lasted into the mid 1990s forced retailers to drop their prices to draw in customers. When the economy returned to prosperity in the late 1990s, this competition only increased. Companies such as Sears, Roebuck and Co. met this competition by restructuring and focusing more on their retail business. WalMart was now forced to compete with companies designed to better serve the consumer. Companies such as Target Stores began to shift its focus to its national markets by carrying more fashionable merchandise. Many companies, such as Caldor and Woolworth Company, were unable to stay with the competition and closed down entirely. WalMart was able to buy up many of stores and expand its own market.
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The trend is described in a number of recent studies on the impact of low wages. In one study,[3] researchers found that Wal-Mart’s “price cut” in 1987 caused a drop in its retail earnings of $7.45 a year for a period of 10 years—$17.53 per year (an increase of 9.6%, 4.9% yearover year).[4]
The trend has not been noted by other studies, but is widely acknowledged in a number of quarters. Most of this is due to research done by Harvard economics professor David Greenbaum (and his colleagues) that shows the labor market is more complex to determine. He showed that, at some point, workers are asked to give up some or all of their basic needs. After that, there is a period of time that workers should be getting paid what they need. When the time has passed, things can quickly go bad. In a different study,[5] researchers and social psychologists conducted a similar study.[6] The first study took a close look at how the productivity gap of average workers grew between 1980 and 1991 when Wal-Mart’s prices were high.[7] The second one took a look at labor market data from the 2000 or newer, to see how Wal-Mart’s prices grew over time. [8] In the third study,[9] researchers did similar study focusing on data from 1986-2007.[10] The authors asked consumers “Why did Wal-Mart’s prices climb? What does it mean for productivity or profits when workers get paid less?” By comparing hourly wages of workers whose jobs took a much bigger hit, researchers came to the conclusion that workers’ jobs had become more expensive.
In fact, as our previous analysis of Wal-Mart’s price cut shows, wages in the low-wage sector grew at the same rate as the wage gains in the high-wage sector.[11]
[3] The study also found that Wal-Mart’s cost of living fell below that of its competitors.[12] According to the Center for Responsive Politics,[13] Wal-Mart’s price cut led to an “unemployment crisis” that cut employment by as much as 4% over 2000 until it took control of the U.S. economy in 2007.[14] The cost of hiring lost 7,000 jobs in the same period.[15]
As noted above, this type of research is just one form of the data needed to demonstrate the impact that Wal-Mart’s increase in hourly wages had on wages. Indeed, the findings of the last three studies have been published in different research journals and in different reports. The data gathered by those two studies, and those in the third, is not as compelling and hard to interpret as those of the last three studies.
Further studies, however, show that the shift in the manufacturing work force and price cut caused the price of clothing to fall in both industries.
If the trend can be estimated by considering the wage wage gap, let’s look at some examples.
Source
[1] The Department of Labor study found that, in the 1980s, manufacturing increased $4.33 less per hour after a few years of declining earnings. The decline was partly because workers had “removed” the cost
[table]
The trend is described in a number of recent studies on the impact of low wages. In one study,[3] researchers found that Wal-Mart’s “price cut” in 1987 caused a drop in its retail earnings of $7.45 a year for a period of 10 years—$17.53 per year (an increase of 9.6%, 4.9% yearover year).[4]
The trend has not been noted by other studies, but is widely acknowledged in a number of quarters. Most of this is due to research done by Harvard economics professor David Greenbaum (and his colleagues) that shows the labor market is more complex to determine. He showed that, at some point, workers are asked to give up some or all of their basic needs. After that, there is a period of time that workers should be getting paid what they need. When the time has passed, things can quickly go bad. In a different study,[5] researchers and social psychologists conducted a similar study.[6] The first study took a close look at how the productivity gap of average workers grew between 1980 and 1991 when Wal-Mart’s prices were high.[7] The second one took a look at labor market data from the 2000 or newer, to see how Wal-Mart’s prices grew over time. [8] In the third study,[9] researchers did similar study focusing on data from 1986-2007.[10] The authors asked consumers “Why did Wal-Mart’s prices climb? What does it mean for productivity or profits when workers get paid less?” By comparing hourly wages of workers whose jobs took a much bigger hit, researchers came to the conclusion that workers’ jobs had become more expensive.
In fact, as our previous analysis of Wal-Mart’s price cut shows, wages in the low-wage sector grew at the same rate as the wage gains in the high-wage sector.[11]
[3] The study also found that Wal-Mart’s cost of living fell below that of its competitors.[12] According to the Center for Responsive Politics,[13] Wal-Mart’s price cut led to an “unemployment crisis” that cut employment by as much as 4% over 2000 until it took control of the U.S. economy in 2007.[14] The cost of hiring lost 7,000 jobs in the same period.[15]
As noted above, this type of research is just one form of the data needed to demonstrate the impact that Wal-Mart’s increase in hourly wages had on wages. Indeed, the findings of the last three studies have been published in different research journals and in different reports. The data gathered by those two studies, and those in the third, is not as compelling and hard to interpret as those of the last three studies.
Further studies, however, show that the shift in the manufacturing work force and price cut caused the price of clothing to fall in both industries.
If the trend can be estimated by considering the wage wage gap, let’s look at some examples.
Source
[1] The Department of Labor study found that, in the 1980s, manufacturing increased $4.33 less per hour after a few years of declining earnings. The decline was partly because workers had “removed” the cost