Frontline offers two starkly contrasting images: one of empty storefronts in Circleville, Ohio, where the local TV manufacturing plant has closed down: the othera sea of high rises in the South China boomtown of Shenzhen. Is there a connection between American job losses and soaring Chinese exports? Walmart! For Walmart, China has become the cheapest, most reliable production platform in the world, the source of up to $25 billion in annual imports that help the company deliver everyday low prices to 100 million customers a week. But while some economists credit Walmarts single-minded focus on low costs with helping contain U.S. inflation, others charge that the company is the main force driving the massive overseas shift to China in the production of American consumer goods, resulting in hundreds of thousands of lost jobs and a lower standard of living here at home.
“Is Walmart Good for America?” provides a provocative examination of the impact Walmart has had on the U.S. economy. The documentary highlights the changing relationship between manufacturers and the so-called “big-box” retailersexemplified by Walmartthat has contributed to the bankruptcy of some American businesses and a growing unemployment rate. While Walmart supporters tout the advantages of one-stop, low-cost shopping, others are alarmed at both the outsourcing that has made these low prices possible and how large retailers affect smaller, local businesses. FRONTLINE examines the winners and the losers as it documents how: Below some thoughts reviewed in the film:
Global retailers are dominating manufacturers in making decisions about product quality, type and price.
A basic flaw in the United States-China trade relationship is that we can afford to buy Chinese products, but they cannot afford to buy ours.
Walmart has approximately 6,000 global suppliers; 80 percent of these are from China.
China is becoming the biggest producer of high-tech products in the world.
TCL, a Chinese company, is now the largest producer of televisions in the world, and almost all of their U.S. exports go to Walmart.
The United States is exporting raw materials to Third World countries and importing their manufactured products, which is a reversal of former economic relations.
In 2003, the United States had a $120 billion trade deficit with China, it was about $160 b in 2008. Todays trade deficit is $32b (NPR radio, News Around the World, January 7, 2015)
Assignment questions:
Q1.What does the documentary tell you about the global business environment?
Q2.What forces are driving the retail industry? Conduct an environmental analysis for Walmart, including the general environment and industry environment. For the industry environment, conduct a Porter Five Forces analysis of the (big-box) retail industry. Identify the strategic group to which Walmart belongs.
Q3.Identify Walmart’s generic strategy and articulate that strategy from an industry perspective.
Q4.Resources are defined as tangible and intangible assets a firm uses to choose and implement its strategies (Peng, 64). Which (distinctive) competencies or capabilities does Walmart utilize to implement its (generic) strategy? That is, what does Walmart do better than its competitor to be so successful in the retail industry?
Q5.Market and financial analysis:
a. How big is Walmart? Provide us with an idea on how big Walmart really is with respect to the domestic and global big-box retail industry? Provide industry (competitors) and market data, here.
b.Provide current market data for Walmart: a) total number of stores; b) number of domestic versus international locations, and, c) where are most of Walmarts international stores located and why?
c.Financial analysis of Walmart. Use latest report(s) available. Provide a trend analysis over the past three years with respect to Walmarts revenues and net income. Dig into the financials, explain the trends, e.g. were the companys revenues growing, if so, where and/or where not (markets)?
Q6. What are Walmarts plans for the future?
Q7.With respect to your situational analysis of Walmart in questions 2-4, do forces that are driving the retail industry and the key success factors in the retail industry justify Walmarts plans for the future? Justify your answer.