Christina Ley



Christina LeyBUS 240 – 509/27/12Activity #12 - WalMart Case StudyGO TO WEBSITE: ON ONLINE: Watch the Full Program OnlineVIEW THE FOUR MODULESREVIEW BACKGROUND INFORMATION / DEFINITION OF TERMS TYPE YOUR RESPONSES ON THIS DOCUMENT FORMPUT COMPLETED DOCUMENT IN YOUR PORTFOLIO The changing relationship between manufacturers and the so-called "big-box" retailers is exemplified by Wal-Mart. This societal change has contributed to the bankruptcy of some American businesses and a caused unemployment for some American workers. While Wal-Mart 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.Definitions:? Outsourcing is when a business obtains services or products used in manufacturing, such as parts for a television set, from an outside (often overseas) supplier or manufacturer in order to cut costs.? Offshore Companies conduct most of their business outside of the country in which they are incorporated. These companies are also known as non-resident companies. ? Push Production is when manufacturers of products decide what to produce, how much to produce and the price of the product.? Pull Production is when retailers determine what the manufacturer will produce, how much to produce and the price of the product.Case Facts:? Global retailers are superseding 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.? Wal-Mart 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 Wal-Mart.? 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 and it is rising each year.Answer the following questions as you view the WALMART CASE STUDY:What did you know about Wal-Mart before viewing the documentary?I knew WalMart faced criticism by labor unions. They faced issues and lawsuits for poor working conditions, low wages, and inadequate healthcare, among other things.How is Wal-Mart able to keep track of its inventory? Why is this important? List the effects this has on producers.Wal-Mart uses Telson, a device that is able to get information such as the history, sale price, and trend price from the product just from the bar code. It is important because of speedier delivery, orders generated every night, and it’s more available to customers.What is an opening price point? How does it influence sales?Opening price point is the cheapest item in the line (rock bottom price). It influences sales because it lures customers in, see what they want to purchase (not always lowest price).Do you think the strategies that Wal-Mart is using are fair? Why or why not? What class of people would be most vulnerable to their opening price point marketing strategy?I think it’s fair but also unfair. I think that they are fair because they are giving us some pretty good deals. I think that they are unfair because of the way they have it set up, like having the good deals set up front and making you think the deals get better as you go towards the back. This causes people to buy the things toward the back instead of the better things toward the front. It is also unfair that they are using products from overseas that are cheaper instead of the products from here and putting people out of a job from doing it.Trace the decline of Rubbermaid from 1994 to 2004. What factors most contributed to this decline?Resin price increased (raw material), Wal-Mart would not take price increase, dropped products, Rubbermaid sold to Newell (sold all assets and jobs lost).What new kinds of jobs might be created as a result of outsourcing? What jobs might be eliminated?Low skills jobs are eliminated – manufacturing, call centers. High skill jobs are created – design, sales, customization, installation, and maintenance.Who gains the most from Wal-Mart's price policies? Why?Wal-Mart and consumers, especially Chinese manufacturers, because the price policies force companies to find the cheapest source, which is often China (due to Chinese monetary policy).Who has not benefited from Wal-Mart? In what ways?The people who have been shopping at Wal-Mart have not benefited from Wal-Mart. We are not benefiting because we are spending our money on overpriced objects that they did not pay that much for.How should Wal-Mart balance the needs for worker benefits, low prices for consumers and high profits for shareholders?Wal-Mart should balance the needs for worker benefits by using products that are manufactured in America instead of putting people out of business so that they can pay less. Wal-Mart should lower prices for consumers that way people way buy more than they do now and people will think that it is more fair then they do now. Wal-Mart should use high profits for shareholders so that we can pay less and they can make their money from shareholders.In 1994, President Clinton said that new trade agreements would create a market for American products in China. What happened to the United States companies after opening trade with China?For many, America's trade with China has not lived up to its expectations. Expanded trade was great for large U.S. multinationals but has been a tough market to crack for smaller and mid-sized American companies.What most surprised you about the film?I found that the Telson was really interesting. To have a device tell a company or business how much they should invest in inventory is quite impressive. It really affects their sales and trends. ................
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