Walmart: Global Leader in Consumer Satisfaction & Profits - Essay Sample

Introduction

Walmart is a globally recognized enterprise that has generally played the role of meeting the demands of consumers across the globe. Like any other enterprise willing and focusing on expanding its customer base, Walmart has made both legal and grandiose prices that have been drawing consumers on every Walmart store like a magnet. The company has been enjoying and profiting from this concept of business model to ensure that they always stay ahead of the completion in the industry. But behind the struggle and rush to keep the consumers certified, Walmart has used a series of shortcuts that have not only impacted the consumers, but also the government and other competitors in the industry. Therefore, the essay will critically focus on how Walmart has been committing smart crimes against consumers, government and other competitors in the market, through focusing on two sides of the story and how it benefits the company, at the expense of other competitors

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Crime Allegations

According to Mitchell, (2020), In September 2000, Walmart, an American based company, making strides in the global market, was hit with three massive charges regarding predatory pricing. Government agents in German and Wisconsin accused the giant global mall of pricing goods below the required cost of attracting more customers. However, the concept was deemed as a strategic plan to drive away competitors in the market. In Oklahoma, the company faced a similar threat of facing a privet lawsuit in pricing practices.

The Wisconsin Department of Agriculture, Trade, and Consumer Protection filed a claim regarding Walmart’s violation of the state’s antitrust law. The alleged claims outlined that Walmart made a deliberate move in selling essential commodities such as milk, butter, laundry detergents, among other products at a lower price across its numerous stores in West Bend, Beloit, Racine, Oshkosh and Tomah, all in the aim of attracting customers. The allegation outlined the aim of the company in creating a monopolistic type of completion by forcing other companies in the sector to sell at a lower price, which would affect their profits and later force the stores to shut down.

Benefits to Walmart:

Price reduction is one the highly increasing concept that has been widely utilized by many enterprises, to help increase the productivity of the business. Therefore, price reduction acts as a concept of increasing the customer base of an organization. In this case, the benefits of price reduction by Walmart was used to drive in more sales from a simple yet effective tack tick to draw in customers.

The use of this concept increases the customer base of the company, as more consumers are attracted to the stores, due to the price falling that cares for ordinary consumers. While the other stores maintain a steady difference of pricing, to gain profits that are not hard to come by due to consumption reduction and higher completion, Walmart used this opportunity to drive sales of other products which were not being even sold at underprice, as consumers flocking the stores, gained the opportunity to visit and acquire what they wanted.

Disadvantages to the Government and Consumers

While the consumers are enjoying the benefits of reduced prices, there is a devastating effect on both the consumers and competitors. One of the claims behind the reduced price products sold to consumers was the increasing supply of poor quality products that were sold by the company to the consumer without their consent. Most of the products sold by the company at a lower price were deemed to be of poor quality. However, Walmart used the concept of reducing prices to help attract even more consumers, who were hoping that they were buying authentic products. As Rosoff, Pontell, and Tillman, (2002) outlined, the concept of white color crimes is becoming more rampant since the consumers are not so attentive and keen on what they put in their basket. Therefore, consumers have remained in harm’s way, without considering the effect of an unfair competitor, which affects the economic development as well as tarnishing the name of the original companies that supply their products to Walmart.

Reducing the prices of products below the selling price may be deemed as a brisk move in swaying customers in your direction. However, the devastating effects have far-reaching consequences to the government. Price reduction with harms the economic development and governmental means of raising enough revenue. Therefore, most of the stores are forced to cut the cost of operation, as most of the workers are rendered jobless due to economic recession. Through this, the levels of unemployment escalate at an alarming rate.

Is the United States Losing Manufacturing Jobs?

The manufacturing output has gradually increased by more than five percent since 2000, as it has become less labor-intensive and more capital intensive. Workers in the sector are increasingly becoming more competitive due to the increased job requirements that are being established on each entry-level. Therefore, there is a distinctive increase in the education level and experience of the workers in the manufacturing sector. But despite the improvement and advancement in the working class, in the manufacturing sector becoming more competent, there are fewer manufacturing jobs across the nation, with more than 7.5 million jobs lost since 1980 (Pierce, & Schott, 2016). As the price of manufacturing increases in the United States, most of the manufacturers are utilizing the concept of low-cost labor production due to the increased cost of production in the nation. Even though the government is fighting to ensure most of the production businesses remains in the nation, fewer companies are adhering to these demands. Never the less, the rate of unemployment in the nation is skyrocketing at an alarming rate.

According to Ibrahim, Mohamad, and Shah, (2018), the Chinese market is consuming the manufacturing rate decline in the United States. One of the primary concepts that are accelerating the decline in the nation is the availability of cheaper manufacturing costs in the foreign market. China accounts for more than 4% of job loss in the nation due to manufacturers relocating and opting to use the Chinese market too. According to Pierce, and Schott, (2016), the Chinese government has played a huge role in influencing the shift of manufacturers, who want to enjoy the lucrative Chinese market. Through imposing trade sanctions and embargos, the United States remains at a losing side with the Chinese government as it is pushing for higher trade embargos for the companies that are not manufacturing their products in the Chinese soil. Therefore, most of the companies are attracted by not only the cheaper labor in the region but the increasing demand for the lucrative Chinese market.

The increase in the rate of unemployment in the nation is a true definition of how things are slipping through our hands when it comes to manufacturing jobs. The increased unemployment indicates that; the nation has not done enough when it comes to retaining the manufacturing jobs.

According to Ibrahim, Mohamad, and Shah, (2018), the manufacturing sectors in many countries are declining dues to numerous factors that have generally affected the entire economic growth of the country. The American economy has tremendously shifted from a manufacturing economy to a service-based economy as the service-based economy is deemed to be more promising in growth.

The demand from other services sectors is profoundly affecting the growth of the manufacturing sector in the US, as the country’s economy is considering the low levels of investments to generate competent and higher returns as compared to those in the manufacturing sector. Therefore, the manufacturing sector has faced a higher degree of completion that is threatening the growth of the sector, due to the increasing levels of economic growth in the region.

The History of Amway, and Why Would Its Activities Be Pertinent to Topics Covered in This Chapter

Amway is a multinational company that has diversified its services across the globe intend to diversify the company’s operation. Amway is one of the American companies with a long and rich history in the field of offering services. However, despite the increasing range of operations across numerous countries across the globe, the company has been faced with a series of crimes against consumers and the government, not to mention the competitors as well.

Since the establishment of Amway in 1959, the company has recorded tremendous growth in offering numerous services across and beyond the American borders. But behind the extensive range of services offered by the company lies a dark network of secretive operations that revealed the violation of legal rules to gain unlawful profits. The company suits best in the chapter’s context since it revealed a vibrant network of corruption events conducted under the nose of the authorities.

The actions of fraud in the company may be deemed as a white color crime against the government and the consumers. One of the famous and undetected crimes was depicted during the 1980 Canadian fraud detection by the Canadian government, where it was revealed the company had evaded to pay the tax of more than 24 million between 1965 to 1980 (Jing, 2018).

Jing, (2018) outlined that in 1982, Co-founder and the vice president for cooperating services were indicted in Canada for several criminal charges that had been committed by the organization under their leadership. The company had underreported the value of most of the goods brought in the country. On the contrary, the company had defrauded the Canadian government more than $28 million on taxation. The concept of undervaluing proved to be more useful to help slip through the finger of the government official, for the organization to gain unfair profits, which increased completion in the region.

While the 1982 lawsuit proved to be harsh to the company, Amway soon found itself in another messy lawsuit due to the violation of the Copyright Act. The Recording Industry Association of America (RIAA) sued Amway on the violation of copyright as part of its anti-piracy efforts. However, Amway denied any wrongdoing, as the videos were used for training purposes. Never the less, the company was benefiting from the use and violation of the copyright, to help gain unfair profits at the expense of RIAA.

Lastly, Amway found itself between a hard place and a rock in 2007, after the operations were halted in the United Kingdom and Ireland due to the use of deceptive marketing concepts. The company conducted deliberate deceptive marketing strategies that lured most of the suppliers to buy bogus motivation and training tools. The company aimed to inflate sales using deceptive means.

References

Ibrahim, H. I., Mohamad, W. M. W., & Shah, K. A. M. (2018). Individual Factors and Knowledge Sharing: Evidence from Engineers in the Electrical and Electronic Manufacturing Sector. Global Business & Management Research, 10(3).

Jing, H. W. (2018). RESEARCH ON AMWAY (CHINA) DIRECT SELLING MODEL (Doctoral dissertation, SIAM UNIVERSITY).

Mitchell, S. (2020). Wal-Mart Charged With Predatory Pricing - Institute for Local Self-Reliance. Retrieved 13 May 2020, from https://ilsr.org/walmart-charged-predatory-pricing/

Pierce, J. R., & Schott, P. K. (2016). The surprisingly swift decline of US manufacturing employment. American Economic Review, 106(7), 1632-62.

Rosoff, S. M., Pontell, H. N., & Tillman, R. (2002). Profit without honor: White-collar crime and the looting of America (pp. 37-41). Upper Saddle River, NJ: Prentice Hall.