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Is Wal-Mart Good for America or the World?

Wal-Mart’s pioneering use of technology and its market power have transformed the way goods are made and distributed in the global economy; allowing it to have a profound impact on workers in the United States and around the world.

The late Wal-Mart founder, Sam Walton, was notoriously known for his aversion to technology. According to his 1992 memoir, Made in America, he wrote: “Actually, I have never seen computers [as he called the company’s Information Technology (IT) systems] as something more than necessary overhead. A computer is not and never will be a substitute for going out to your stores and finding out what’s going on.”

Walton’s mistrust of computers is buttressed by his hand-picked successor, David Glass. According to Anthony Bianco’s book Wal-Mart: the Bully of Bentonville (2007), Mr. Glass would observe his boss checking a computer-generated invoice against his own handwritten accounting book. Additionally, it would also forward the computer-generated invoice. Mr. Bianco assumed that Mr. Glass chose to go “full throttle” on his computer systems (head office at the David Glass Technology Center) at or around the time of his boss’s death.

Under the inspiration of David Glass, Wal-Mart became a technology leader. “The company was an early adopter of barcode scanning and ultimately set the benchmark for supply chain efficiency with highly integrated point-of-sale systems, communicated inventory via satellite and even RFID tracking” (Techdirt.com, Lindquist, 2007). As a special note,

RFID uses low-power radio transmitters to read data stored in tags, at distances ranging from 1 inch to 100 feet. Tags are used instead of barcodes and can contain much more data, allowing manufacturers, suppliers and retailers to track and manage assets more efficiently (Vijayan & Brewin, TexasInstruments.com, 2003, para 2).

With the much-vaunted supercomputer housed in the David Glass Technology Center, which is the second largest in the world after the Pentagon’s supercomputer, Wal-Mart is poised to transform the way goods are made. For example, the company has developed web-based software (Retail Link) that allows Wal-Mart and its suppliers to monitor the movement of their respective inventory from shelves (including distribution centers) to cash registers. In this way, Wal-Mart is able to keep inventory low, which helps reduce operating costs. Thus, Wal-Mart is able to pass the savings on, in part, to consumers in the form of lower prices. In turn, suppliers are forced (good choice of word) to accept a lower wholesale price (Wal-Mart is able to purchase goods in large volumes, eclipsing demand from other retailers – competitive advantage) (Valenti , Go.com, 2002).

To compensate for the lower wholesale price, Wal-Mart’s suppliers glean (sometimes with help from Wal-Mart) efficiency by making production of their products more profitable and reducing the wages of their employees.

Reducing the wages of employees of Wal-Mart and its suppliers, to support the reduction of their respective price to the consumer, creates a negative impact on workers in the United States. Falling wages are accompanied by a lack of health care and a poor quality of life for American workers. Remedies for U.S. employees are non-existent due to Wal-Mart’s successful ability to avoid unionization (courtesy of our U.S. government) and their suppliers’ ability to outsource (outsource) manufacturing of its products to foreign countries.

The snowball effect (indicated in the previous paragraph) is also having a negative impact on workers around the world. For example, foreign suppliers compete to meet Wal-Mart’s fanatical demand for low prices on its products. Thus, in some countries (encouraged by their governments), employees are reduced to indentured servitude (including child labor) without government protection or recourse through collective bargaining. In fact, Professor Musuraca (2007) pointed out that trade union leaders are condemned to death in Colombia and that trade unions are non-existent in China.

Wal-Mart’s pioneering use of technology has also transformed the way goods are distributed in the global economy. For example, “they have such an efficient system for getting goods to arrive without staying in the warehouse (Go.com, 2002, para 15),” said Arun Jain, professor and chair of marketing at the University of Buffalo School of Management. . Likewise, transforming the way goods are distributed is having the same negative impact on workers in the United States and around the world.

Therefore, Wal-Mart’s pioneering use of technology is helping it establish its market power as it continues to aim for “the low price”. For example, Wal-Mart retains the top spot on the Fortune 500 list and, as Professor Musuraca (2007) taught, Wal-Mart is a microcosm of the American economy. I add to Professor Musuraca’s point by stating: “Wal-Mart is a microcosm of the global economy with all its warts (the negative impact on workers everywhere).”

In conclusion, I showed how David Glass overcame the late Sam Walton’s reluctance (after he disappeared from the picture) to see the importance of investing in “computers” by creating the David Glass Technology Center.

David Glass’s vision and implementation of Wal-Mart’s pioneering use of technology helps secure its market power which, in turn, has transformed the way goods are made and distributed in the Mondial economy. Additionally, I elaborated on Wal-Mart’s impact (via its technology and power) on workers in the United States and around the world. Has David Glass proven the late Sam Walton, revered by Wal-Mart as an oracle or prophet…devil like the Moses (if not King Solomon) of Bentonville, wrong?

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