Wal-Mart: Everything That’s Wrong With The American Business Model


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In order to determine what’s wrong with American business, one need look no further than Wal-Mart.  It buys all of its products from China, thereby not utilizing American labor.  It pays its employees poorly. Yes it provides millions of jobs but if it doesn’t provide a livable wage, what’s the point?  It cuts corners, thereby providing a poor experience for customers.  And in the end, only really cares about its stock price.  Recently, much has been written about empty shelves and long lines due to labor shortages.  Quite simply, Wal-Mart is the retailer of the past and will eventually fail because the one great thing about Capitalism is competition.  If it has one strength and advantage, it’s prices. Due to the fact it’s so large, it can demand high margins from suppliers, allowing it to charge cheaper prices. Every manufacturer dreams about gaining access to Wal-Mart and its more than four thousand US locations.  It can literally support entire companies with its sales volume.  The problem with Wal-Mart is management refuses to think outside the box, doing business as it always has and people are finding alternatives like Costco, and Target.  These two competitors have done a far better job of moving with the times.  Their stores are nicer, their employees happier and customer service is far superior.  Shopping at Wal-Mart on the other hand is simply a miserable experience.  For many companies customer service has again become front and center.  But not at Wal-mart, which last month finished dead last in the American Customer Satisfaction index.  Wal-Mart is the coal mine of American retailing.  But Wal-Mart is just one example of what’s wrong with American business.  There’s a real problem with our business model when kids graduating from Colleges and Universities today, can expect to receive similar pay to what my graduating class earned in 1987.  Young people today are living with their parents well in to their twenties and even thirties.  Homes, cars, clothes and everything else we purchase, has gotten more expensive. So why the lagging salaries?  The single most important reason; shareholders.  While I completely understand the concept of profits, it can’t be the only thing that matters. It will be detrimental in the long-term. What will happen when companies create masses of people who can’t afford to purchase anything?  Every worker is also a consumer and if they have no buying power how do companies expect to keep earning profits?  The so-called 1% aren’t buying Ford’s, GM’s, Toyota’s and Honda’s.  The middle class are.  Companies need to start comprehending that.  A company is either making money or it isn’t.  If this year a company has it’s best earnings ever and next year it has its second best year, the stock plummets.  That should be the definition of insanity.  In summary, American companies must provide better wages and conditions for the people who sustain companies like Wal-Mart.  It’s good business practice.  It will lead to higher profits because people who are satisfied are more productive and ultimately it will be what’s best for America.

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