53 pages • 1 hour read
Charles FishmanThe Wal-Mart Effect: How the World's Most Powerful Company Really Works - and How It's Transforming the American Economy
Nonfiction | Book | Adult | Published in 2006A modern alternative to SparkNotes and CliffsNotes, SuperSummary offers high-quality Study Guides with detailed chapter summaries and analysis of major themes, characters, and more.
Themes
Impact of Corporate Policies on Suppliers and Competitors
The Wal-Mart Effect examines the ways in which corporate policies impact suppliers and competitors through the lens of the Wal-Mart corporation and its evolution over time. Charles Fishman narrows his interrogations to this billion-dollar corporation in order to consider how a single corporate entity has far-reaching effects on all of those organizations who work with, for, and around it. Fishman argues that Wal-Mart’s control of the national and global retail markets squeezes its suppliers and manipulates the quality, distribution, and prices of their products.
Fishman considers this notion by examining the effects of Wal-Mart’s relationships with a handful of its suppliers including Vlasic Pickles, Levi Strauss, and the L. R. Nelson sprinkler company. Through these examples, Fishman examines what effect a single buyer has had on these companies and their products. According to Fishman, these examples prove that “the impact of Wal-Mart’s scale and power” manipulates what citizens “think is a market economy” (82). Wal-Mart is such a large buyer of goods that “they constitute a threat to the free market,” Fishman holds, as they “can often defy the laws of supply, demand, and competition” (82, 83). For companies like Vlasic, Levi’s, and Nelson, Wal-Mart’s corporate commitment to offering low prices caused them to suffer. The companies found themselves beholden to Wal-Mart for their survival; and were thus compelled to alter their company standards in order to satisfy Wal-Mart’s principles and buyer demands. In this way, Fishman avers, Wal-Mart has historically harmed its suppliers’ ability to maintain the quality of their company and products and to compete in the larger retail market.
Meanwhile, Wal-Mart embraces an opacity about its corporate policies that keeps their competitors from understanding true market statistics. Because of Wal-Mart’s insular company policies and culture, Fishman encountered obstacles throughout his work to investigate Wal-Mart’s impact on its suppliers and competitors. Due to the wall of silence, Wal-Mart has established around its operations and policies, Fishman argues that the corporation has made “a mockery of American ideals, and of the very principles on which both a market economy, and a democracy, are built” (246). Indeed, Wal-Mart’s refusal to speak about its relationships with suppliers and competitors has warped economic data and thus disabled competitors and suppliers alike.
Fishman supports these claims throughout the text by citing specific interviews he conducted with representatives from suppliers and an array of studies conducted by economists and scholars alike. This data verifies Fishman’s overarching hypothesis that Wal-Mart’s corporate policies are a representation of the negative ways in which corporations might harm small businesses, distort economic statistics, and manipulate the people working with, alongside, and in competition with them, all to the end of satisfying their own growth.
Trade-Offs of Low-Cost Consumer Goods
Throughout The Wal-Mart Effect, Fishman investigates the positive and negative implications of Wal-Mart’s historical commitment to offering low-cost consumer goods to its customers. This guiding principle originated when Wal-Mart founder opened the first Wal-Mart store in 1962. Sam Walton latched on to “a single idea that he somehow knew in his gut was singularly powerful: Sell stuff that people need every day just a little cheaper than everyone else, sell it at that low price all the time, and customers will flock to you” (8). Fishman acknowledges the simplicity and cleverness of Walton’s founding belief. However, he also interrogates Walton’s philosophy in light of the corporation’s unprecedented growth over the course of its history. Indeed, Wal-Mart’s retail superpower status at the time of Fishman’s text’s publication indicates that the company’s guiding philosophy is no longer relevant or sustainable. There is, Fishman argues, “some unseen but terrible cost to be paid for ‘always low prices’” (9). In order to maintain this promise, Wal-Mart has had to squeeze suppliers, outsource labor, abuse employees, sacrifice quality, and skimp on aesthetics. While offering low-cost consumer goods has indeed helped American consumers save on general merchandise, Wal-Mart’s inexpensive offerings actively harm its employees, suppliers, competitors, distributors, and staff.
Wal-Mart’s consistently affordable prices have also manipulated consumers into understanding the retail market in distorted ways. Fishman holds that the Wal-Mart effect is so significant that Wal-Mart “shapes where we shop, the products we buy, and the prices we pay—even for those of us who never shop there” (5). Wal-Mart has taught its own shoppers what items should cost. In turn, Wal-Mart has set the standard for what the same items should cost at competing retail stores and local businesses. In these ways, Wal-Mart’s simple low-cost ideals have dictated the growth of the national and global markets and economies.
Fishman also considers how this latter influence negatively affects outsourced labor and product quality. Because Wal-Mart refuses to raise its prices, its demands beget overtaxed workers and overstrained facilities. In order to satisfy Wal-Mart’s low-cost promise, suppliers, employees, and laborers must sacrifice their health and well-being. Fishman’s research and findings prove that affordability is linked to efficiency, and efficiency is often linked to sloppiness and even to brutality. Fishman particularly notes the ways that Wal-Mart’s cheap salmon and clothing prices are directly correlated to unfair labor practices and dangerous work conditions in outsourced factories including Chile and Bangladesh. These findings reiterate Fishman’s overarching claim that low-cost consumer goods have far-reaching and often inhumane effects both on the global economy and the global workforce.
Ethical Concerns in Global Supply Chains
The Wal-Mart Effect argues that Wal-Mart’s impact on the global economy has dangerous ethical implications for global supply chains. Fishman considers this notion by examining Wal-Mart’s evolution over the course of their history. Wal-Mart began as a single, humble storefront in a small Arkansas town in 1962. Over the decades, Wal-Mart saw exponential growth, “growing in rural areas where it brought a range of selection and price not previously available” (8). The larger the business became, the more labor and production they had to outsource and the more they had to skimp on product quality and labor standards. Fishman holds that this is a facet of what he deems “the Wal-Mart economy,” the effects of which extend “far beyond the borders of the United States to the countries whose names are on the labels of everything we buy” (10). In particular, to understand how Wal-Mart’s founding philosophies and corporate policies are impacting the global supply chain, Fishman investigates those suppliers and factories located overseas. His research takes him to Chile, Bangladesh, France, and elsewhere, as he seeks to understand the ethical implications of Wal-Mart’s unstoppable growth.
Fishman’s research reveals that Wal-Mart maintains a laissez-faire policy in its relationships with its global suppliers and their associated factories. Even those lawsuits and exposés criticizing Wal-Mart’s unethical overseas practices have not compelled the corporation to address its unethical practices. Indeed, according to Fishman, Wal-Mart’s dedication to offering low prices is the immediate cause of these dangerous work conditions. Their resistance to amending their practices is inspired by their reluctance to sacrifice profit or raise prices. However, Fishman argues that if the company reexamined its role in the global economy and global workforce, they could “have such a rapid and positive effect on improving conditions” in the salmon and textile industries, for example (180).
However, instead of doing so, Fishman argues that Wal-Mart has only made superficial attempts at realigning its ethical values. For example, Wal-Mart posted codes of conduct in its overseas factories in response to the labor violation lawsuit from 2004. The lawsuit held that Wal-Mart’s low unit prices were squeezing workers to such a degree they couldn’t survive “the long hours and low wages” they were forced to endure (189). Fishman argues that Wal-Mart’s tepid response to these allegations is a representation of the company’s inability to balance ethical concerns with its low-cost dedication. Therefore, Wal-Mart’s corporate greed and power directly harms members of the global supply chain. Fishman holds that this pattern won’t end until Wal-Mart holds itself accountable and maintains an ethical awareness.
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