Essay on Microeconomics FInal

Submitted By lex1989
Words: 2099
Pages: 9

Case Study: Walmart in Microeconomics
Brieauna Gray

Walmart is the leading retail-industry earning $466 billion by specializing in discounted goods from grocery to electronic items. One can also gather materials to start a new garden or to refuel that Chevy’s engine with new oil. Walmart is the #1 company by that measure. The founders of Walmart have fulfilled their basic vision of providing goods & services to the consumer by simply catering to their needs. “Walmart is the world's largest company by revenue, according to the Fortune Global 500 list in 2014, the biggest private employer in the world with over two million employees, and the largest retailer in the world. Walmart is a family-owned business, as the company is controlled by the Walton family, who own over 50 percent of Walmart through their holding company, Walton Enterprises. It is also one of the world's most valuable companies (in terms of market value), and is also the largest grocery retailer in the US. In 2009, it generated 51 percent of its US$258 billion (equivalent to $284 billion in 2015) sales in the US from grocery business. It also owns and operates the Sam's Club retail warehouses in North America.”[1] This firm has obviously mastered the philosophy of supply chain management. Walmart successfully uses technology to stay on top of production costs, supply, and demand. They have reached levels that even a single company has seen. Walmart’s influence inspires other popular companies to follow their “low price” model. A landscaping company who has little competition with fair distribution costs; will dominate any market. In 2013 Walmart released a Global Responsibility Report detailing how it utilizes resources to keep their company afloat. The GRR is a close look at what a company does while they conduct business. It shows honesty and responsible actions taken to ensure the low costs while catering to supply and demand. In recent years; supply and demand conditions have impacted Walmart by forcing companied to redefine their business models and commit to more environmental friendly practices. By increasing the use of recycled materials; Walmart is by far the most environmental sound company by its measure. “With the Sustainability Index, Walmart is applying the science and research that we’ve developed to create a more sustainable supply chain globally,” said Kara Hurst, CEO of The Sustainability Consortium. “We’re excited about the significant progress Walmart and its suppliers are making and value their partnership with us to address big issues and drive real social and environmental change.” Based on the insights and data from the Index, Walmart has been working with suppliers, nonprofits, industry experts and government to develop and implement solutions that address critical “hot spots” and opportunities across the global supply chain. As part of the progress update at today’s meeting, executives, merchants and suppliers shared progress on five major initiatives underway: Increasing the use of recycled materials, offering products with greener chemicals, reducing fertilizer use in agriculture, expanding the sustainability index to international markets, and improving energy efficiency.” [2]. By providing freakishly low prices to its consumers; Walmart has received somewhat of a backlash due to its negatively view income elasticity. Walmart’s different and incomparable business model. Demand for goods from the national retailer is high even when the economy was weaker because of its lower prices. Some consumers even suggest Walmart is a depot for inferior goods as opposed to its competitor; Target. In my opinion; Walmart should be classified inelastic due to the change in prices leading those to a high change in demand. Bottom line; consumers want the cheaper price. If price didn’t matter consumers would have shopped at the smaller local shops leaving these companies in business. Overhead and most of all; supply and demand has