Boy Blue answers “I read this book but i cant understand it...”

Hosein asked this question about The Walmart Effect: How the World's Most Powerful COmpany Really Works-AndHow it's Transforming the American Economy:

I read this book but i cant understand it very good. Is there any one that give me a summary about the main objective if each chapter?

Boy Blue I don't have time to summarise each chapter but what I remember from this are a few key points. It is important to remember that around the time this …moreI don't have time to summarise each chapter but what I remember from this are a few key points. It is important to remember that around the time this was written Walmart was the largest company in the world by market cap. It was an unstoppable force.

- Walmart has such a huge buying power that it is very hard for their suppliers to not deal with them. They account for 50% + for a lot of their suppliers in total sales. However, many companies that choose to supply products through Walmart find themselves being slowly squeezed by an inexorable force, as Walmart starts chipping away at their margin to keep lowering the prices.
- We are all responsible for Walmart's prevalence and success. While we don't condone the way they treat their staff, workers, other businesses or the environment, we're in love with the low prices. So it's a difficult moral position for us, especially those who can't afford to shop anywhere else.
- Walmart dramatically changes the towns and cities where it has stores. He called this the suburbanisation of the local shopping experience.
- Part of this process involves destroying its competitors. To combat this many of it's competitors merge to try to fight Walmart (safety in numbers).
- While Walmart offers thousands of new jobs, they are at lower wages and eventually the town will suffer as all the diverse businesses are unable to compete. Basically they put constant downward pressure on wages across the country.
- Walmart also affects the environment and fabric of places far away from the United States, the salmon farming in South America, clothes manufacturing in Asia etc. It does audit these processes but in many cases the auditing is ineffective. In particular for manufacturing of clothes, the companies will be tipped off when Walmart is going to visit and therefore change their processes just for the visit.
- Walmart is great at cutting out unnecessary components of the shopping experience for example it was one of the first supermarkets to go to self-serve. Another example used is getting rid of the unnecessary packaging that deodorant used to come in. Here the author explains that Walmart's relentless search for efficiency and cost cutting can be a positive thing.
- Walmart has an unbelievable distribution and logistics network. It was more effective than the government during Hurricane Katrina.

The most important point he makes however is that Walmart is so powerful that it is beyond the market forces of capitalism. That is to say it is so big it is setting the rules of the market and therefore isn't influenced by them. This point is a bit tenuous, he also says that Walmart doesn't have to play fair because no one can make it.(less)

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The Walmart Effect

by Charles Fishman

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