The International BS Book Club II – Wal-Mart

One of my missions on this Blog is to draw your attention to books that might offer insights into strategic management and international business (see my earlier Travels of a T-shirt discussion). I just stumbled across some notes I’d scribbled down after finishing off Charles Fishman’s The Wal-Mart Effect last year.

This was both an insightful and frustrating read. Wal-Mart are clearly a fascinating case study in terms of their growth over a few decades from a fairly inconsequential retailer in the US mid-west to (perhaps) the world’s largest firm.

Fishman presents a series of examples of businesses and industries that have been substantially affected by the practices of Wal-Mart. He presents a viable and reasonably well-balanced thesis that the influences that Wal-Mart has wrought across the US economy and society are multi-faceted. Several of these influences were quite eye-opening, in terms of the extent to which product prices have been driven downwards, and the willingness of Wal-Mart to share savings with consumers. His discussion of various supplier firms reveals Porter-style bargaining power of a buyer writ very, very large. Not surprisingly some of these firms have been driven to the wall, but others seem to have prospered, and consumers have consistently been rewarded with cheaper products (and often products that are more efficiently designed and packaged). Of course, other retailers have usually suffered in the battle for customers. Fishman provides little recognition that the surviving chains are also beneficiaries of the new efficiencies in their pool of suppliers.

Photo by Neato Coolville

Photo by Neato Coolville

I find the actual structure of the book somewhat tiresome however. There was a strong tendency to repeat and repeat the same points in slightly different ways. It was even more frustrating that the internationalisation of Wal-Mart was given such short shrift. As IB scholars have (often gleefully) observed, Wal-Mart has had some considerable failures in its offshore retail efforts (especially in Germany and Japan), and is yet to substantially translate its business model beyond familiar environs. Of course, on the supply side, Wal-Mart is a very big player, benefiting considerably from the emergence of suppliers in Asia (China particularly).

Turning to the Australian retail scene, one issue warrants consideration: Wal-Mart only captures around 10 percent of the retail dollar in the US market. On my calculations, Woolworths and Wesfarmers (as owner of Coles, Bunnings etc) each account for around 21 percent of the Australian retail market. Shouldn’t there be a lot more fuss made about their collective effect on consumers, suppliers etc down here (beyond gutless government reviews)? Where’s the Fishman-style examination of the Woolies Effect?

To get a further taste of the Fishman book, check out these excerpts.

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