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Our economy is basically based on one major concept; competition. Competition is defined in Webster's Dictionary as being a trial of skill or ability. Competition can sometimes be a good thing, and it can also be a bad thing. It all depends on which end of the spectrum you are.
Competition between two companies can benefit society just as often as it can hurt society. One major example of this is Wal-Mart and other large corporations coming into a small town and running small privately owned shops out of business. It is on this main topic that I will focus the rest of this paper on. Small businesses across the United States are being forced to close due to the success of large chain stores. The success of these chain stores has been argued to be beneficial by some and detrimental by others.
Wal-Mart is the world's largest retailer and it is still growing. There are many benefits Wal-Mart can offer a community, such as a decrease in the unemployment rate, as well as an increase of individual and per capita income. Some other benefits are that the opening of a Wal-Mart will create a larger tax base, and also there will be an increase of visits to the city by out-of-towner's. These are just a few of the many benefits that the opening of a Wal-Mart or another large corporation would have on a town. One final benefit that may be a little deceiving is an increase in total retail sales.
This may be deceptive because the increase most likely at the expense of many small businesses in that city and neighboring cities. Many different types of specialty stores could possibly suffer and go out of business. For example, Wal-Mart alone could put several stores out of business such as food stores, general merchandise stores, department stores, hardware stores, variety stores, specialty stores, and apparel stores. Large corporations including Wal-Mart have made claims stating that small businesses can compete with them. Some of the suggestions they make to smaller businesses include forming coops.
Also, small businesses are urged to make shopping an experience, as well as embrace new technology. Small businesses can also fulfill an unmet need. Location is also extremely key in competing with large corporations. Small business owners claim that there is no way small businesses can compete with Wal-Mart. There are many reasons why this would be so, such as small businesses do not have as much access to advertising as large corporations. Small businesses also have limited hours of operation compared to large businesses.
Also, they have smaller staffs and lack of specialized personnel. Small businesses also have a smaller inventory, and cannot lower prices to the extent that Wal-Mart does. They also are usually not given the opportunity to experiment with new retailing methods. Small businesses also often suffer from a lack of building space. Small business owners also generally do not want to expand or form coops.
There is a trend happening in America today that the number of large chain stores is growing and the number of small businesses is decreasing. Wal-Mart is one such chain store. Some argue that a large chain store will benefit the town where it is located and the American economy in general. Others argue otherwise. Wal-Mart representatives suggest that small businesses can compete with Wal-Mart but many small business owners disagree. It is my belief that the large corporations including Wal-Mart's practices can be somewhat justified by utilitarian standards.
The utilitarian principle of justice states, "a society is a just one to the extent that its basic institutions are so organized as to promote the greatest overall or average happiness of its members. " A competitive market is something that utilitarians have worked for over the years. The building of a Wal-Mart in a town where one did not previously exist before creates a good deal of competition. Whether this is good competition or bad competition is a whole other story. The utilitarian believes that an unregulated market distributes resources fairly. Also, I believe that Wal-Mart's and other large corporations practices can be justified by using libertarian standards.
Libertarianism places much emphasis on the individual's liberties. According to libertarians a fair society must defend the freedom of each individual to pursue his dream. Libertarians, like the utilitarians, believe that an unregulated economy is the only way a person's rights as an individual are protected. This would therefore be an argument for building a Wal-Mart, or some other large corporation, in a town where one did not exist before. In conclusion, small businesses everywhere are going out of business because of large corporations such as Wal-Mart. This is an example of competition at its best.
However, it can be justified by using both utilitarian and libertarian standards. Resources: Buss, D. D. (1996). The little guys strike back. Nation's Business, 84, 18 - 24. Greco, S. (2001).
Are you ready for the major leagues? . Inc, 23, 106. France, Patrick. (2001). Rights & Wrongs. PIP Printing Packet.
Lowry, J. R. (2000, July). The fight for survival by independent retailers. USA Today, 129, 22 - 25. Unkown. (2001, March).
Company Information. [On-Line]. Available: web Unkown. (1998). What drives independent supermarkets out of business. Progressive Grocer, 77, 60. Vance, S. S. , & Scott, R.
V. (1994). Wal-Mart: A history of Sam Walton's retail Phenomenon. New York, NY: Twayne Publishers.
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