The Wal-Mart Effect Research Paper Example | Topics and Well Written Essays - 2250 words

The Wal-Mart Effect - Research Paper ExampleThought Wal-Mart does not manufacture its products, it attains economies of scope because it has trim back average cost in selling one or more than products together than separately, thereby religious offering competitive low- equipment casualtyd products. Some mom-and-pop stores, on the opposite, focus on one type of brand or product alone, which reduces their economies of scope, and they cannot lower berth their prices without affecting their margins. Moreover, Wal-Mart has big(p) and numerous stores with different product types and brands that allow it to shape detailed economic factors that can affect purchasing behaviors. Fishman (2006) depicted the swift expansion of Wal-Mart Ten years later, by the end of 2000, Wal-Mart had opened 888 Supercenters, an average of seven new Supercenters per month, 120 months in a row (p.8). The more shops that Wal-Mart opens, the more it is able to keep its prices lower due to product and sales v olume. Hence, economies of scope is a large advantage that small shops cannot easily beat hence, they can die or have died due to lower competitiveness in pricing and variety.Aside from economies of scope, large companies can gain economies of scope. Wal-Mart and other firms generate cost savings because of their size in the industry. Wal-Mart has economies of scale because the average cost of selling falls as the volume of products change increases. It can negotiate with, though some critics would call it force, suppliers to sell goods to them at a lower price since they can purchase larger volumes.