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The Wal-Mart Way Becomes Topic A in Business Schools
The New York Times, Constance L. Havs, July 27, 2003
1. WAL-MART isn't just a place for bargain hunters. It's also an attraction for
professors. At universities across the country, interest in Wal-Mart Stores
has soared in the last five years, and all sorts of courses address specific
questions raised by the company's dominance. Just as Wal-Mart, the
$244-billion-a-year retailer, has put countless rivals out of business, WalMart, the case study, has pushed aside General Motors, Sears and other
companies as the model of business prowess. It is, increasingly, an
example of what to do -- and as some professors see it, what not to do.
2. Some professors hold up Wal-Mart as an example of how to do things
right or to explain important concepts. Professor Fram uses Wal-Mart to
illustrate ideas like "channel commander," a term for the distributor with
the most power. And to Uday M. Apte, an associate professor of
operations management at Southern Methodist University in Dallas, "no
company better illustrates the principle of 'cross docking,' " a technique to
minimize trucking expenses. Others turn to Wal-Mart to highlight social
problems that may be overlooked in the shopping scramble -- issues like
the impact of goods that are made abroad and sold cheaply in the United
States. ''Most of the issues we discuss with Wal-Mart as an example really
have broader applications," said David A. Anderson, associate professor
of economics at Centre College in Danville, Ky. He leads students on trips
to the local Wal-Mart as part of the course.
3. Wal-Mart's rapid growth the last decade has also placed more of its stores
closer to academic centers like Boston, so professors who once might
have had only a theoretical knowledge of its operations can now see them
in action.
4. Perhaps the most specific lesson to emerge from Wal-Mart is obvious, but
its impact has been enormous: costs of all kinds must be kept low so
products can be sold for less. 'If I’ve learned anything about Wal-Mart, it's
that cost is king," said Professor Fox, who began studying it a few years
ago. 'They have an almost single-minded focus on reducing costs. It's
imbued throughout the organization. They are very stingy when they buy
for America and distribute products for America."
Questions
1. What two functions of Wal-Mart are mentioned in the first paragraph?
a. _____________________________
b. _____________________________
2. What general idea does the example of "cross docking" in
paragraph 2 illustrate?
___________________________________________________________
___________________________________________________________
3. What has enabled the professors to gain practical knowledge of Wal-Mart’s
operations?
______________________________________________________________
4. According to Wal-Mart’s policy, the consumer should buy cheap/costly
products as a result of reduced/increased production costs.
5. For Robert Letovsky, associate professor of business at St. Michael's
College in Colchester, Vt., Wal-Mart's inventory management, through a
network of scanners, computers and at-the-ready suppliers, makes it a
textbook example of successful turnover -- the retail world's term for goods
moving off shelves and into consumers' hands. The faster that process,
the more profitable is a store.
6. This interest in Wal-Mart has even created growth in a sub-industry of
materials that are useful to students. The retailer has become a bestselling topic for the Harvard Business School, which sells Wal-Mart case
studies to business schools around the world. The newest such study,
published in March, discusses the company's strategy for so-called
neighborhood markets: building smaller stores in some areas to help WalMart capture more grocery business from local chains.
7. Many students now in college have grown up with Wal-Mart. To them, it is
not a distant rural phenomenon, the way it might have been only 10 years
ago. It is a place where they shop -- for school supplies, household
products, groceries, gasoline and incidentals.
8. To some, it is more personal than that. Some students have been forced
to return to school to gain new skills because their previous businesses
were destroyed by Wal-Mart's strength. 'We've had several students who
had small hardware or apparel stores, and as soon as Wal-Mart would
come into a nearby town, it would hurt their business," said Jeffrey E.
McGee, chairman of the management department at the University of
Texas at Arlington. 'That is one of the reasons they are going to the
university, to change their career." Other students have experienced the
impact of Wal-Mart in slightly less direct ways. The 40- and 50-year-olds
who are returning to school for master's degrees have worked in
environments that have been deeply affected by Wal-Mart's practices.
Questions:
5. (paragraph 5) "The faster that process, the more profitable is a store."
Which process is referred to here? (Give the name of the process and its
definition). ___________________________________________________
6. Paragraphs 6-8:
Tick (V) the three effects Wal-Mart has on business students.
_____ Students purchase various goods from Wal-Mart
_____ Students’ businesses are positively affected by Wal-Mart
_____ Wal-Mart case studies are used as learning materials
_____ Students apply Wal-Mart methods in their small stores
_____ Students are exposed to Wal-Mart-like practices at work
9. Wal-Mart has tried to become a force within education in its own way.
Using some of the money from its vast sales, it has financed retail centers
at several large universities, where the company's executives lecture and
its recruiters descend to hire new talent. Among the recipients, a
spokeswoman said, are Western Michigan University, Texas A&M, the
University of Washington and the University of Florida.
10. Wal-Mart has sponsored retail centers for about nine years, according to
Betsy Reithemeyer, director of the Wal-Mart Foundation, which is backed
by sales from the stores. Her budget, which covers a variety of grants
besides those to retail centers, is $150 million -- double the amount three
years ago.
11. The company's profit also flows to education through other avenues. The
Walton Family Foundation, controlled by the relatives of Sam Walton, who
opened the first Wal-Mart in Rogers, Ark., in 1962, pledged $300 million to
the University of Arkansas last year to build up its undergraduate and
graduate programs. In 1998, the foundation gave $50 million to rename
the business school on the university's main campus in Fayetteville after
Mr. Walton, who was commonly known as Mr. Sam.
12. Sam Walton suggests, though, that the company's spectacular growth
may not be sustainable. 'Wal-Mart is getting closer to the sun," he said.
'They scrapped 20-plus stores for Germany because the courts there
forced them to raise prices to avoid preying on small businesses." He also
doubts that some of Wal-Mart's cultural hallmarks -- like the Saturdaymorning chant in which workers shout "Give me a W!" -- will translate well
everywhere the company wants to go.
13. Other issues for Wal-Mart include unions, which the company has mostly
avoided but which are more dominant in urban areas, as well as higher
real estate costs, taxes and increased congestion that could cut into its
famed efficiency.
Questions:
7. What was Wal-Mart’s purpose in financing retail centers at universities?
Complete the sentence:
Wal-Mart sponsored retail centers in order to _____________________
________________________________. (up to 5 words)
8. According to Sam Walton, Wal-Mart’s rapid development may not be
durable. TRUE/FALSE
Support your answer by quoting from the text
______________________________________________________________
______________________________________________________________
14. Academics are also looking at the negative consequences of Wal-Mart
when it comes to considering ethical, environmental and social issues.
Professor Anderson of Centre College, a small liberal-arts college founded
in 1819, began teaching his environmental economics course three years
ago, with Wal-Mart front and center as a symbol of what he calls "the
implications of buying cheap things." Shoppers may be drawn to Wal-Mart
because of inexpensive products that have been imported from countries
like China, Professor Anderson says, where labor and environmental
standards are lower than in the United States. But there are larger costs,
he tells his students, that are not factored into the price on the tag. ''If we
paid the full cost of the gasoline and the plastic and the health costs of
pollution, all of these things would be far more expensive," he said.
15. Professor Anderson also teaches a freshman seminar called ''Economics
in an Ethical World," in which he discusses the benefits Wal-Mart brings
as well as the disadvantages. Wal-Mart allows poor people to buy food
and other necessities," he said. 'That's the good thing. The bad thing is
that it erodes downtowns (the commercial centers of the cities) and
eliminates nicer stores that have better service and pay their workers
better."
16. About a year ago, Jarnes E. Hoopes, a professor of history and business
ethics at Babson College in Massachusetts, began looking at what he
called the symbolic aspects of Wal-Mart. “The company's approach to
commerce interferes with the American dream* for some people”, he said.
''It's a new kind of twist because it does affect the lifestyles of so many of
us," he said. "It is an enormous employer, and it is identified with what's
happened with America in the last 25 years." Many of the high-paying
skilled jobs are gone; instead, people are working at Wal-Mart for half the
money, he added.
17. That perception of reduced opportunity carries over into spending, he
says. ''People have a sense of being trapped in this marketplace," he said.
"You work for these low-wage jobs, and you can have your American
dream as long as you buy it at Wal-Mart. So the dream is getting
standardized, and downscaled, in a way that hasn't happened before."
* The American Dream can be defined as having the opportunity and freedom that
allows all citizens to achieve their goals in life through hard work and determination
alone.
Questions:
9. What is Professor Anderson's criticism of Wal-Mart?
______________________________________________________________
______________________________________________________________
10. Which of the following are disadvantages of Wal-Mart, according to
Professor Anderson? (There is more than one answer)
a) Wal-mart has unethical business practices.
b) It has low prices, allowing everyone to enjoy shopping there.
c) It destroys other stores whose service is better.
d) Stores in the center of the city struggle to survive after a Wal-Mart opens.
11. How does the “company’s approach to commerce interfere with the American
dream”?
Complete the sentence with ONE word in each space
Wal-Mart workers can buy goods mostly at ___________________ because
their wages are _______________.
12. What is the main idea of this article?
a. Wal-Mart has distorted the American dream by eliminating high-paying
skilled jobs.
b. Wal-Mart is the right place for bargain-hunters.
c. The advantages and disadvantages of Wal-Mart are commonly studied
in business schools.
d. Wal-Mart is an example of how to do things right and explain business
concepts.
Vocabulary exercises
1. What word in par. 13 is the opposite of "rural" (par. 7)? _________________
2. What word in par. 2 has the same meaning as the word "products"(par. 4)?
__________________________
3. What is the synonym of "consequences"(par.14) in the same paragraph?
_________________________
4. What is the synonym of 'cheap" (par. 14) in the same paragraph?
________________________
5. What word is the opposite of "benefits" (par. 15) in the same paragraph?
_______________________
Find the following words in the text and study their meanings in context
par. 1
rival
par. 2
concepts
par. 3
rapid
par. 5
profitable
par. 7
phenomenon
par. 9
executives
highlight
decade
par. 10 amount
par. 14 environmental
par. 17 opportunity
impact
Fill in the blanks with the words from above (there are some extra words)
1. Because of the growing dangers to our planet Earth, there is more awareness
today to __________________issues.
2. The job your boss offered you is a once-in-a-life ________________. You
should take it!
3. The US economy has an enormous ______________on the Israeli economy.
4. The ______________ technological developments make 2-year-old computers
old-fashioned.
5. Wal-Mart is a very ______________ company because its prices are cheap so
that many people buy their products.
6. A cat playing with a dog and a rat is an unusual _______________.
7. Ten years ago was the last _______________of the 20th century.
8. The ____________ of the technological devices people use has grown
steadily in the recent years.
9. _______________ of big companies usually earn very high salaries.
10. Market competition is the result of _______________ companies fighting
over the money of the consumers.