Wal-Mart

Introduction
Founded by the Walton family in 1962 in Bentonville, Wal-Mart uses a consolidation strategy to drive local small town businesses out of business. The consolidation strategy includes Wal-Mart locating many small stores in small towns. Using price competition,
the chain store drives the local small businesses to extinction. After this, the chain opens a big store in a big town near the area and closes the small stores. The small businesses cannot reopen immediately therefore people in the small towns nearby are dependent on the large store in the larger town. This strategy consolidates customers to one store and result in increased traffic and social dislocation. In the UK Wal-Mart operates using the brand name ASDA. Wal-Mart acquired ASDA in 1999; however, ASDA had been mirroring Wal-Mart policies for some time before the takeover took place. ASDA manages to deliver products, especially non-food products, such as microwaves and other home appliances at very low prices previously unheard off. The chain store is criticized for acquiring products from suppliers with known illegal employment practices, lacking a serious environmental plan, and using false advertising.
Effective Allocation of Resources in Various Economic Systems
An economic system refers to a system through which the society strives to meet the material needs of the people through the production of goods and services, which is limited by the availability of elements such as land, labor, capital, and natural resources. Due to the scarcity of supply of these elements, governments have to decide on how to allocate these resources effectively between competing needs. Different countries adopt different economic systems. For example, a government that chooses a free market economy exercises minimal government intervention and leaves the forces of demand and supply to influence decision-making. A command economy is one in which the government takes full control and centrally plans on the allocation of resources (Clarke & Eleanor 2006). Most countries in the world today use a mixed economy that combines components of both government intervention and private enterprises in varying pretexts. It also differs between countries.
Government interventions in the economy usually take the form of exclusion or provision, taxes or subsidies and regulation. The government can restrict the prices of some goods, for example low prices on public goods, to maximize social benefits and increase consumption. A mixed economy usually allows privatization in order to raise money through sale of public enterprises or to eliminate poor management in these enterprises. Some governments also provide legal and infrastructural facilities to support activities of the private sector to boost economic growth (Clarke & Eleanor 2006). Such strategies prevent competition between the government and the private sector, hence creating an enabling business environment that allows competition among producers in the private sector.  
Impacts of UK Governments Policies on Wal-Mart Internationals Business Activities
A little amount of unemployment has to be present in any economy in order to allow creation of jobs in the economy. The employment policy of the UK government has been laid down in order to maintain this level of safety in the economy. Such policy allows Wal-Mart to find workers through the help of the government, which carries out programs that assist the youths to identify job opportunities. Through the commerce policy, the government provides subsidies to business entities such as Wal-Mart, because Wal-Mart operates in an industry that offers necessities to consumers. This move by the government of the government provides a favorable business environment to Wal-Mart through the cash incentives provided by the government, which promotes the companys products in the view of the citizens (OECD 2000).
The UK government works alongside the Central Bank to ensure that the appreciation of prices set by Wal-Mart flows in a smooth trend. This is done through the implementation of monetary policies that influence the market operations of the company in the country. Clarke & Eleanor (2006) argue that expansionary economic approaches assist in adding liquidity in markets, but recessionary monetary policies decrease the supply of money in the economy. Inflation is an important component in business operations. Inflationary policies by the government, such as borrowing or interest rates, aim at influencing the supply of money in the economy, and this affects the revenues for Wal-Mart UK because a companys revenue outlay has a strong correlation with a countrys inflation rate.
Impacts of UKs Competition Policy
The UK government instituted a competition act in 1998 that prohibits various activities of firms operations in the country. These include the creation and activities of cartels, the exploitation of dominant positions of different firms on a local or national level, and the intensive, such as merging instead of competing. Wal-Mart is affected by this policy through price fixation, fixation of business terms, and the shape up of markets that allows the company to come into terms with other firms instead of competing in different market segments. On the other hand, the UKs Enterprise Act of 2002 changed the Competition Act and reinforced the influence of regulators, particularly in terms of identifying and punishing market dominance abuse and union-like behavior. According to Clarke & Eleanor (2006), the acts main provisions provide for the emphasis of determining the public concern criteria to a narrower concern about the behavior of competition.
In an effort to make community utilities and government units, more efficient, obligatory aggressive tendering was set up in the UK in the 1980s (OECD 2000). This program required publicly financed organizations to search for bids from a variety of suppliers, therefore initiating competition into an acquisition procedure. The purpose was to slash costs and enhance efficiency in the delivery of public services. Moreover, there are concerns that companies may make extremely low deals in an effort to chase a predatory pricing policy. Once competitors have been forced away from the market, the present firms can increase price and extort short-term abnormal profits.
How market structure determine the pricing and output decisions of businesses
Economists appreciate that an understanding of the market structure enables an individual to predict the behavior of a firm in the industry. Market structure influences the efficiency and profitability of a firm. Very few markets fall in the category of perfect market or monopoly. A majority of firms competes with other firms; however, the firms maintain some degree of market power. This market structure fall between monopoly and perfect competition markets. This is known as imperfect competition. In the UK supermarket industry, imperfect market dominates in the form of oligopoly. Deniz & Junichi (2004) oligopoly comprises few firms within an industry. In the supermarket industry in UK, the four major plays include ASDA, Tesco, Morrisons, and Sainsbury.
The four major supermarkets in the UK control more than 75% of the market share. The paramount factor that determines market structure is geographical distribution of the supermarkets. The success of a supermarket depends on its location. In the UK, there is an inadequacy of shopping district sites. Many supermarkets are locating their stores approximate to each other leading to price competitions. Since the takeover of ASDA by Wal-Mart for 6.4 billion sterling pounds, price wars in the supermarket industry are cutthroat. Supermarkets cut prices of some products to attract customer e.g., ASDA sells automobile fuel at a lower price than market price to attract customers who also buy other products from the store (Troy 2004).
Output and price decisions always depend on the cost and the goals is to maximize profits. Price maximization is achieved when the marginal revenue and cost equal each other. In imperfect competition like the one in the UK supermarket industry, ASDA sets a price higher than the marginal cost. The firm also sets price lower than the cost with the intention of reducing competition in the end. Using this strategy, the firm makes losses in the short run but has the chance to make high profits after the competition is eliminated. The result of imperfect make is a market with highly priced goods and a supply that does not meet demand. Imperfect competition may also lead to improved living standards because the competition is on location rather than price. When price competition is too fierce, the government intervenes to ensure consumer commodities mirror competition (Deniz & Junichi 2004).
Way in which market forces shape organizational responses
Market forces include demand, supply, and marketing. Organizational response is the measures an organization takes in response to changes and circumstances in the operating environment. Organizations use market research and analysis to formulate responses because these responses have a direct influence on the profits. Other market forces include legal, social economic, technological, regulatory, and political. The market forces are always fluctuating creating opportunities, threats, and uncertainties for the organizations. Organizations that fail in the monitoring of market forces are either unprepared for the resulting threats or opportunities (OECD 2000).
Large organizations, such as ASDA or Wal-Mart Canada may influence the market to some extent; however, market forces play a pilot role in determining the cost and level of output for each product. Except for a few branded products, most of the products are homogenous therefore, the business must respond to changes in prices and demand of certain products. When the competitor lowers the price of a product, the other businesses must follow least they lose their customer, especially true for products demanded frequently, such as vegetables and fuel (Troy 2004).
How the business and cultural environments shape the behavior of ASDA and Wal-Mart Canada
Culture refers to the prevailing norms and values that guide peoples behavior within a society or organization. At the organization level, the organizations beliefs, values, and learned ways shape the culture. This is evident in the structure of the business and the people working in the organization. Culture influences all aspects and activities of an organization. ASDA and Wal-Mart Canada comprises people from different cultural backgrounds working together to achieve the objects of the firms. The interactions between this people characterize organization behavior. Wal-Mart uses recognition and rewards programs to highlight desirable behavior and encourage other employees to adopt the desirable behaviors (Deniz & Junichi 2004).
The structure of Wal-Mart includes departments each with a different responsibility. The employees within each department are organized into teams. Each team comprises of people with different skills working together to achieve a common goal. Cooperation within the teams is important because it has a direct effect on customer satisfaction. According to Troy (2004), the business environment is highly competitive thus; members of a team have to meet regularly to ensure they are on track toward achieving their goal. The teams discuss productivity and quality issues facing their department and develop solutions in line with the objects of the organization. This improves the performance of the team, department, and the entire organization. Working as a team ensures completion of tasks faster and the transfer of skills from one team member to another. Transfer of skills is evident when one team member misses work and another has to fill in.
The significance of international trade to UK business organizations
The UK economy is dependent on foreign trade to a considerable extent. The government is a champion of international trade with the main trading partners coming from the EU. The United States is the largest investor in the country. American corporations account for up to 12% of the top 500 corporation in the world. Foreign investment is paramount to the UK economy. The countries trade deficit amount to approximately 1.5% of the national GDP; however, the country does not lose because of the large amounts of foreign investment every year. The government appreciates the importance of foreign investment and has provisions allowing regional government to establish enterprise zones. Organizations operating in the enterprise zones are exempted from property tax and receive reimbursements for the cost incurred in the construction of factories and business premises (Deniz & Junichi 2004).
International trade broadens the horizons and markets for the UK-based organizations. The organizations have access to goods and services not produced within the country because of limitations, such as climate and mineral resources. The businesses within the UK get access to customers in other countries allowing them to increase customer numbers and sales. International trade attracts foreign investors, such as Wal-Mart who improves the variety of goods and services available to the population and delivers them at a low price. Business organizations also have access to better production technique not available within the country. The businesses have an option of purchasing goods from the international market where they can find cheap products, a benefit they pass down to the consumers. The access to products from different regions of the world increase number of similar products the consumers can choose. International trade therefore increases variety and choice to the UK consumer (Troy 2004).
Impacts of Global Factors on the operations of Wal-Mart International
The universal economic conditions may hurt the financial performance of Wal-Mart, whether in the markets served by the company or in the global perspective. In the UK, for example, high rates of interest and other costs may in one way or another, affect the overall consumer demand for the various products and services sold in the companys stores. It may also alter the product mix of the products sold into one that has an inferior gross profit margin and may lead to a slower turnover as well as greater inventory markdowns (Clarke & Eleanor 2006). Global factors can increase not only Wal-Marts operations, but also the activities of the companys suppliers, a facet that can end up in increased costs of the goods sold to customers. These factors may negatively affect the Wal-Marts gross margins, inventory turnover, cost of sales, or worse still, adversely affect the companys operations and the results of operating in the international market segment.  
Impacts of European Union Policies on Wal-Mart UK
The UK government has pioneered for further development of the European Unions solitary market for several years. UK favors the incorporation of more countries in the union partially because the government believes that the move can improve the overall performance of the macro-economy. As suggested by OECD (2000, p. 86) Increasing the size of the customs union could increase the export potential in the country and this means that Wal-Mart UK could enjoy the benefits of cheaper imports and increased resource endowment. This could include the imports of products from agricultural endowed countries who may join the union with an objective of increasing their market segment. As more members join the union, new markets could arise, which implies increased demand for Wal-Marts products and services. The unions policies promote foreign direct investments and incomes, as well as profits.
Foreign direct investments help the member countries to fasten economic changes and this means that Wal-Mart UK operates in an environment that suits the needs of the business. European Union also allows a more varied labor market in the member nations, including UK. This provides greater openings for Wal-Mart to access or import cheap but skilled labor from the regions that experience labor shortages. OECD (2000) regulations maintain that firms operating within the region carry out corporate social responsibility. This is a compulsory requirement. Wal-Mart has, therefore, to carry out these activities while operating in the UK. The company has to come up with ways of conserving the environment, and provide education to the public in order to create public awareness on the importance of this practice.
Conclusion
The UK economy is mixed. The government controls some of the important services, such as school, police, hospitals, and colleges. There is a private sector comprising of sole proprietorships, partnerships, limited liability, and unlimited liability companies. The government maintains minimal interference in the running of private businesses. Several forces affect private ventures, such as ASDA in the country. This market forces determine pricing and level of output, however because the supermarket industry is imperfect, major businesses, such as ASDA maintain a level of control. The free market policy in the UK allows businesses to decide when to get in or out of the market. The survival of the business is determined by the decisions the business and the competitor make. International trade facilitate variety, low prices, and choice for the UK consumer as local businesses seek cheaper products with more varieties and foreign businesses enter the market to seize the opportunities.
 References
Clarke, R. & Eleanor, J. M 2006, New Developments in UK and EU Competition Policy, Lyme, Edward Elgar Publishing.
Deniz Igan, Junichi Suzuki, 2004. The Wal-Mart effect in central and Eastern Europe, Journal of Comparative Economics, 40(2), Pp. 194-210, ISSN 0147-5967.
OECD 2000, OECD Economic Surveys: United Kingdom 2000, London, OECD Publishing.
Troy, M., 2004. Wal-Mart International. DSN Retailing Today, 43 (23), pp. 20-22.