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Walmart's impact on smaller communities

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Please help with the following problem:

When Walmart locates to a smaller town, often the local retailers (e.g., hardware, clothing, and appliance stores) are unable to successfully compete and are driven out of business. Why does Walmart have a cost advantage over its competitors and therefore is able to charge lower prices. If Walmart drove its competitors out of business, and behaved like an unregulated monopoly, what would happen to its prices and why?

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Solution Summary

This solution discusses Walmart's ability to charge lower prices and its ability to drive competition out of business. It discusses what would happen to its prices if it behaved like an unregulated monopoly by driving competing companies out of business. It covers concepts such as economies of scale, procurement of goods, and barriers of entry. The explanation is given in 122 words.

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Walmart sheer volume and scale of business allows the organization to capture economies of scale in terms of procurement of goods from vendors and thus, allows the organization to charge ...

Solution provided by:
Sheetal Jain, PGDM
Education
  • BComm, University of Delhi
  • Post Graduate Diploma in Management (Equivalent to MBA), All India Management Association
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