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Should Wal-Mart Give Up on Entering Chicago? Report (Assessment)

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Updated: Jan 6th, 2022

To attain a substantial market share, Wal-Mart has incorporated the concept of business expansion. One of the investment destinations it has identified includes the urban centers in the US such as Chicago. The firm intends to establish twenty stores in Chicago (Wal-Mart Watch, 2009, p.3). However, the firm’s efforts have been faced with numerous challenges. Because the firm is committed to the attainment of its profit maximization objective, the firm’s management team should not give up. This arises from the fact that urban centers such as Chicago present some of the core avenues through which the United States can attain high economic growth. By expanding into urban centers such as Chicago, the firm will be faced with a feasible market opportunity despite the challenges considering Chicago’s population. Expanding into Chicago is in line with the firm’s risk-taking nature. There is a high probability of the firm increasing its customer base by entering Chicago. The ultimate result is that the firm will be able to attain maximize its shareholder’s maximizing objective.

Wal-Mart should agree to the demands of the Chicago Federation of Labor

To gain a substantial market position, a firm should ensure that a suitable working environment is developed. One of the ways through which this can be achieved is by ensuring effective employees remuneration. Over the years, Wal-Mart has been criticized by activists, politicians, and unions due to its ineffective work practices. One of these relates to depressing the wage rates (Baron, 2006).

To enter Chicago, the firm has been required by the Chicago Federation of Labor to improve its wage rates. One of the requirements entails increasing its wage rate to $8.75 per hour which is $0.50 higher compared to the state minimum. In addition, the firm is required to formulate a comprehensive benefits package (Gaus, 2010, para. 2). By increasing its wage rate, the firm will develop a positive perception within the society. For example, the firm will be considered to be offering competitive salaries (Gaus, 2010, para. 3). In addition, by complying with these demands, the firm will develop a positive public image and hence its acceptance within Chicago. Upon being accepted in society, there is a high probability of the firm increasing its customer base and also improving on customer loyalty. This will contribute towards the firm’s long-term survival as a going concern entity.

What should it do to build a majority in the city council?

Wal-Mart’s approval to build stores in Chicago is based on its ability to convince a majority of the legislators within the city council. One of the ways through which the firm can attain this is through the creation of job opportunities. For example, local contractors should be issued with tenders to build the stores. According to Alderman Emma Witts, the Chicago West Side ward is faced with a lack of jobs. The firm should ensure that the job positions created are offered to residents (Skorbug, 2004, para. 2-5). In addition, the firm should ensure that it operates in a socially responsible manner. One of the ways through which the firm can attain this is by integrating Corporate Social Responsibility (CSR) concepts in its operation such as the provision of healthcare. In addition, the firm should ensure that a substantial amount of consumer spending is given back to society. This means that the firm should contribute to the welfare of the society in which it operates.

An integrated strategy for Wal-Mart’s urban expansion

Wal-Mart should consider incorporating the franchising strategy to venture into the Chicago market. Dayal-Gulati and Lee (2004, p.71), define franchising as establishing a business relationship between the franchisee and the franchisor. The franchising rights should be issued to Chicago residents. Through franchising, the firm will give the franchisee a right to use its trademark and trade name. However, Wal-Mart will ensure that it controls all the firm’s operations in addition to the provision of the necessary assistance. The resultant effect is that the firm will effectively enter the market.

Reference List

Baron, D. (2010). Business and its environment. New Jersey: Prentice Hall.

Dayal-Gulati, A. & Lee, A. (2004). Kellogg on China: strategies for success. Chicago: Northwestern University Press.

Gaus, M. (2010). Wal-Mart outmaneuvers unions to win approval for Chicago store. Web.

Skorbug, J. (2004). City council approves Chicago’s first Wal-Mart. Web.

Wal-Mart Watch. (2009). Wal-Mart’s urban problem: why does the company have trouble in America’s largest cities? Web.

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