Management Economics Analysis of Walmart

This report analyses the market structure of Walmart, its history, products, and services. It also suggests whether Walmart can operate in different market structures and the level of government intervention required.

Assessment 2
Management Economics

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Analysing the description of the company, its products or services and history.........................1
Analysing the market in which company has been operating ever since its inception................2
Analysing the market structure in which company operate its business in its history................3
Analysing the market structure in which firms can operates or not as well as suggestion for
greater or lesser government intervention...................................................................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8
Justification for the references-.......................................................................................................9

INTRODUCTION
Management economics provides a framework that help companies in its decision
making in order to maximise their profit and outcomes in effective manner (Baumers and
Holweg, 2019). For this report, selected company is Walmart, it is a multinational retailing
company of United States. The reptort cover description of the company, analyse its market,
different market structure. It further analyse the company can operate in a different market
structure or not.
MAIN BODY
Analysing the description of the company, its products or services and history
Walmart is a retailing company of UK and operate its business in a chain of
hypermarkets, grocery stores and discount department stores in United States. Its headquarters is
in Bentonville, Arkansas and it was founded in 1962 in Rogers, Arkansas by Sam Walton. It has
10,566 stores and clubs in almost 24 countries with different names (Walmart, 2021) It provide
its services by the name of Walmart in united States and Canada, as Flipkart Wholesale in India
and as Walmart de Mexico y Centroamerica in Central America and Mexico. According to its
revenue, it is a largest company in all over the world. It is also a largest private employer in all
over the world by providing 2.2 million employments. In 1972, it was listed in New York Stock
Exchange.
In 1962, Walmart was focusing on increasing its growth from rural areas therefore it
avoid its direct competition from strong retailing companies such as Kmart and Sears. After its
growth it established its first discount warehouse in 1983 as a Sam's Club discount warehouses
and Walmart Super centres in 1988. Within in 10 years it opens the combination of merchandise
and grocery Super centres and become one of the largest grocers in United States. By the help of
customer attention, cost control and efficiencies in its distribution channels, it becomes the
largest retailers of United States in 1990. After one year it expand its business in international
market by opening a store in Mexico and then in another countries which includes Canada,
Germany, China and United Kingdom. In 1992, it also suffer great loss and after its great efforts
it doubled its sales in 1995. In 2010, it start to acquire many e-commerce businesses which
includes Moosejaw and Jet.com.
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Analysing the market in which company has been operating ever since its inception
Market structure is a classification of different market in which company is classified
according to their level of competition and market share. Market structure of Walmart is
oligopoly because its features makes its presence in oligopoly market structure (Bell, 2020). In
oligopoly market structure only few number of suppliers exist in the market. These supplier has
strongest position in the market which makes them oligopolistic. It can be considered
monopolistic because in US market there are many retailing companies that selling similar
products in different packaging and branding in the market. But Walmart has full control in its
product price, they can reduce the price of its product but cannot reduce it. Its main competitors
are Amazon, Target, Costco, Kroger and Alibaba. All of these has large market share which
makes them oligopolistic. Important features of oligopoly market that makes Walmart
oligopolistic are described below:
Few firms- In oligopoly market structure there are only few large companies exist and
they have intense competition with each other because they have same nature of products in the
market. In US market there are also few large companies exist in its retailing market which
makes Walmart oligopolistic in nature. It face intense competition with their competitors in
effective manner.
Barriers to Entry- It create strong barriers for the companies in order to enter in a
oligopoly market in effective manner (Coatney and Poliak, 2020). Barriers like patents, control
over raw material and licenses, etc. makes costly for the new companies in order to enter in a
market in effective manner. Walmart is a largest company of US and barriers to entry makes
them to earn maximum profit in effective manner.
Non-price Competition- It makes fear for the price wars in between competitors which
makes non-price competition in between oligopolistic firms. Oligopolistic firms are depends on
various price methods which includes, after sales services, advertising, warranties, etc. It makes
Walmart to face non-price competition and keep focus on increasing demand and brand
recognition in effective manner.
Interdependence- In oligopoly market, firms hold certain amount market share which
makes them interdependence with each other in effective manner. If the price and output
decision of one company is changed, it directly affected the output of its competitors firm. In
2

case of Walmart, it makes its management to keep review its competitors pricing policy in order
to get protected from it in effective manner.
Nature of the product- In oligopoly market , products of the company are either similar
or different in nature but have strong demand in the which makes company oligopolistic in
effective manner (Cretì and Fontini, 2019). In context of Walmart, some of its products are
identical or some of them are different from its competitors which makes company oligopolistic
in nature. Which means that its competitors are also selling similar products in different
packaging or branding in the market but the quality of these products are almost similar.
Selling costs- In oligopoly market, firms avoid price competition as well as it makes
interdependence in between firms so, selling costs are important for the firms in order to compete
with their competitors effectively for gaining large market share. In respect of Walmart, it is
important for its management to set effective price of their products in order to attract more and
more customer and gain more market share in effective manner.
No unique pattern of pricing behaviour- In Oligopoly market structure, firms want to
earn maximum profit and want to perform its functions interdependently as well as they also
want remove uncertainty with their competitors in effective manner. But it makes companies to
follow almost same pattern of pricing behaviour. In this market structure, companies are
competing each other which arise different pricing situation. In regards of Walmart, they have to
follow same pattern for making pricing strategies for their products in oligopoly market
structure.
Indeterminateness of the demand curve- In oligopoly market structure, determine
demand curve for the firms product are difficult and firms are interdependence with each other
which makes their demand curve indeterminateness. In accordance with Walmart, its
competitors change the prices of their products in different manner which makes their demand
curve indeterminate.
Analysing the market structure in which company operate its business in its history
Walmart is a largest retailing company in all over the world as well as its has largest
market share. But in its Sam Walton purchased a branch of the Ben Franklin stores from its
owner that are Butler Brothers in 1945 (Farr and Faber, 2018). It want to sell its products in low
price in order to achieve higher amount sales at that time. It is evaluated that the market structure
of the Walmart at that time should be monopolistic because there were large number of buyers
3

and sellers at that time and Sam Walton want to sell their products in low price in different
packaging and branding. In monopolistic competition market structure, there are many buyers
and seller exist and the products are slightly different from each other. The important feature of
monopolistic market structure that create monopolistic competition for Walmart at its starting
time are described below:
Large number of Buyers and sellers- It is a main feature of monopolistic competition
because large number of buyers and sellers are exist in the market but not more than perfect
competition (Hamilton, 2021). It provides a control to each firms for their price output policy.
Which makes company independent and does get affected if their competitors change their
pricing policy. In case of Walmart, it purchase a branch from its owner which makes there were
many buyers and sellers exist in the market at that time. But they have a benefit to make
effective pricing strategies for their products in order to attract more customer in effective
manner.
Free entry and exit of firms- In monopolistic competition, firms can enter or exist from
the market freely same like in perfect competition. This makes company to spend low amount in
order to enter in a market and sell their products in effective manner. In this market market
structure exist firms are making super-normal profits while entering of new firms it affects the
demand of exist firms products and they have to reduce the price which makes them to earn
normal profits. In context of Walmart, they were enter freely in this market by selling products in
low price which decrease the sales of their competitors in effective manner.
Product Differentiation- Under monopolistic competition, products are different from
each other. The products of the monopolistic competition firms are slightly different from each
other because of different packaging, design, material used, skills, taste, etc. In respect of
Walmart, its owner sell product in different design, packaging, branding in order to attract more
customers at that time in efficient manner. They sell these products in low prices at that time in
order to make their strong position in the market in effective manner.
Selling Cost- In this feature of monopolistic competition, firms are using different type
of methods which contain different cost in order to promote their products in the market in
effective manner (Hyers and Kovacova, 2018). Advertisement plays a important role for the
firms because it directly affects the demand of their products but it contain huge selling cost in
effective manner. This makes the firms who spend large selling cost has great demand whereas
4

the firm who spend low selling cost has low demand in the market. In regards of Walmart, its
owner spend large amount of selling cost in order to promote their products in the market in
effective manner that's why it become a largest company in all over world at present.
Lack of perfect knowledge- It create lack of perfect Knowledge for the buyers as well as
for sellers for the market and there are no products whose substitutes are available in the market
because they are different from each other (Ionescu, 2019). This makes lack of knowledge for
buyers in order to get information about product's quality, price, etc. In accordance with
Walmart, its owner get benefits from it at that time because consumers does not have proper
knowledge about the products and they does not found its close substitute in the market in
effective manner.
Analysing the market structure in which firms can operates or not as well as suggestion for
greater or lesser government intervention
Walmart is operating its business in oligopoly market structure because there are few
number of large companies exist in the market which makes it oligopolistic (Wei and Wei,
2018). When the Walmart started its business it operates their business in monopolistic
competition because it was selling its product in low price and its product are slightly different
from its competitors in effective manner. Different type of market structure in which Walmart
operates or not are described below:
Monopoly-
If the Walmart operate its business in monopoly market it is not optimal for it because it
providing retailing products in the market and as well as many companies are also operating
retailing business. In context of it, main features monopoly market that are not optimal for it are
described below:
Single seller- In monopoly market structure, only single seller or producer exist in the
market which makes them to sell totally different products in the market in effective manner.
This makes no competition for the firms in effective manner (Lee, 2021). In case of Walmart, if
they operate its business in monopoly market, they used to be sell totally different product and
that was not possible because it sells retailing products in the market.
There are no close substitutes- Under monopoly, there is no competition because the
products are totally different as well as their close substitutes are not available. In respect of
5

Walmart, some its products have slightly close substitutes in the market which makes that
monopoly market structure in not optimal for it.
Perfect competition-
If the management of Walmart, operate its business in perfect competition it can be
optimal for them in some extent because there are large number of buyers and sellers are exist in
the market and sell Homogeneous products in effective manner (Sergi, 2019). The main features
of perfect competition that makes Walmart to operate its business are described below:
Many buyers and sellers- In perfect market competition there are large number of
buyers and sellers exist. The sellers are big as well as small as well as selling identical products
in effective manner. In context of Walmart, it operate its business in international market and
there are many sellers exist that are selling retailing products in the market. It makes perfect
competition for them in effective manner.
Homogeneity- The products are homogeneous in nature which makes perfect
competition between suppliers. There close substitutes are also available in the market. In case
of Walmart, if its management its business in perfect competition they have to sell homogeneous
products in the market.
Free entry and exist- There are free entry or exist in perfect competition market. In
which company are had to spend less cost in order to start their business in effective manner. In
accordance with Walmart, it create strong competition for them in which new firms can enter
freely.
From the above discussion, it will be suggested that management of Walmart can operate
their business in oligopoly market because they have compete only with firms as well as it has
largest market share which makes them strong in order operate their business in effective
manner.
Suggestion for Government interference in the society-
Government should intervene or not is the main problems for the economy because free
market economist suggest that government should be strictly limited their intervention in the
society which create inefficient allocation of resources (Sion, 2018). Whereas other economist
suggest that government intervene strongly in the economy for maintaining some fields in
effective manner such as public goods, externalities and monopoly power.
Factors that are in favour of government intervene in the society are described below:
6

 Government create greater equality in the society by redistributing income and wealth
equally.
 It helps in order to overcome market failure by providing subsidies and goods with
optimistic externalities (Vasylishyn and Yarova, 2020).
Factors that are against of government intervention are described below:
 Government can make wrong decisions in order to spend public income which create
many problems for the society in effective manner.
 Government does not involve any individual in their decision in order to act and spend by
making personal freedom in the society.
After above discussion that government should make their interference in the society in
effective manner in order to improve equality by providing equal opportunity and wealth in
effective manner.
CONCLUSION
From the above mentioned report, it is concluded that management economics assist
company's manager in order to manage various organisational function as well as make decisions
by using economics theories in effective manner. Market structure helps companies in order to
identify suitable market for their operation according to the level of their competition in the
market in the market. Firms who has few competitors as well as largest market share are operate
their business in oligopoly market structure.
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REFERENCES
Books and Journals:
Baumers, M. and Holweg, M., 2019. On the economics of additive manufacturing: Experimental
findings. Journal of Operations Management, 65(8), pp.794-809.
Bell, E., 2020. Cognitive automation, business process optimization, and sustainable industrial
value creation in artificial intelligence data-driven internet of things systems. Journal of
Self-Governance and Management Economics, 8(3), pp.9-15.
Coatney, K. and Poliak, M., 2020. Cognitive decision-making algorithms, Internet of Things
smart devices, and sustainable organizational performance in Industry 4.0-based
manufacturing systems. Journal of Self-Governance and Management Economics, 8(4),
pp.9-18.
Cretì, A. and Fontini, F., 2019. Economics of electricity: Markets, competition and rules.
Cambridge University Press.
Farr, J.V. and Faber, I., 2018. Engineering economics of life cycle cost analysis. CRC Press.
Hamilton, S., 2021. Real-time big data analytics, sustainable Industry 4.0 wireless networks, and
Internet of Things-based decision support systems in cyber-physical smart
manufacturing. Economics, Management, and Financial Markets, 16(2), pp.84-94.
Hyers, D. and Kovacova, M., 2018. The economics of the online gig economy: Algorithmic
hiring practices, digital labor-market intermediation, and rights for platform
workers. Psychosociological Issues in Human Resource Management, 6(1), pp.160-165.
Ionescu, L., 2019. Should governments tax companies’ use of robots? Automated workers,
technological unemployment, and wage inequality. Economics, Management, and
Financial Markets, 14(2), pp.64-69.
Lee, J.Y., 2021. Corporate Social Responsibility. In Encyclopedia of Sport Management (pp.
106-109). Edward Elgar Publishing.
Sergi, B.S. ed., 2019. Tech, smart cities, and regional development in contemporary Russia.
Bingley: Emerald Publishing Limited.
Sion, G., 2018. How artificial intelligence is transforming the economy. Will cognitively
enhanced machines decrease and eliminate tasks from human workers through
automation?. Journal of Self-Governance and Management Economics, 6(4), pp.31-36.
Vasylishyn, S. and Yarova, V., 2020. Analytical provision of socio-economic security
management at macro and microlevels. Studies of Applied Economics, 38(4).
Wei, G. and Wei, Y., 2018. Similarity measures of Pythagorean fuzzy sets based on the cosine
function and their applications. International Journal of Intelligent Systems, 33(3),
pp.634-652.
Online:
Walmart, (2021) [Online]. Available through: <https://www.walmart.com/>
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Justification for the references-
For selection of the suitable reference and literature for current project use of the many
search engine has been made such as google schoolers that supports identification and selection
of authentic set of data. Further, for choosing the correct article and data source use of the key
words of the topic has been made for instance Management economics, description of the
company, Walmart, Barriers to Entry, Non-price Competition, market structure, lesser
government intervention, Perfect competition, Government interference in the society, Factors
that are against of government intervention, etc. Along with this, I used to read out and analysis
the abstract of the selected journal and article to ensure its justification and suitability for current
project. Thus, reading of abstract is taken as the main justification to check the suitability of the
data and once after the analysis of the suitable data sources and references has bene made to
write and construct the current project. The list of the references that has been selected for
current project and the use of which seemed justifiable and appropriate for current project are
discussed and listed below with the of the following references:
References Draft taken Justification
Baumers, M. and Holweg,
M., 2019. On the economics
of additive manufacturing:
Experimental
findings. Journal of
Operations
Management, 65(8), pp.794-
809
Management
economics provides
a framework that
help companies in
its decision making
in order to
maximise their
profit and outcomes
in effective manner.
The current article has been selected from
the google choler and it tend to be authentic
and reliable source of information as it is
having proper copyrights and name of
author along with publication year. This
references describes about the definition of
management economics as well as how it
helps companies. the selection of the
current article is seemed to be appropriate
as it provide information about the
economic of additive based on experiments
thus set a better base to provide
information about the definition of the
management of economics.
Bell, E., 2020. Cognitive
automation, business
Market structure of
Walmart is
This reference describes about the market
structure of the company. The current
9

process optimization, and
sustainable industrial value
creation in artificial
intelligence data-driven
internet of things
systems. Journal of Self-
Governance and
Management
Economics, 8(3), pp.9-15.
oligopoly because
its features makes
its presence in
oligopoly market
structure
article has been selected from the google
choler and it tend to be authentic and
reliable source of information as it is
having proper copyrights and name of
author along with publication year. It has
been and evaluated that the selection of the
current article is vital and justifiable as it is
facilitating information about the market
structure based on Cognitive automation,
business process optimization, and
sustainable industrial value creation in
artificial intelligence data-driven internet of
things system.
Coatney, K. and Poliak, M.,
2020. Cognitive decision-
making algorithms, Internet
of Things smart devices, and
sustainable organizational
performance in Industry 4.0-
based manufacturing
systems. Journal of Self-
Governance and
Management
Economics, 8(4), pp.9-18.
It create strong
barriers for the
companies in order
to enter in a
oligopoly market in
effective manner
The current selection of article is
appropriate as it tend to provide an
effective understanding about the Cognitive
decision-making algorithms, Internet of
Things smart devices, and sustainable
organizational performance in Industry 4.0-
based manufacturing systems which
supported to effectively undertake the key
barriers as well as how to overcome within
a business market. The current article has
been selected from the google choler and it
tend to be authentic and reliable source of
information as it is having proper
copyrights and name of author along with
publication year. This reference describes
about the barriers for the company while
entering in the oligopoly market.
10

Cretì, A. and Fontini, F.,
2019. Economics of
electricity: Markets,
competition and rules.
Cambridge University Press.
In oligopoly market
, products of the
company are either
similar or different
in nature but have
strong demand in
the which makes
company
oligopolistic in
effective manner
This references describes about the nature
and demand of oligopolistic company's
products. The current article has been
selected from the google choler and it tend
to be authentic and reliable source of
information as it is having proper
copyrights and name of author along with
publication year. Along with this, current
article is also suitable and justifiable based
on the fact that it provide better underdoing
about the Economics of electricity:
Markets, competition and rules that reflects
about the products of the company are
either similar or different in nature.
Farr, J.V. and Faber, I.,
2018. Engineering
economics of life cycle cost
analysis. CRC Press.
But in its Sam
Walton purchased a
branch of the Ben
Franklin stores
from its owner that
are Butler Brothers
in 1945
This references describes about the Sam
Walton as well as their purchased of Ben
Franklin stores. The current article has
been selected from the google choler and it
tend to be authentic and reliable source of
information as it is having proper
copyrights and name of author along with
publication year
Hamilton, S., 2021. Real-
time big data analytics,
sustainable Industry 4.0
wireless networks, and
Internet of Things-based
decision support systems in
cyber-physical smart
It is a main ure of
monopolistic
competition
because large
number of buyers
and sellers are exist
in the market but
The current article has been selected from
the google choler and it tend to be authentic
and reliable source of information as it is
having proper copyrights and name of
author along with publication year. This
references describes about the monopolistic
competition and its comparison with the
11

manufacturing. Economics,
Management, and Financial
Markets, 16(2), pp.84-94.
not more than
perfect competition
perfect competition.
Hyers, D. and Kovacova,
M., 2018. The economics of
the online gig economy:
Algorithmic hiring
practices, digital labor-
market intermediation, and
rights for platform
workers. Psychosociological
Issues in Human Resource
Management, 6(1), pp.160-
165.
In this feature of
monopolistic
competition, firms
are using different
type of methods
which contain
different cost in
order to promote
their products in the
market in effective
manner
This reference described about the different
types of methods used by the companies in
monopolistic competition. The current
article has been selected from the google
choler and it tend to be authentic and
reliable source of information as it is
having proper copyrights and name of
author along with publication year
Ionescu, L., 2019. Should
governments tax companies’
use of robots? Automated
workers, technological
unemployment, and wage
inequality. Economics,
Management, and Financial
Markets, 14(2), pp.64-69.
It create lack of
perfect Knowledge
for the buyers as
well as for sellers
for the market and
there are no
products whose
substitutes are
available in the
market because
they are different
from each other
This describes about the knowledge of
seller and buyers in the market in the. The
current article has been selected from the
google choler and it tend to be authentic
and reliable source of information as it is
having proper copyrights and name of
author along with publication year.
Lee, J.Y., 2021. Corporate
Social Responsibility.
In Encyclopedia of Sport
In monopoly
market structure,
only single seller or
This reference describes about the
competition of firm in monopoly market
structure. The current article has been
12

Management (pp. 106-109).
Edward Elgar Publishing.
producer exist in
the market which
makes them to sell
totally different
products in the
market in effective
manner. This makes
no competition for
the firms in
effective manner
selected from the google choler and it tend
to be authentic and reliable source of
information as it is having proper
copyrights and name of author along with
publication year. The selection of set article
is seemed valued and justifiable as it
supports a better understanding of the CSR
that tend to reflect that intend of high
coopetition meeting of CSR should be seen
by business organisation.
Sergi, B.S. ed., 2019. Tech,
smart cities, and regional
development in
contemporary Russia.
Bingley: Emerald
Publishing Limited.
If the management
of Walmart, operate
its business in
perfect competition
it can be optimal
for them in some
extent because
there are large
number of buyers
and sellers are
existing in the
market and sell
Homogeneous
products in
effective manner
(Sergi, 2019).
The current article has been selected from
the google choler and it tend to be authentic
and reliable source of information as it is
having proper copyrights and name of
author along with publication year. This
describes about the operation of a business
in perfect competition.
Sion, G., 2018. How
artificial intelligence is
transforming the economy.
Government should
intervene or not is
the main problems
This references describes about the issues
in the economy due to the intervention of
government within it. The current article
13

Will cognitively enhanced
machines decrease and
eliminate tasks from human
workers through
automation? Journal of Self-
Governance and
Management
Economics, 6(4), pp.31-36
for the economy
because free market
economist suggest
that government
should be strictly
limited their
intervention in the
society which
create inefficient
allocation of
resources
has been selected from the google choler
and it tend to be authentic and reliable
source of information as it is having proper
copyrights and name of author along with
publication year
Vasylishyn, S. and Yarova,
V., 2020. Analytical
provision of socio-economic
security management at
macro and
microlevels. Studies of
Applied Economics, 38(4).
It helps in order to
overcome market
failure by providing
subsidies and goods
with optimistic
externalities
The current article has been selected from
the google choler and it tend to be authentic
and reliable source of information as it is
having proper copyrights and name of
author along with publication year. This
reference describes about the methods
which helps in overcoming the market
failure in the economy. The selection of the
current article is justifiable as it provide
information about the Analytical provision
of socio-economic security management at
macro and micro levels that lead to better
understanding about the ways that to
overcome faced issues in target market.
Wei, G. and Wei, Y., 2018.
Similarity measures of
Pythagorean fuzzy sets
based on the cosine function
and their
applications. International
Walmart is
operating its
business in
oligopoly market
structure because
there are few
This references described about the
company which is operating their business
in. The current article has been selected
from the google choler and it tend to be
authentic and reliable source of information
as it is having proper copyrights and name
14

Journal of Intelligent
Systems, 33(3), pp.634-652.
number of large
companies exist in
the market which
makes it
oligopolistic
of author along with publication year.
Along with this, it being justifiable as it
supports a better understanding and
implication about the structure of market.
15