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Large corporations vs. small businesses. The impact of Walmart on Mom and Pop (Business)

The existence of large-scale enterprises or their establishment attracts different kind of reactions and interpretation on the effects they have on the small businesses found in their locale. The former has been presumed to deprive the latter market for its products and consequently resulting to deterioration of Mom and Pop businesses activities in the area. This popular misconception has gained significant media publicity resulting to general public acceptance. The purpose of this paper is to evaluate the materiality of this popular belief and there afterwards give an opinion on its relevance. In pursuant of this objective, this paper will have to consider constructive destruction, effects on price, effect on employment, and quality of new business as effects of establishment of a large corporation..

To start with, establishment of a new large corporation results to constructive destruction. The term implies that when a new idea or product get introduced into the market it results to failure of small-scale businesses that previously used to rely on now the outdated products supported by the outdated technology. This is of course unfortunate for these businesses but is of profound importance to the consumer. This aspect creates a platform for the emergence of new small-scale enterprises that will be able to embrace the new technology and helps in advancement of technology. This leads to enhancement of economic efficiency through proper allocation of resources..

Moreover, it is well understood that large corporations sells goods at relatively lower prices. This means that the consumer is able to spend less on the same goods he/she used to purchase at a higher price from the Mom and Pop businesses. Money, which has been saved from purchasing goods at lower price, will be availed to other goods and services thereby enabling sprouting of small-scale businesses in that line of products or services. Therefore, other small businesses have the ability to start and develop due to the now availed resources and market for that matter. .

In the evaluation of effect on self-employment, if indeed existence of large-scale enterprises results into reduced development of small-scale businesses, then it would be automatic that self-employment would drastically decrease. Based on research undertaken in USA on the effects of establishment of a popular large-scale enterprise by the name Walmart, it was found out that that as the number of stores of that enterprise increased, self-employment rate shot up by almost 50%. If was true that the establishment of large scale enterprise resulted to decreased rate of Mom and Pop business activities then it could have been discovered the otherwise..

On the question of quality of the new businesses, it is direct that some small-scale businesses competing with large-scale enterprise will of course fail. Their subsequent failure will avail valuable resources necessitating opening of small-scale enterprises of which people view as of low quality since they are new. However, if the newly established businesses have to remain in the market, they must raise their game by providing quality goods to the consumers. Therefore, this opinion does not hold for this will provide the small-scale enterprises with the required impetus to grow..

Therefore, this paper seeks to disband the popular misconception that establishment or existence of large-scale corporations results to decay of small-scale enterprises but instead they offer them the explicit platform for development and growth. Every one, judging from the prior discussion, can be able to deduce that for development of any Mom and Pop business, that presence of large-scale enterprises is quite crucial.


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