Final answer:
Wal-Mart's aggressive pricing strategy is a fundamental aspect of its competitive approach, leading to market share growth at the expense of smaller businesses. Both Wal-Mart and Amazon have been criticized for their impact on local economies and potential predatory pricing approaches. Such strategies are central to their retail dominance but raise concerns about market competition and community effects.
Step-by-step explanation:
True, Wal-Mart's aggressive pricing strategy is indeed a strategic action that plays a major role in how it competes in the retail marketplace. This strategy involves leveraging Wal-Mart's massive economies of scale to offer lower prices than competitors, which can attract more consumers and increase market share. However, Wal-Mart's business model is not without criticism; the company's pricing tactics have been linked to negative impacts on the economic structure of many small towns. When Wal-Mart enters a new market, it often outcompetes smaller, locally owned businesses, which can result in job losses and closure of local enterprises. Additionally, Wal-Mart has influence over suppliers and often pressures them into maintaining low costs, which allows the retailer to uphold its reputation for low prices. A functionalist would view Wal-Mart's model as an efficient way to provide goods at the lowest possible price to consumers, though this efficiency may come at the expense of the broader social fabric of communities.
Wal-Mart's model can be contrasted with that of another retail giant, Amazon, which also utilizes a production model and cost structure that enables it to offer competitive pricing. Amazon's approach has significantly changed the book selling industry and other retail sectors by undercutting competitors' prices, even when including shipping costs. This has raised concerns about predatory pricing practices, where larger firms set prices extremely low to undermine the competition, potentially leading to a more monopolistic market environment.
Overall, Wal-Mart's pricing strategy is a key part of its dominance in the retail sector, similar to the way Amazon has reshaped competition with its own model. Both companies have faced scrutiny over their impacts on competition and the consequences for local economies.