Final answer:
Organizations with high profitability like Wal-Mart can develop high organizational slack which allows flexibility in operations. Functionalists may view Wal-Mart's low price model as a means of efficiency for consumers, but it can result in low wages and minimal local economic reinvestment. High organizational slack may come at the expense of workers' benefits and contribute to broader economic challenges.
Step-by-step explanation:
An organization with high profitability, such as Wal-Mart, can indeed develop high organizational slack. This refers to the surplus or buffer provided by the firm’s strong performance, which allows it to have flexibility in its operations and resources. When an organization like Wal-Mart has significant profitability, it can afford to maintain additional resources that can be utilized in times of strategic shifts or unexpected circumstances.
From the perspective of a functionalist, Wal-Mart’s approach to achieving low prices by squeezing vendors can be seen as a pursuit of efficiency and value for consumers in core nations. While this model may lead to cost savings and a wide variety of goods for consumers, it can also result in lower wages and fewer benefits for workers, reflecting Wal-Martization of the economy. On a broader scale, location choices for industries can be influenced by the cost of labor, with low-skill manufacturing tending to move to areas with a low cost of living, whereas industries requiring high-skilled laborers face other economic pressures, such as local inflation in wages and housing costs.
Inflation poses planning problems for businesses, potentially impacting their ability to profit and invest in improving products and services. Wal-Mart, by focusing on low prices, may offset some inflationary pressures but at the cost of minimizing benefits and wages paid to employees, thus maximizing organizational slack but potentially contributing to broader socio-economic issues.