for Econ: Are suppliers forced to sell to Wal-Mart?

[ocm]

How about a non-WalMart story. This was told to me first hand by the "bad guy". We'll call him Bob.

Bob ran a chain of muffler shops, a big chain. He had one supplier (XYZ, Inc.)that he did a lot of business with. Bob told his CFO to do a little digging and let Bob know when Bob was 50% of XYZ's business. A few months later the CFO told Bob that they had just crossed the threshhold. They were now 51% of the sales of XYZ.

Bob then went to the owner of XYZ a made an offer to buy his business. The offer was low. XYZ's owner was in a pickle. If he sold, he would make only a little money. If he didn't he would lose Bob's business and likely not survive.

Bob ended up buying XYZ for a very favorable price (to Bob).

When he told us the story, Bob laughed.

Now that was market power. Bob used it. Wal-Marts technique is quite similar.

Properly enforced and literally interpreted, existing anti-trust laws would keep a great deal of this kind of thing from happening.

 

[Big Muddy rancher]

Vlasic must not have learned their lessnon very well because we just bought Vlasic pickles at Walmart yesterday.

The guys who "learned the lesson" no longer run the company. Also, I don't believe Vlasic ever stopped selling to Wal-Mart. Their choice was a lesser of two evils choice. Submit to Wal-Mart and lose margin, or don't submit and lose more margin.

Just because they still use the name Vlasic doesn't mean it's the same owners, or even the same management. Ask Sandhusker, I'll bet he is no longer an owner.

The real lesson here is, "Watch out when you deal with Wal-Mart, or somebody else will end up with your company."

Hell I could be a owner one day and not the next. Anybody can buy and sell shares and not be involved with the management of the company.