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STORE WARS: When Wal-Mart Comes To Town
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LESSON THREE: Should We Let Them In?: A Cost-Benefit Analysis of Allowing a New Chain Store Into Town

  1. Introduction
  2. Standards
  3. Related resources
  4. Method of activity
  5. Method of assessment
  6. Extensions/Adaptations
  7. Author bio

1. Introduction

It's a good bet that your students have already performed an informal cost-benefit analysis (or perhaps a "pro-con" chart) to help them make an important decision. This lesson has them conduct this type of analysis to determine whether a town should allow a large chain store to open within its borders. They'll consider the arguments made by both sides of the debate in the STORE WARS documentary, and they'll look at some Web sites that provide further information about the topic. They'll create a chart that summarizes the possible costs and benefits in economic, social, and environmental terms, and they'll summarize their opinions in reports to the town's mayor.

Lesson Objectives

Students will:
  • List the large chain stores in their area and discuss their opinions of these stores.
  • Watch video segments and discuss Wal-Mart's strategies and its opponents' viewpoints.
  • Define and discuss the terms "costs" and "benefits."
  • Discuss different types of costs and benefits.
  • Discuss the advantages of conducting a cost-benefit analysis to help make a decision.
  • Use information from the video and Web sites to conduct an informal cost-benefit analysis related to a potential new chain store.
  • Discuss their charts.
  • Pretend they've conducted the cost-benefit analysis at the request of a town's mayor, and write recommendations explaining whether they think a large chain store should be allowed to be located in the town.
Materials Needed
  • VCR and TV
  • Computer with Internet connection
  • One copy of the Student Handout for each student or pair of students
Estimated Time

4-5 class periods

2. Relevant National Standards

This lesson addresses the following national content standards established by McREL.

Civics Standards
  • Understands ideas about civic life, politics and government
  • Understands the role of diversity in American life and the importance of shared values, political beliefs and civic beliefs in an increasingly diverse American society
  • Understands the character of American political and social conflict and factors that tend to prevent or lower its intensity
  • Understands issues concerning the disparities between ideals and reality in American political and social life
  • Understands the formation and implementation of public policy
  • Understands issues regarding the proper scope and limits of rights and the relationships among personal, political and economic rights
  • Understands how participation in civic and political life can help citizens attain individual and public goals
Economics Standards
  • Understands that scarcity of productive resources requires choices that generate opportunity costs
  • Understands the roles government plays in the United States economy
Curriculum Standards for Social Studies
(listed at the National Council for the Social Studies Web site)
  • Individuals, Groups, and Institutions: Social studies programs should include experiences that provide for the study of interactions among individuals, groups and institutions.
  • Power, Authority and Governance: Social studies programs should include experiences that provide for the study of how people create and change structures of power, authority and governance.
  • Production, Distribution and Consumption: Social studies programs should include experiences that provide for the study of how people organize for the production, distribution and consumption of goods and services.
  • Civil Ideals and Practices: Social studies programs should include experiences that provide for the study of the ideals, principles and practices of citizenship in a democratic republic.
3. Related Resources

Wal-Mart official home page (be sure to link to "Investor Relations")

The Home Depot official home page (link to "Company Info.")

Target official home page (link to "Company")

Office Depot official home page (link to "Company Info.")

Sprawl-Busters

Hibbing, Minn., Opens A 'Monster' Wal-Mart

Ready or Not, Here Comes Wal-Mart

Retail, Wholesale, and Department Store Union's Wal-Mart Dispute Page

The Benefits of Doing Business Locally

4. Method of Activity

1. Ask students to list the names of as many large chain stores as they can think of. They might mention Wal-Mart, K Mart, Target, Home Depot, or Office Depot, just to name a few. Ask them how many of these stores are located in or near their home town. What do they think of these stores? What do their parents or other adults think of these stores?

2. Provide students with a brief introduction to the video by explaining that it's a documentary set in Ashland, Virginia. Ashland was approached by Wal-Mart to open a new store on the town's outskirts. This proposal sparked a significant controversy in the community.

3. Show students the following segments of the video, or have them view the entire program. After viewing, ask them to answer the questions below in a class discussion:

Video segments:

Timecodes Summary
9:52-11:50 summary of the different points of view, including that of the Pink Flamingos
17:26-18:23 description of Wal-Mart's "saturation strategy"

Questions to answer:
  • What is Wal-Mart's "saturation strategy"?
  • What is meant by "one-stop shopping," and what role does Wal-Mart play in this type of shopping? Can this type of shopping be done downtown?
  • Why are the Pink Flamingos concerned with Wal-Mart's strategies and opposed to an Ashland Wal-Mart?
4. Ask students to define the words "cost" and "benefit." Under what circumstances would they compare the costs and benefits of something? They might mention that they consider costs versus benefits when they're shopping for something expensive or when they're deciding whether to sign up for a club or athletic team.

5. Ask students if, in their own lives, costs and benefits are always measured in terms of money. Can they think of other types of costs and benefits? Inform them that although many people think of costs and benefits strictly in financial terms, a decision can also have social or environmental costs or benefits. Social costs and benefits relate to how a decision will affect social interactions and culture in the place where it is implemented (e.g. how the decision will affect where and how people are able to make new friends or meet old ones; how the decision will affect the town's architecture; how the decision will affect residents' "sense of community"). Environmental costs and benefits relate to how the decision will affect the natural environment (e.g. how the decision will affect levels of pollution or the availability of natural animal and plant habitats).

Note: The definitions above are not strict definitions used by economists but lend themselves well to the issues raised in the video. If you're teaching advanced economics students, inform them that different economists have different ways to define these types of costs and benefits. For example, environmental costs and benefits are often considered a subset of social costs and benefits.
6. If you're teaching high school economics, inform students that social, environmental, and some economic costs are forms of externalities. An externality is "A cost or benefit that's not included in the market price of a good because it's not included in the supply price or the demand price" (from the Economic GLOSSarama). In other words, an externality is a cost or benefit that's a side effect of an action or investment, affecting people or groups of people who have not directly contributed to the investment. In the dog park example below, neighborhood residents would experience costs and benefits from the park even if they did not invest directly in the financing or construction of the park.

7. To illustrate different types of costs and benefits, ask students to imagine that their town or neighborhood council has proposed to convert a vacant lot into a dog park. Some examples of costs and benefits include the following. Can students think of others?
  • economic costs: it will cost money to clear the land, put in the grass, and build a fence
  • economic benefits: people may bring their dogs into the neighborhood and then shop in local stores; the existence of a park as opposed to a vacant lot may raise local property values
  • social costs: barking and other park noise may decrease the neighborhood's peace and quiet and make residents feel "stressed out"
  • social benefits: the park may provide a new place to meet people and a renewed sense of neighborhood pride
  • environmental costs: dog excrement may pollute the area, including the water supply, if it's not cleaned up
  • environmental benefits: grass is generally better than pavement, since it cools the neighborhood and absorbs water that would otherwise run off
8. Explain that businesses, governments and other organizations and individuals often perform cost-benefit analyses when trying to make important decisions. This type of analysis is similar to a pro/con list that students may have made in the past in which they list the pros and cons of making a certain decision. Ask students to explain why they think this type of analysis might be helpful in determining whether to locate a chain store in a town.

9. Ask students to imagine that they live in a town that doesn't yet have a large chain store such as Wal-Mart. The executives of one of these retail companies want to open a store in the town. The Mayor has hired your students to perform a cost-benefit analysis to assess the pros and cons of allowing the chain store to open. They may assume the store is a Wal-Mart, or they may select another retail chain to use as their example.

10. Give each student or pair of students a copy of the Student Handout, which contains a cost-benefit chart. Have them watch the video segments and visit the Web sites listed above. As they go through these resources, ask them to list on the cost-benefit chart the economic, social and environmental costs and benefits that they think would be incurred if this new chain store were allowed to open.

Students should be as specific as possible when creating their charts and should provide numbers and examples from the video and Web resources. For example, in the Economic section, they might state as a cost that, between 1983 and 1993, businesses in Iowa lost more than $603 million in sales (according to a study cited at Sprawl Busters) and as a benefit that Wal-Mart contributed $22.8 million to the state of Iowa in the fiscal year ending 1/31/2001 (according to Wal-Mart's Web site - link to "Investor Relations" and "Economic Impact").

Note: Be sure to make students aware that they will most likely not be able to directly compare the numbers they find for the economic costs and benefits. For example, the numbers stated above for Iowa refer to different measurements (sales losses versus state tax contributions) as well as different time periods. It is not likely that students will be able to gather monetary figures that they can directly compare. Instead, when they're drawing their final conclusions about the costs versus benefits (see step 12), they should analyze the significance of the individual figures and try to determine which ones carry the most weight based on the evidence they've seen in the video and Web sites. If they were economists who were seriously studying this problem, they'd have to compare costs and benefits in the same measurements and units. However, finding this type of information would require more advanced research and calculations than is practical for this lesson.
Video Segments:


Timecodes Summary
9:52-11:50 summary of the different points of view
13:03-17:18 Al Norman's viewpoint (the consultant from Sprawl-Busters)
19:20-23:04 the Mayor and Councilman research the effects of Wal-Mart on a neighboring town
32:34-34:13 Wal-Mart's director of community affairs explains his company's position
34:13-35:19 the professor denies making the claims that appear in the Wal-Mart ad
35:19-36:40 a discussion of the possible economic benefits Wal-Mart will provide
36:40-37:23 a discussion of Wal-Mart's employment situation
40:50-45:11 town council meeting, with a description of possible economic costs and benefits
11. Discuss students' cost-benefit charts as a class. Did they tend to come up with the same costs and benefits for each category, or were there notable differences between students or pairs of students? Ask more advanced students (upper high school) to think about the ways in which the cost-benefit analyses might look different for different towns. What factors do they think might affect whether or not a town benefits from a new chain store? Might some towns suffer greater costs or incur greater benefits than others? Why or why not?

12. Ask students to write their recommendations to the Mayor, expressing their opinions based on their assessment of the cost-benefit analysis. Their letters should provide specific examples from the chart and the resources they've looked at.

5. Assessment Recommendations

Since every class is different, every teacher will assess students in slightly different ways. However, areas of consideration should include the following:
  • Participating in class discussions.
  • Carefully following all directions.
  • Completing the charts with specific facts, figures and opinions they've heard on the video or read on the Web sites.
  • Writing recommendations to the Mayor that clearly explain their decision and provide specific examples to justify their opinion.
6. Extensions/Adaptations

  • (grades 6-12) Have students list the items they have purchased at large chain stores such as Wal-Mart. Then have them list the things they've bought at independent stores, such as the ones in downtown Ashland. How much of their shopping do they do at large chains versus smaller independent stores? Why do they think they choose certain stores or types of stores over others? If they're not yet old enough to drive, how much does access to transportation affect their shopping decisions? Where do they think they'll shop when their adults, and why?

  • (grades 6-12) Have students draw a map of their town or print out from MapQuest or Yahoo! Maps. Ask them to label the locations of the major chain stores, such as Wal-Mart or Home Depot, on the map. Also have them label the locations of as many independently-owned businesses as they can think of, either downtown or in the town's outskirts. If students live in a large city, have them concentrate on their home neighborhood. Have them use the Internet to research other chain stores that aren't yet located in their town. Ask them to predict which chain stores might be the next to move into their area. They should write paragraphs explaining their predictions and label the possible future store locations on the map.

  • (grades 8-12) Have students search an online news source, such as CNN, to find articles about some of the large retail companies. They might type in the keywords Wal-Mart, Home Depot, Target, etc. Ask them to list the types of news stories that have recently been reported about these stores. Then have them choose three stories and write paragraphs summarizing what the articles say about the companies and explaining whether the articles appear to favor or oppose the expansion of these stores into new areas.

  • (grades 11-12) Refer students to the segment of the video when an Ashland resident calls a professor to verify her quote in Wal-Mart's newspaper advertisement (34:13-35:19). Ask them to find other examples of academic research being quoted in advertising. They can look in newspapers, magazine or TV ads. Have them record the ad's sponsor, date of publication or airing, and the research it cites. Then ask them how they can verify whether this information is true. Have them conduct research on the Internet or in print resources to find out if the actual research supports the claims made in the advertisement. Discuss the reasons why companies and organizations quote academic research. Do students think the companies have an obligation to verify their claims with the researcher, or is it OK to use the research out of context, as Wal-Mart apparently did in its Ashland ad?

7. Author Bio

Betsy Hedberg is a teacher and freelance curriculum writer who has published lesson plans on a variety of subjects. She received her Secondary Teaching Credential in Social Studies from Loyola Marymount University and her Master of Arts in Geography from UCLA. In addition to curriculum writing, she presents seminars and training sessions to help teachers incorporate the Internet and other technologies into their classrooms. She recently presented a seminar entitled The World Wide Web Can Help Your Students Think Critically at the California Council for the Social Studies 1998 annual conference. In 1997, she founded Curriculum Adventures, a curriculum development, publishing and consulting business.



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