Walmart is a retail network of identical universal stores, which sell goods at prices below average. Some critics of the network claim that Walmart contributes to the displacement of small traders from the market, including small family shops. Also, a number of individuals and organizations give evidence in favor of the fact that the network stores have a negative impact on the environment, and the rights of the personnel are often violated. So, Walmart is rather contradictious enterprise. It implements many corporate citizenship programs, donates in healthcare, education and ecology. Some economists believe that Walmart protects the USA from inflation.
Walmart is extremely popular in the USA as well as all over the world. Some people say about the Walmartization of America and the Fortune 500 magazine named it Planet Walmart. The reason of its popularity is not low prices, but also due respect to the customers and tolerant corporate culture. However, Walmart once had to overcome obstacles on the part of unscrupulous competition, pressure from society and the political elite in order to become one of the most successful retailers in the world.
1. What are the major issues in this case? Assess Walmarts corporate social responsibility using the four-part CSR model. Is Walmart socially responsible despite having a devastating impact on small merchants? What about its impact on communities in terms of sprawl, traffic congestion, and impact on the appearance of the environment? What responsibility, if any, does the company have to these merchants or to the communities it enters?
The main issues of the case are duality of Walmart responsibilities fulfillment and the violations of rules that have both positive and negative impact on community. Other issue is a severe opposition to Walmart and ways to find a compromise.
The main responsibilities of the company in front of the merchants or the communities are known as CSRs. Walmart fulfills its economical responsibilities, providing customers with good quality and low prices goods. However, sometimes, they provide customers with low-quality commodities from Chine. In addition, when Walmart appeares in the town it will attract a lot of customers, and small merchants will lose their clients. Walmart is often accused of violating some legal duties. It may be gender discrimination, violation of labor legislation, paying low benefits, and taking advantage of illegal immigrants regardless the resistance of workers unions. In addition, recently the corporation has been accused of cheating in Mexico and it also refused to meet its obligations to the victims of the fire in Bangladesh. The last fact is also connected with the violation of ethical responsibilities. To add more to the list of violations one can also consider pressure which Walmart makes on its competitors, which provokes the complete extinction of smaller entrepreneurships. Nevertheless, Walmart seems to be environmentally friendly and conducts some programs to support the ecology. Walmart also fulfills its philanthropic responsibilities, financing local initiatives such as rodeo and also investing in local medical establishments. For example, the company donated 1 billion meals to Feeding America action, and generated $18 million to U.S. nonprofits voluntary organizations. Devastating impact on small merchants is a result of severe market competition, where larger and better business wins. It is not connected with social responsibilities. While making money, Walmart fulfills its economical responsibilities, which are also a part of CSRs. So, generally Walmart is socially responsible despite its impact on merchants.
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Problem with quick spreading seems to be more connected to the technological development that allows people to live far away from the urban centers. Problems with traffic jams can be improved by the organization of traffic. It is not always connected to the large retailer shops. Only ecological problems connected to Walmart deserve advanced attention.
As any company, which entrances the community, Walmart is socially responsible, and it is not allowed to violate any kind of human rights. On the contrary, it must protect human rights and help to renew ecology, donating to different social programs. However, CSR is a form of corporate self-regulation and it means that company is obliged to fulfill other requirements, apart from local and international rules, ethical standards and norms. Moreover, Walmart is not responsible for its smaller local competitors.
2. Sam Walton has been called a motivational genius. After reading this case, and with what you have observed at your local Walmart store, explain how this motivational genius empowered the employees. What is the Walmart Way? What has happened now that Sam is no longer around to visit the stores?
Sam Walton, known as a genius of encouragement, empowered his employees with his own formula of motivation – profit sharing, incentive bonuses, and stock options. Mr. Walton always empowered employees by giving them a feeling that they are also business owners. He always mentioned not to be scared of risking, advised to find best solutions and to feel the responsibility for your own actions in order to get some additional profit. Walton was one of the first business leaders in the world, who managed to create a partnership based on trust. Sam Walton developed the basic value formula – “everyday low prices for the American working class” -. At the same time he demonstrated the most basic features of successful leadership: clear, understandable vision; constant communication and consistent accession. He was always talking about three important values: respect for the individual, strive for excellence, and serve the customers.
Walmart Way is a unique program that describes the main principles of work of this retailer. It includes corporate culture, employees behavior, values of customers, price policy, importance of technological changes and relations with the suppliers. The importance of growth and constant development was also emphasized.
After Sams control declined, Walmart quietly changed its policy. New management of Wal-Mart began to respond to growing competition from companies like Target, and a myriad of smaller stores, discount grocery chains and Internet retailers, trying to mitigate competitors efforts. Rather than compete, Wal-Mart began to chase competitors (McDonald, 2011). The company moved away from the message of “everyday low prices” and began to raise prices on some items while promoting “agreement” on the other. After the company’s vision has been compromised, it is very difficult to regain former strength. After these changes employees and Walmart leaders were very disappointed and confused, but what is more important – they lost a trust of their customers.
3. Walmart was an early leader in the area of corporate social responsibility. How do the early Buy American program and the Environmental Awareness campaign illustrate this? Were these programs actually examples of corporate social responsibility or were they gimmicks to entice customers into the stores? Are the benefits of its more recent corporate citizenship programs offset by the companys detrimental impact on merchants?
“Buy American” program clearly illustrates duality of corporate social responsibilities of Walmart. On the one hand, the company had an obligation to provide inexpensive high-quality products to the customer, and at the same time it was responsible for Americans loosing their jobs. The “Buy American” plan restored up to 4,538 vacancies inside of the US economy. “Environmental Awareness” campaign was the first precedent in the business industry of America. It should be noted that even in present time Walmart continues their Conservation Campaign, producing “green energy” by solar panels and encouraging recycling. “Adopt-a-Highway” and “Adopt-a-Beach” programs, tree planting and cleaning up the communities actions work on a positive image of the company and attract customers.
However, it worth noting because Buy American programe was just a large-scale PR move, that ended up a year after the start of the program When this program was to be launched, Sam held a press conference and showed that all the goods Walmart can propose to the customers were bought in the domestic markets. In some time, the company has become the largest buyer of Chinese goods in the country and caused many US manufacturers to go out of business. Thus, one can assume that the retailer used this campaign to attract more customers. Environmental campaign is of great importance for maintaining the retailer’s image after several environmental scandals involving intervention in the ecosystem of the community. It is difficult to compensate all the negative impact on the environment with green technologies, when part of the park or resort territory was destroyed. Although environmental programs have some positive impact on ecology, it can be considered as gimmicks to attract more customers and improve social impression.
Detrimental impact on merchants cannot be offset by citizenship initiatives at the local and national levels. If small shops lose their clients, their owner may find job in Walmart but they still are going to lose time, money, opportunities and efforts. College scholarships for high school seniors, funds raisings and recycling education programs cannot bring back clients and business.
4. Walmart continues to find severe resistance to its expansion into New England and California. From Walmarts perspective, draw the stakeholder map. Define the true goals of the opponents of Walmart. Include a consideration of the following: (a) stopping Walmarts expansion, (b) preserving the status quo (e.g., downtown community and social fabric), (c) developing a cause that will pay their bills, (d) fighting for an ideology, or (e) something else. What should Walmart do?
Figure 1. Stakeholders map (Stakeholder mapping marketing theories, n. d.)
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A fraction of internal stakeholders is promoting their goods for the larger number of consumers. Employees are also interested in convenient conditions of work and fulfillment of managers obligations connected to social security. They have opportunity to develop their company and expand it all over the country or even the world. The main threat is associated with permanent resistance from the local communities and it might be a challenge to overcome it. Stakeholder characteristic is legitimacy.
The stake of customers is to get products with the highest quality at the lowest prices. They have opportunity to buy good products but there is a threat to buy low-quality thing from China. Stakeholder characteristics are legitimacy and power.
The stake of local communities has convenient access to the retailer and absence of negative impact on environment and corporate citizenship programs. Local community has an opportunity to obtain benefits from such programs but there is threat of negative impact on ecology, culture and local merchants. It has to overcome the challenge of to-be-or-not-to-be-Walmart dilemma. Stakeholder characteristics are legitimacy and power.
Pressure groups stake is to protect community from negative impact of the retailer. Some of them are interested in obtaining money from Walmart competitors that previously hired them to prevent Walmart emersion. They have an opportunity to bring their arguments to media and stop Walmart expansion. There is, however, a threat that their connections with other retailers will be investigated. Challenge is to act successfully and keep their tenant in secret. Stakeholder characteristics are urgency and power.
Stake of professional bodies such as local merchants is to survive in condition of Walmart influence. There is an opportunity to increase its popularity via Walmart inner advertising, but there is also a threat to lose clientele and money and be closed forever. The challenge is to survive under the pressure of bigger retailer shop. Stakeholder characteristics are legitimacy.
Stake of society is to obtain maximum profit of Walmart activity money, job opportunities, different programs created by the corporation and many other opportunities. However, various negative occasions connected with Walmart may provoke severe negative impact on society. Stakeholder characteristics are legitimacy, power and urgency.
Medias are also interested in depicting the struggle between the main proponents and opponents of Walmart and obtaining benefit from it. Their challenge is to show situation honestly. Their opportunity is to make money on depicting scandals around Walmart, but there is a threat of unfair actions. Stakeholder characteristics are legitimacy, power and urgency.
Emersion of Walmart in new cities sometimes provokes severe resistance and main idea of community members is to stop Walmarts expansion. This case shows that real goals of the opponents are to eliminate large and successful competitor. In New England local small producers were afraid to lose their manufactures due to Walmart expansion. There were protests and referendums to stop Walmarts excrescence.
There is a struggle to preserve status quo, because of the threat to lose unique culture of a resort area due to offensive consumerism. Such changes were considered as changes in social basis, allegedly connected with the emergence of Walmart. In the National Main Street Center in Washington, DC Columbia Kennedy Smith said that Walmarts emersion provoked panic in town and minimized the role of the downtown.
There was additional severe struggling on the ideological and philosophical levels. In Iowa city residents created a petition to block Walmart from building 87,000-square-foot store. It is remarkable, that opposition was headed by Jim Clayton, a downtown merchant, who argued that Walmart has foreign philosophy. In Colorado retailer was attacked because of some philosophical reasons, particularly because of its relation to the ecological problems that were changed later. Walmart was one more time accused by the activists Paul Glover in provoking such unpleasant things as mindless consumerism, paved landscapes, and homogenization of community identity.
Nevertheless, there were some strange offenders. For example, The Wall Street Journal stated that local retailers in Mundelein, Illinois were trying to block Walmart entrance. The reason for such actions was that its grocery sales had percentage of its total sales. Saint Consulting Group hired publishers and bribed experts. Community lost millions in sales and in sales taxes.
Walmart should speak to the community representatives and meet their needs and requirements. For example, ecological view was changed after public accusation. Another good example is that Walmart sponsored the local rodeo in Pawhuska and financed medical and other local initiatives after having been called national retail ogre.
5. What is your assessment of competitors secretly hiring consulting firms to block Walmarts entry into new communities? Is this an ethical practice? Is this a fair practice with respect to competitor stakeholders?
Supervalue, Inc., Safeway, Inc., and Ahold NV hired Saint Consulting Group secretly to block Walmart entry into the new community, and it cannot be considered ethical. Ethical practice is a set of standards of moral conduct and judgments. Josephson, one of Americas most respected authorities, has developed 12 ethical business principles. The actions of Walmart opponents are in stiff opposition to these principles (Josephson, n. d.). For example, it contradicts to the principle of honesty truthful dealing.. Ethical leaders are trying to protect and build a good reputation of the company and the morality of its employees. They never behave in the way that can undermine someones respect. They take measures required to remedy or prevent the misconduct of others. On contrary, it was revealed that they designed special “black art” act to combat Walmart. In addition, WFTO prescribes 10 Principles of Fair Trade including transparency, accountability and fair trading practices that come into contradiction to actions of local retailers (World Fair Trade Organization, 2016). So, such practice cannot be considered ethical and fair.
6. Do your own research to update Walmarts situation in the Mexican bribery scandal, the fire in Bangladesh, the plan toBuy more American, and the campaign to tell its American Success Story. Has Walmart made progress or have things gotten worse?
The world was shocked with Mexican bribery scandal and fire in Bangladesh. In October 2015 it was informed about the investigation connected to the widespread corruption in the Wal-Mart Stores Inc. in Mexico It lasted for three years and has not yet ended, however most of the work has been completed and it is possible the matter can be resolved with a fine and no criminal charges against individual managers of Wal-Mart. As a part of the same investigation, evidences of bribery in India were found. Wal-Mart spokesman Greg Hitt said the company is cooperating with the government in this matter. In May, 2016 the judge Bouchard authorized the Wal-Mart Board of Directors to use the appropriate powers to investigate matters alleged in these cases (Feeley, 2016).
After the fire in Bangladesh, Walmart announced publicly that in 2014 it will contribute 3 million dollars via BRAC USA for victims of the factory collapse of Rana Plaza and victims of other tragedies in Bangladesh. Only 1 million was paid to the victims of Rana Plaza tragedy and 92,000 dollars were provided for medical procedures. However, in November 2015, Walmart refused to donate money to injured workers and their families affected by the Tazreen fire (Clean Clothes Campaign, 2015).
Nevertheless, Walmart is supporting its “Buy more American’ plan. Wisconsin is a prominent part in Wal-Mart’s commitments made in America. Retailer buy goods from Tailor Made and Rockline; US NUK makes pacifiers and infant spoons in Reedsburg; Uniek Inc., which manufactures picture frames in Madison; Hampton Products International, California company with the object of Shell Lake, in the north-western part of the state Wisconsin. Paying attention to the fact that Wal-Mart has committed two-thirds of its purchases in the United States, the company’s sales may rise to $ 250 billion (Romell, 2016).
Thus it can be concluded that the retailer has not reached any progress in the scandalous revelations and disasters. However, Walmart have never lost all its reputation.
7. When you are the largest company in the world, how do you protect yourself against criticism? Does it seem that no matter how hard you try, its hard to make things better?
To be protected from criticism, the head of the worldwide retailer should have good communication skills. First, it will help to encourage and motivate people. And second, it will help in dealing with competitors, pressure groups, government and the press.
It is important to create some kind of culture, which helps employees to successfully overcome periods of housekeeper fall.
A leader of world-known retailer has to have intuition in terms of what customers need or what they want to do in life. This instinct can be developed with the help of modern technologies, analyzing data about customers, creating the most comfortable conditions for customers and offering consistent and fair prices.
To be the best worldwide it is necessary to be the best locally. Customers should consider global retailer as its “local” and not a foreign one. Sometimes it is better to find a partner with the knowledge of the local market, than to lose it at all. Careful use of expensive natural resources, energy, packaging, products, people and time in the long run gives higher returns.
However, Walmart’s experience shows that it does not matter how hard company tries to fulfill customers expectations. There are always pressure group and opponent organizations that will try to spoil the reputation of the other competitor. In addition, in any city there will always be consumers who are against large retailers. No matter how hard one tries, it is impossible to please everyone. However, retailers and discounters, who are trying to do their best, have many proponents that provide them with the development and stability.