Walmart Case Study

WALMART CASE STUDY SUSTAINABILITY MANAGEMENT 7/3/2014 Student’s Name & ID Number Instructor’s Name

TABLE OF CONTENTS TABLE OF CONTENTS ................................................................................................................ 1 INTRODUCTION .......................................................................................................................... 3 MAJOR ISSUES ............................................................................................................................. 3 CORPORATE SOCIAL RESPONSIBILITY ................................................................................ 3 ECONOMIC RESPONSIBILITIES: .......................................................................................... 4 LEGAL RESPONSIBILITIES: .................................................................................................. 4 ETHICAL RESPONSIBILITIES: .............................................................................................. 4 PHILANTHROPIC RESPONSIBILITIES: ................................................................................ 4 IMPACT OF SPRAWL, TRAFFIC CONGESTION ON COMMUNITIES AND ENVIORNMENT ........................................................................................................................... 4 RESPONSIBIITIES TOWARDS COMMUNITIES AND MERCHANTS................................... 5 MOTIVATIONAL GENIUS .......................................................................................................... 5 THE WAL-MART WAY ............................................................................................................... 5 SAM: NO MORE MOTIVATONAL LEADER ............................................................................ 6 WAL-MART AS AN EARLY LEADER....................................................................................... 6 BUY AMERICAN ...................................................................................................................... 6 ENVIRONMENTAL AWARENESS ......................................................................................... 6 RESPONSIBILITY WAL-MART HAS TOWARDS ITS EMPLOYEES (AFTER CLOSING OF STORES) ........................................................................................................................................ 7 STAKEHOLDERS ......................................................................................................................... 7 MARKET STAKEHOLDERS.................................................................................................... 7 NON-MARKET STAKEHOLDERS .......................................................................................... 7 MARKET STAKEHOLDERS:................................................................................................... 8 NON-MARKET STAKEHOLDERS:......................................................................................... 8

GOALS OF THE OPPONENTS .................................................................................................... 9 LABOR-UNION FUNDED GROUPS ....................................................................................... 9 GENDER DISCRIMINATION LAWSUIT ............................................................................... 9 GREENWALD’S FILM ........................................................................................................... 10 ETHICS IN BLOCKING NEW ENTRY IN MARKET .............................................................. 10 CONTINUING EXPANSION INTO INTERNATIONAL ARENA ........................................... 10 CONCLUSION ............................................................................................................................. 10 REFERENCES ............................................................................................................................. 12

INTRODUCTION This case study was meant to give its reader about the clear understanding about the Wal-Mart. It was started in 1962 by Sam Walton. The first target market of this store was rural towns with population of less than ten thousand people. It was established to provide its customers with such a customer service which will be loyal, fast, and friendly and will provide consistently low prices. Later on, Wal-Mart expanded its business in other larger countries also to become international store. Presently Wal-Mart has four main divisions around the word which are Wal-Mart Supercenters, Discount Stores, Neighborhood Markets, and Sam’s Clubs warehouses. These comprised of more than 100 customers visiting Wal-Mart per week. In addition, Wal-Mart also has provided its customers with thousands of jobs, low prices but high value being socially responsible. Sam has also started to get the Wal-Mart involve in environmental awareness. As Sam has made WalMart socially responsible for environmental awareness, so these stores also started making shelf tags from 100 percent recycled papers. Whenever Wal-Mart enters in a new small town of America, the small merchants there get feared of Wal-Mart because they will no longer remain the low price providers of goods. Some merchants have pulled out their businesses by their self when Wal-Mart entered their place.

MAJOR ISSUES There are three main issues with Wal-Mart expansion. These are: 1. Putting local small business merchants out of business 2. The creation of urban sprawl 3. Traffic congestion

CORPORATE SOCIAL RESPONSIBILITY Corporate social responsibility is basically how business can be run by having positive impact on its society. The analysis of corporate social responsibility of Wal-Mart by SNG 4-part CSR mode is given below:

ECONOMIC RESPONSIBILITIES: Wal-Mart has fulfilled it economic responsibilities successfully. It is a profitable store having net sales over $345 billion (2007). As Wal-Mart is profitable so it has given base of success to all the other aspects of CSR. LEGAL RESPONSIBILITIES: Wal-Mart is nor legally responsible company. It is because it gives its employees very low salaries, due to which Wal-Mart is the most sued company in America. ETHICAL RESPONSIBILITIES: Company is ethically responsible. It can be seen through its campaigns of Buy American and Environmental Awareness plan. But there are some issues in this too. Wal-Mart doesn’t fulfill the responsibilities towards small merchants. PHILANTHROPIC RESPONSIBILITIES: This is the area which is said to be strong as Wal-Mart has done a lot of corporate citizen initiatives and effective management. They have also established Walton Family Charitable Support Foundation.

IMPACT OF SPRAWL, TRAFFIC CONGESTION ON COMMUNITIES AND ENVIORNMENT Wal-Mart has become the threat to the environmental landscape. It is also threat to the communities as well. The reason behind is its expansion and building of stores on the vast areas. By doing this, Wal-Mart is depressing the economic health of the communities and other downtown stores. These mega stored are increasing at a very alarming rate leading to the sprawl in the communities. This increasing rate is resulting in wetlands destruction, flooding potential, increased traffic and has impacts on locally owned stores also. Landscape has effected because Wal-Mart has many stores which are unused with vast parking lots too. Moreover, such types of stores are built in such areas of towns which are not accessible

without driving so result in increase in traffic. This will lead to air pollution, water contamination and also at some point may call for more roads.

RESPONSIBIITIES TOWARDS COMMUNITIES AND MERCHANTS Yes, Wal-Mart has responsibility towards the merchants and communities where it enters. It should use the energy in clean and efficient way. Moreover, the main responsibilities include giving locals with resources, relief hunger, create opportunities for males as well as females there, produce more with fewer resources, and avoid wasting of resources.

MOTIVATIONAL GENIUS Sam Walton, founder of Wal-Mart is said to be a motivational genius. According to Sam Walton, “Individuals don’t win, teams do. If you work for Wal-Mart, Sam Walton will be your partner, not your boss”. He is the first to introduce profit-sharing pan for its employees. In this way Sam has made its employees as its partners so that they will also work for the company with encouragement and full effort. Moreover, he started developing competition among its employees. The winner of the competition is then be rewarded by payoffs. He also has created cross-pollination. This has encouraged the managers to make them challenging by switching to different departments.

THE WAL-MART WAY Walton was of the view to have strict control over its stores, operations of the stores, quality of its products and expenses too. Wal-Mart stores are based on supply chain management practices. Wal-Mart has pride that it has provided with its customers with low prices by reducing its own costs due to supply chain practices. For every Wal-Mart region, there is a dedicated Regional Vice-President who looks after that region. For management, Wal-Mart has used the TQM that is total quality management. By this way it has lowered its prices, increased its productivity and finally got the control over the market. Wal-Mart has a strong impact on the community. The main impact of it is on the economy as a large discount retailer in a local market. It results in crowding out of small retailers by offering

lower prices. The local retailers will suffer a lot and this Wal-Mart has a very negative impact on them. Wal-Mart’s success has lead to the closing of many small stores. It also has changed the purchasing approaches of the customers.

SAM: NO MORE MOTIVATONAL LEADER Sam is not considered as motivational leader now. This is because company has diverted from the basic principles of the Sam for the success. The new management at the Wal-Mart, after the death of Sam Walton, has changed its attention towards the competition. Moreover, the company has also started increasing prices on some of the items instead of lowing.

WAL-MART AS AN EARLY LEADER BUY AMERICAN Wal-Mart was famous for its low prices. But suddenly it has started more money on U.S made products. According to Wal-Mart it was to boost the sourcing of Wal-Mart. It was taken as good sign of corporate social responsibility as it was supposed to create new jobs for the American people. They also said that this campaign will help to attract and bring back many other firms to the America which will boost up the economy of U.S. these campaigns depicts true picture of Wal-Mart’s corporate social responsibility. By this, Wal-Mart has supported American based companies and manufacturer by giving them large orders, by doing business with them and by giving them larger contracts to save them and preventing them to going out of the business. ENVIRONMENTAL AWARENESS Wal-Mart also started an environmental campaign. In this campaign Wal-Mart has claimed that they have worked for the reduction of green house effects and emissions. But in reality it was not like that. The green house emissions of the Wal-Mart keep on increasing the gasses which are not god for the environment. Moreover, Wal-Mart always supports that politician which is destroying the environment.

RESPONSIBILITY WAL-MART HAS TOWARDS ITS EMPLOYEES (AFTER CLOSING OF STORES) Wal-Mart has recently closes its five stores. Due to which many employees have loosed their jobs. Some of them might be very responsible and loyal towards the organization. It is not their mistake as Wal-Mart has closed its stores. Now it is the responsibility of the Wal-Mart to have those employees with new jobs as well. If job is not available, then paying off those employees till they find a new job for themselves. The loyal employees must be given a place in any their store of the Wal-Mart as these will be very beneficial for the company. This closing has not only impacted the employees but also their families and community as a whole. The employees should be treated with decency and respect whether firing off. Make counseling with such employees once before they leave. Provide them with many benefits as well.

STAKEHOLDERS The main stakeholders of the Wal-Mart are divided into two categories: Market and non-market. MARKET STAKEHOLDERS 

The stockholders



The Wal-Mart Executive



The Employees



The Communities where Wal-Mart is located



Consumers



Suppliers



Non-Profit Organizations



Competitors

NON-MARKET STAKEHOLDERS 

The Labor Unions



The International retail Stores



The Politicians

MARKET STAKEHOLDERS: 

The stockholders: interested in return on investment



The Wal-Mart Executive: interested n stock options



The Employees: interested in their income



The Communities where Wal-Mart is located: interested in jobs and their day to day necessities for purchasing



Consumers: interested in their purchases



Suppliers: interested in orders for jobs and profits



Non-Profit Organizations: interested in foundations from Wal-Mart



Competitors: interested in knowing about Wal-Mart’s expansion and convenience.

NON-MARKET STAKEHOLDERS: 

The Labor Unions: because Wal-Mart has strict policies for not giving chance to their persons



The International retail Stores: interested in the strategy acquired by Wal-Mart



The Politicians: for the funding of the campaigns

Fig. Source: Slideshare.net

GOALS OF THE OPPONENTS The opponents of the Wal-Mart included Labor unions, religious groups, environmentalist groups, grassroots organizations, and community members all are having the claim that WalMart is unethical and unjust. In this task are discussed three main opponents of Wal-Mart and the response of the Wal-Mart to them. LABOR-UNION FUNDED GROUPS Labor union has funded to make two organizations. Their main goal was to stop the Wal-Mart through unions to expand internationally. Moreover, these work as anti-union for Wal-Mart. The two organizations made as opposed to Wal-Mart were Wake-Up Wal-Mart and Wal-Mart watch. The purpose of Wake-Up Wal-Mart was to change the focus of the company. The focus of the company was profit while this opposing firm wanted to change focus towards people first. They were also of the thought that Wal-Mart is not paying reasonable wages to its employees and workers. Wal-Mart Watch was established to show Wal-Mart to behave ethically and socially to have positive impact on the societies. In response to these two organizations, Wal-Mart has created Working Families for itself. The main goal of this group was to show the society about the good contributions of Wal-Mart for the society. GENDER DISCRIMINATION LAWSUIT Wal-Mart is under the gender discrimination lawsuit. According to it the women has claim that Wal-Mart takes time to give women with management positions. Moreover, it as also claimed that the proportion of female worker at Wal-Mart is less than at any other similar store. In response to this, Wal-Mart counter attacked the claims of gender discrimination. It shows with proper documentation that there is gender equality at Wal-Mart. Moreover, women are also on management positions and are working potentially.

GREENWALD’S FILM A film was also released against Wal-Mart. This film has shown in it that how Wal-Mart is ineffective. It also has incorporated some interviews which were showing that how Wal-Mart has threaten their lives. These interviews included of a mother, a family and a city mayor. In response to this film, Wal-Mart has counter attack on maker of the film and showed bad reviews for the maker of the film.

ETHICS IN BLOCKING NEW ENTRY IN MARKET It is no doubt possible that many firms will be hiring many consulting firms to stop the Wal-Mart from entering in a new market. This is because they have some fear that Wal-Mart will not take up their share as well. This is a very unethical practice to target someone with fraud. If the opponents want to compete then make their strategies in such a way to bock automatically the entry with their product and service quality, not with such internal schemes.

CONTINUING EXPANSION INTO INTERNATIONAL ARENA It is unethical to change the other country’s culture. A successful fir is the one which changes its culture according to the host country’s culture and still succeed and survive. If Wal-Mart enters into the international arena, it will face many issues. There will be monopolies already build there. There might be already low prices that Wal-Mart can face loss. Still it is good for WalMart to enter into a new market but with their proper strategy to cope up with the particular barriers there. They have to standardize their products as well as local market strategies. Similarly it will be good to buy the available things from local people to lessen their threat and fear.

CONCLUSION In conclusion, Wal-Mart is becoming internationally strong and big company. It is dominating the markets at an international level and becoming powerful. Its too low prices have pushed many small merchants to close down their businesses. It has put profit its first priority, due to

which people are suffering whether they are workers or community. Governments should stop the Wal-Mart from being opening the stores above a specific limit described by the government.

REFERENCES Anderson, K. (2006). Globalization and the Wal-Mart Effect - How Wal-Mart Changes the Way Products

are

Sourced

and

Sold.

Retrieved

from

http://www.probe.org/site/c.fdKEIMNsEoG/b.4218005/k.783A/Globalization_and_the_ WalMart_Effect.htm Essays, UK. (November 2013). Understanding of the Case Study Walmart Management Essay. Retrieved from http://www.ukessays.com/essays/management/understanding-of-the-casestudy-walmart-management-essay.php?cref=1 Hazlett, C. (2004). THE WALMART way. Retrieved from http://nreionline.com/mag/walmartway Jasonppalmer. (2010). Case Study Analysis of “Wal-Mart: The Main Street Merchant of Doom”. Retrieved from http://jasonppalmer.wordpress.com/2010/10/05/case-study-analysis-ofwall-mart-the-main-street-merchant-of-doom/ Sierra Club. (2014). How Big Box Stores like Wal-Mart Effect the Environment and Communities. Retrieved from http://vault.sierraclub.org/sprawl/reports/big_box.asp Starner,

R.

(2013).

Inside

Walmart's

'Buy

American'

Strategy.

Retrieved

from

http://www.siteselection.com/onlineInsider/walmart.cfm The Walmart 1%. (2013). The Truth about Walmart’s Environmental Record. Retrieved from http://walmart1percent.org/issues/greenwashing/ Uoni.

(2009).

Wal

Mart

&

Stockholder

Analysis

1.

Retreived

from

http://www.slideshare.net/uoni/wal-mart-stockholder-analysis-1-1065287 Wal-Mart Stores, Inc. (2014). Walmart Highlights Progress in 2014 Global Responsibility Report. Retrieved from http://finance.yahoo.com/news/walmart-highlights-progress2014-global-201800829.html

Walton,

S.

(2014).

practice.

Lesson

#1:

Motivate

Your

Workers.

Retrieved

http://www.evancarmichael.com/Famous-Entrepreneurs/591/Lesson-1-Motivate-YourWorkers.html

at