Walmart — corporate stratertgy Essay Example

  • Category:
    Business
  • Document type:
    Case Study
  • Level:
    High School
  • Page:
    3
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    2180

Wal-Mart Case Study

Major issues in the case

Wal-Mart was started with an aim to cater of small rural towns whose population was less than 10,000 people. This was meant to help these towns with fast, friendly service and offer low prices. The stores were able to offer convenience and serve the consumers well. The store expanded and became a multinational. With the expansion, Wal-Mart has faced social and ethical issues. The major issues that have been discussed in this case are: the company corporate social responsibility, responsibility to the competitors, Barriers to domestic expansion, threat of putting small merchants out of business, creating urban sprawl, traffic congestion in areas where they relocate, impact on local community, pressure from labor unions and gender discrimination (Paruchuri, Joel & David, 2009).

Corporate social responsibility involves keenly considering the effects that a firm has on the community. Business has to be responsible for their actions. Corporate social responsibility can be divided into four parts. The parts are: economic responsibilities, legal responsibilities, ethical responsibilities and philanthropic responsibilities. Economic responsibilities involve activities that help the economy of the country of operation. This involves provision of employment, invest in human capital, safe products and generate investment and income (Kotler & Lee, 2005). Wal-Mart has been able to satisfy the economic responsibilities. The company has provided jobs and has high income generation with net sales being high.

Legal responsibilities involve having a good relation with the government officials and legal organs (Kotler & Lee, 2005). Wal-Mart has not performed well in this area. Wal-Mart has been engaged in a lot of legal cases. The company has been branded as the most sued company in America. Among the legal cases that face Wal-Mart are questionable labor practices, discrimination and eliminating small merchants.

Ethical responsibilities involve adoption of a voluntary code of governance and ethics (Kotler & Lee, 2005). Wal-Mart has put some efforts in this area. This is notably by their earlier campaigns on “buy American” and “Environmental Awareness”. Sam Walton was among the first people to implement environmental awareness campaign in their firms. The company made commitment to land, air and water. This was started by using shelf tags that were made from recycled paper. The company in response to reducing loss of American jobs introduced the “buy America”. This was through giving the American manufacturers large orders. On the other hand Wal-Mart has faced accusation of eliminating small merchandisers. This is due to fact that the company offers their products at lower prices (Paruchuri, Joel & David, 2009). This has made their expansion in some cities in America to be opposed.

Philanthropic responsibilities involve setting aside funds which can be used for community projects (Kotler & Lee, 2005). Wal-Mart have put efforts in being good neighbors to the community they operate in. The Wal-Mart foundation together with the company gave more than $378 in 2009. The company and its foundation were able to give $423 in the same year globally. This shows that the company takes part in every community it serves.

“The Wal-Mart Way” and Sam Walton Motivation

Sam Walton was a motivation genius. Sam made working at Wal-Mart more enjoyable as he acted as a partner rather than the boss. The profit sharing plan in 1970 was the first of its kind in the business. The employees were able to share the profitability of the store. This act by Sam Walton demonstrated that he respected the workers. The workers were encouraged in their efforts. Sharing the profit motivated his associates. This led to competition among workers which made them work hard. He also rewarded the winners well in his challenges. Information flow was also encouraged under his leadership. This enabled the employees to understand well the operations of his business. Walton worked hard to make sure that his employees were appreciated and felt valued (Michael, 2014).

Having motivated employees helped the company to use them in gaining competitive advantage. Walton was able to create a culture in the company “The Wal-Mart Way”. This is through making a culture that gave the company a competitive advantage. Every employee is expected to do things “The Wal-Mart Way”. The Wal-Mart culture is always embraced by the new employees through training. This is through viewing employees as business partners and mangers acts as coaches and servant leaders. This is the culture that has driven Wal-Mart for the years it has been in operation. “The Wal-Mart Way” has three core principles which are; respect for the individuals, strive for excellence and service to the customers. A customer at Wal-Mart experiences high quality of service from the employees. The customer related policies are made through the assumption of honesty. This gives Wal-Mart the best customer service. Though Sam is not there, Wal-Mart employees still embrace the culture he instilled in the company (Michael, 2014). This is doing things “The Wal-Mart Way”.

Corporate Social Responsibility

Wal-Mart was an early leader in corporate social responsibility. This is through their “Buy America” and “Environmental Awareness campaign”. Sam Walton acted at the right time when the environmental awareness was growing. His campaigns to commit to land, air and water shows how committed he was. The shelf tags started being made from recycled paper. His efforts to conserve the environment was a success and acted as precedent to other companies to be environmentally aware. On top of this, his plan on “Buy America” was aimed at reducing the loss of American Jobs. He was responsible after realizing that Wal-Mart was leading to a loss of jobs for the Americans. His step to protect the job loss was a sign of corporate social responsibility. He started doing business with an American supplier to help them not to go out of business. He was able to restore 4,538 jobs through this plan. This plan though was successful was later abandoned and the company started importing its supplies. This is believed to have led to loss of business to local firms (Paruchuri, Joel & David, 2009).

The two plans were good examples of corporate social responsibility. Most people believe that Wal-Mart is socially responsible. This is through provision of high value at a low cost. The company is also involved in assisting the community through Wal-Mart foundation. The main complaint however is that Wal-Mart kills the local merchants. This is due to fact that they cannot compete with Wal-Mart due to low prices offered. Some communities just feel that they can’t fit with Wal-Mart due to low cost reputation. Despite complains on killing the local competitors, Wal-Mart corporate citizenship is still strong and active. The recent programs on corporate citizenship cannot be offset by its impacts on merchants. The programs implemented on corporate citizenship include college scholarships, funding children hospitals, local fundraisers money and education on environmental conservation (Paruchuri, Joel & David, 2009).

Closure, layoffs and responsibility to community and employees

Wal-Mart has closed several stores of late. This leads to loss of jobs to employees and also affects the local community and its loyal customers. When the company decides to close off a store, it has ethical issues to face as well as social responsibility. Wal-Mart has to use their code of ethics and ensure that they follow the right procedure in closer. The community in which the company operates in will be affected by lack of benefits they gained from the company social responsibility (Kotler & Lee, 2005). The employees lose their means of earning while the loyal customers are forced to look for alternative store. The company should only close their store when it’s inevitable. This should be done through consultation with all the stakeholders who include the employees, customers and the community. The employees should be compensated or relocated to another store (Carroll & Ann, 2008).

Stakeholders mapping

Stakeholder mapping looks at multiple stakeholders and determines the key stakeholders as well as their goals. The mapping has four main stages which are identifying, analyzing, mapping and prioritizing. In relation to wall mart, each phase will be looked at separately (Bourne & Walker, 2005).

Identifying

This phase lists all the relevant people, groups, and organizations (Bourne & Walker, 2005). From Wal-Mart, this includes the employees, opposition groups, community, environment, government and the customers. The opposition groups have been offering resistance to the expansion of Wal-Mart into New England and California. These groups include rival chains, consulting groups and community.

Analyzing

This is the process of understanding the stakeholders’ perspectives and interests (Bourne & Walker, 2005). In the case of Wal-Mart, this can be achieved by looking at their value legitimacy, willingness to engage, influence and necessity of involvement. The opponents have their goals. The community is opposed to Wal-Mart expansion as due to several reasons. There are those who opposed its expansion to their community as they felt that Wal-Mart reputation did not fit well with them. This was the case of Steam Boat springs and Colorado who have to preserve a status quo. Some of the communities find Wal-Mart to generate offensive consumerism. The local merchants are opposed to Wal-Mart expansion as they fear being driven out of business. Rival groups oppose Wal-Mart in order to reduce competition. Consulting groups are mostly developing a course that will pay their bills. They are hired to help in stopping Wal-Mart expansion. Looking at the stakeholders who are opposed to Wal-Mart expansion, a stakeholder’s map can be drawn.

Mapping and prioritizing

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Consulting groups

Competitors

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Community

Consumers

Willingness

NB: size indicate value of stakeholders to company

Wal-Mart has to continue their efforts in global expansion and company image enhancement to counter the local resistance to expansion. This is supported by the fact that the company have thrived despite the massive efforts to stop its expansion in the USA. This has been through global expansion and improvement in the company image.

Wal-Mart competitors and efforts to block expansion

The competitors to Wal-Mart have been hiring consulting firms secretly to block Wal-Mart expansion. The practice has been engaged through use of firms such as Saint Consulting group. The consulting groups’ main argument is that their practice is not illegal as they are protected by the first Amendment. Though the practice can be proved through the law, it goes against the ethics of fair business. The consulting group uses dirty tricks for their own gain while the city and the developer suffers the damage. In most cases, the development is derailed or stopped after years of lawsuit. The process leads to loss of millions in the property as well as sales taxes. This is an unfair practice to the competitor’s stakeholders due to the loss that is suffered (Paruchuri, Joel & David, 2009).

Global expansion and issues anticipated

As Wal-Mart continues its global expansion, they have to face several issues. Wal-Mart has presence in more than 14 countries outside the United States. The company has set their goal to grow internationally. The company formula that has enabled it to succeed in US may not work in all countries. This was seen in Germany where they had to close the stores. Shoppers have different habits in each country. The company values cannot be imposed in every country. In Germany, the company lost millions of dollars since its entrance in 1998. The company was unable to make good relations with the labor unions (Mark & Michael, 2006).

Culture related issues are another concern. Each country has their unique culture and it is hard to change it. A multinational company is expected to be multicultural. This involves being able to work in diverse cultures and understanding them. For example, the culture in Germany is different from culture in USA. This was seen when the company required its staff to smile to their customers in Germany. While this was normal in USA, to Germany it was interpreted as flirting (Mark & Michael, 2006). The company had to stop the practice. Wal-Mart should be able to work in diverse cultures by being able to adapt to them. This is by understanding the way of doing things in each country they expand to. It is unethical to change another country’s culture. This is in most cases met with resistance as was in Wal-Mart expansion to Germany. The company should not impose a different culture to the country they expand to in order to avoid conflicts with stakeholders.

References

Bourne, L & Walker, D. H. T 2005, ‘Visualizing and Mapping Stakeholder Influence.’ Management Decision. Vol.43, no.5, p.649-660.

Carroll, A & Ann K 2008, Business & Society: Ethics and Stakeholder Management, Mason, OH: South-Western Cengage Learning.

Kotler, P &, Lee, N 2005, Corporate Social Responsibility: Doing the most Good for Your Company and Your Cause. New York: Prentice-Hall.

Mark L & Michael B 2006, ‘Wal-Mart Finds That Its Formula Doesn’t Fit Every Culture’, The New York Times, August 2, Viewed 21 June 2014,

http://www.nytimes.com/2006/08/02/business/worldbusiness/02walmart.html?pagewanted=all&_r=0#

Michael, B 2014,’ ‘“The Wal-Mart Way”…Cultural Kool-Aid Creates Cult-Like Commitment’, Global Bussiness News. Viewed 21 June 2014, http://www.globalbusinessnews.net/story.asp?sid=1239.

Paruchuri, S., Joel A.C, and David, P 2009, ‘The Wal-Mart Effect: Wave of Destruction Creative Destruction?’ Economic Geography, Vol. 85, no. 2, p. 3-5.