QiongZhong BEcase Walmart

Part 1 Introduction

Walmart Stores is the world’s second largest public corporation with its mission to help people save money and live better. Meanwhile, however, it is also a hugely controversial company with various scandals and criticism in terms of business ethics. This case begins with briefly introducing the growth of Walmart, and then talks about how Walmart deal with its ethical issues concerning its stakeholders including competitors, suppliers, and employees. For its competitive stakeholder, the greatest complaint against Walmart is it puts other companies out of business.

As for its suppliers, Walmart works with suppliers to reduce costs of packaging and shipping, which lessens costs for consumers, and most companies believe supplying Walmart is the best thing for their business, but the constant drive by Walmart for lower price can negatively affect suppliers. Ethical issues involving its employee stakeholder include low wages and benefits, Walmart’s stance on unions and workplace conditions and discrimination.

The case also discusses other ethical issues concerning these stakeholders including leadership misconduct, bribery and safety. Walmart has suffered significantly from these scandals. The analysis describes how Walmart respond to these concerns, as well as recent endeavors in sustainability and social responsibility. At last, the case concludes by examining what Walmart is currently doing to increase its competitive advantage and improve its ethical reputation. Part 2 SWOT Analysis and Answer to the Questions This is Walmart Store Inc. SWOT analysis based on the information from this case and its official website.

Strength

1. Large scale of operation. With 2012 net sales of more than $443 billion, 10,130 stores and more than 2 million employees, Walmart is the largest grocery chain that no other retailer can match. Large scale of operation make Walmart obtain greater buyer power than competitors. And larger scale results in lower prices that attract more consumers.

2. Sustainable supply chain and low cost strategy. Effective management of supply chain is one of the most important factors for Walmart success. Walmart works with its suppliers to reduce costs by expecting them continually to improve their system.

3. Wide range of products. Wider range of products than any other retailer attracts more customers to Walmart stores, and meanwhile because of the volume of products it requires, many suppliers believe supplying Walmart is the best thing for their business.

4. International operation. Walmart does not only rely on sales from US stores, foreign markets also make Walmart’s rapid growth.

Weakness

1. Lawsuits related to ethical issues. Walmart faces lawsuits every year such as labor related lawsuits, which costs millions of dollars for the company.

2. High employee turnover. Due to poor work conditions, low wages, unpaid overtime work and discrimination, Walmart suffers from high employee turnover that increase firm’s costs.

3. Negative word-of-mouth. Walmart’s reputation has been damaged for its various negative report such as bribery of authorities, safety issues, as well as poor work conditions.

Opportunities

1. Online shopping growth. With online retail increasingly growing in the US and other foreign countries, Walmart has huge opportunities to start up its online retail market.

2. Retail market growth in developing countries. Since retail market is growing in emerging markets every year, Operating in developing countries such as Brazil, China and Indian is a huge and sustain opportunity for Walmart’s revenue growth.

3. Recognition of supermarket chain products. More and more consumers accept supermarket own label product compared to other brand products, which is a great opportunity for Walmart to increase the number of its own label products in its store and earn more profit.

Threats

1. Online retailers. Online retailor like Amazon and other competitors like Target that have online service would make Walmart experience great competition from them in the future.

2. Criticism from the community. Walmart is facing severe resistance from the community where it plans to open new stores because it will bring great threat to local stores and their families. To become more sustainable, Walmart set up its sustainability goal that is to be supplied entirely by renewable energy, create no waste, and sell products that sustain people and environment. And they are also taking action to achieve these goals.

They have created Sustainable Value Networks (SVN) serving to integrate and evaluate efforts in renewable energy and practice. Walmart’s company value of everyday low cost translates to their renewable energy endeavors by financing utility-scale projects in renewable sources.

Walmart stores also begun selling more products made from sustainable or recycled materials and have taken efforts to reduce packaging. However, although Walmart has achieved some success in its goals, what they did is just a step in the right direction. After all, to be sustainable and environmentally friendly is a long way to go and there are many obstacles waiting for Walmart to overcome.

Over the past years, Walmart has faced many ethical issues concerning its stakeholders including accusation of discrimination, leadership misconduct, bribery, and safety. Ethical issues involving employee stakeholder focused on the way the company treats its employees, which refers to low wages and benefit, failing to provide health insurance, encouraging the hiring of “healthier, more productive employees” and part-time jobs to avoid paying healthcare costs, decreasing its workforce when it expended, and strong stance against unions which could improve workers’ benefits.

What’s more, Walmart has also been accused of discrimination of employees for its unfair treatment on women employees. Walmart’s top management also had some horrible ethical problems, which included Mexican executives paying millions in bribes to obtain licenses and zoning permits for store location, Coughlin, the second highest-ranking Walmart executive pleading guilty to federal wire-fraud and tax evasion charges and so on. There were also safety issues and problems with environmental stakeholders in Walmart.

Having suffered significantly from recent scandals, Walmart is making every effort to improve its brand image including emphasizing integrity in operations and employee behavior at all levels, advertising efforts and its renewed commitment to corporate responsibility. Walmart is working to improve its ethical reputation along with its reputation for sustainability and corporate governance.

And it has also contributed significantly to disaster management projects, economic empowerment for women, and supplier development. The company has also recently embarked on a health initiative to address the growing problem of obesity in America. As the world’s largest retailer, Walmart might make a difference in changing towards healthier eating habits.

Part 3 Recommendations

Although there is a negative side, Walmart still has a very promising future ahead.

First, Walmart should focus on their employees, publicly increase their benefits and rewards, improve the work environment, and employ diversity. In this way, the company can increase morale as well as their image.

Next, when facing small stores in communities, the company can negotiate and cooperate with them to eliminate their resistance. Or they could avoid selling competing products the local stores depend on and also advertise for them. Instead of forcing local stores to go bankrupt, Walmark could change their image to be a company that is beneficial to the community.

Then, as the world largest retailer, Walmart should take giant strides to achieve its sustainability goals. To be a more environmentally friendly organization, Walmart could rebuild their positive image. At last, Walmart’s leadership should demonstrate a renewed commitment and take action toward ensuring the company adheres to ethics and Compliance

standards.

Sources

“Walmart Corporate” official website, June 19, 2014

“Walmart manages ethics and compliance challenges”, 407, Business Ethics,

June 19, 2014