Wal-Mart: The Challenge of Making Relationships with Stakeholders 1. Evaluate how Wal-Mart has ranked and responded to various stakeholders. 2. Why do you think Wal-Mart has had a recent number of ethical issues that have been in the news almost constantly? 3. What do you think Wal-Mart could do to develop an improved ethical culture and respond more positively to its diverse stakeholders? Question 1
Many groups have a stake in what Wal-Mart does. Stakeholders can be broken down into two diverse groups: market stakeholders (shareholders, employees, consumers, and suppliers and non-market stakeholders (labor unions and environmental stakeholders). Market Stakeholders
Shareholders With the shareholders, whose focus is to see profit, Wal-Mart ranks number one, 2008 per Fortune 500 magazine and listed as the 13th most profitable company with $11.3 billion dollars in earnings for 2006. Shareholders equity is over $64 million dollars. 1 (Fortune 500, 2008, CNNMoney.com) Wal-Mart definitely makes their shareholders money. The fundamental question is whether the shareholders care about Wal-Mart’s scrutiny. Shareholders should have some concern on how the world views Wal-Mart and how long they will hold up under the scrutiny. Employees
Employee stakeholders have another story. The discrimination lawsuits ranging from female employees not getting equal pay or equal positions, to disabled employees, class-action lawsuits stating that Wal-Mart doctors questionnaires to prevent disabled workers from applying, Wal-Mart does not rank very high with these employees. Lawsuits stemming from Wal-Mart’s failure to monitor labor conditions at oversea factories and hires illegal immigrants add to the rift in relations between the employees and the company. Wal-Mart continues to deny charges, yet settle cases.
The most disturbing is that Wal-Mart states as part of their company’s purpose “Saving people money so they can live better.” 2 (Walmartstores.com) has been accused of low benefits, working a minimum of 28 hours (full time) and allowing the tax payer to make up the difference, failing to provide health insurance to more than 60 percent of its employees, and part-time employees are excluded from Wal-Mart’s health plan.
Those in the plan are underinsured. Some competitors must lower wages by 3.5 percent to operate in the same location and stay in business. With Wal-Mart being sued for poor working conditions; denying pay, lunches and breaks it is no wonder why Wal-Mart, even with all of the money it makes, has not managed to make it on the 100 Best Places to work. 3 (Fortune 500, 2008, CNNMoney.com) Wal-Mart has missed the mark on their purpose statement. How can you assist in helping people live better if you are not taking care of the people that work for you? Consumers
As stakeholders, consumers may complain about Wal-Mart but they still shop there. When push comes to shove, consumers put aside their morality for the sake of a cheaper price. Wal-Mart is shopped by 84 percent of American households. 4 (Hale, ¶ 1) Wal-Mart and Sam’s Club has managed to provide the consumer one stop shopping to meet their needs. Their growth is being fueled by store expansion, super-center formats selling groceries, gas stations, tire lube shop and photo shops tossed with the lowest prices it is easy to see why some folk toss their morals aside. Consumers reward Wal-Mart by making it the number one retailer.
Retailer Let us not forget the squeeze that Wal-Mart places on it suppliers. By dictating prices, delivery, and payment Wal-Mart has built their fortune on the backs of their suppliers. They have the power to make or break a business by deciding to carry or not to carry their products. Many suppliers have moved production away from the United States to cheaper countries just to remain a supplier to Wal-Mart. This takes jobs away from the United States. For Wal-Mart, this is the way retail operates, but tell it to the companies who have had to sell their business or the mom and pop stores who Wal-Mart put out of business. Non-Market Stakeholders
Non-Market Stakeholders are the labor unions and environmental stakeholders. Labor Unions Germany is the only place where Wal-Mart employees union workers. Wal-Mart has a strict policy about unionization. Allegations, that they will do what it takes to not have employees unionize are no surprise. Wal-Mart feels they can better take care of their employees and provide better benefits, discouraging the any involvement from the labor unions. Environmental Stakeholders
With no surprise, Wal-Mart has even managed to violate The Environmental Protection Agency (EPA) rules and regulations. With allegations of false contracts, failure to obtain permits and work orders, failure to comply with hazardous waste and violation storm contracts, it is no wonder why Wal-Mart remains on radar with state environmental agencies. Wal-Mart may be the number one retailer, but definitely, ranks last in ethically supporting its diverse stakeholder’s needs.
Question 2 Wal-Mart has been in the news constantly for ethical issues because it has operated unethically. Wal-Mart has become the central figure in scores of social, economic, and political debates from health care to immigration and even gun control. 5 (Wal-Mart Stores Inc, 10/19/08, The New York Times)
Critics say those low prices have depressed domestic wages and exported manufacturing jobs to foreign countries, hurting Americans more than helping them. All of which has made Wal-Mart the most scrutinized business in the country. 6 (Wal-Mart Stores Inc, 10/19/08, The New York Times)
The fact that it is a large company, the largest retailer, contributes to why consumers and agencies feel they can hold how it operates under a microscope. Wal-Mart has even created its own website (Wal-MartWatch.com) to look for articles, blogs or sites where Wal-Mart’s name may appear and set the record straight.
Also, with the recent wave of unethical business practices with companies like Exxon, AIG etc... These companies have fostered the consumers distrust and their behavior keeps large companies like Wal-Mart in the public eye. Question 3
I think Wal-Mart is trying to improve their image with their stakeholders. They have developed a website, with hopes of addressing consumer questions. They have contributed to several organizations and are trying to provide “green” stores within some of their communities.
Wal-Mart’s focus should be on its employees, not just lowering prices but doing the right thing by those which they employee. Put the employees first. They are a billion dollar corporation there should be adequate health care provided to all who work there, equal pay for equal work, equality in job positions, keep jobs in America, work better with their suppliers and follow the law at all times. This is the best way to satisfy all of Wal-Mart’s diverse stakeholders.
Works Cited 1. “Fortune 500, Our Annual Ranking of America’s Corporations.” CNNMoney.com, (May 5, 2008): 10/19/2008 from http://money.cnn.com/magazines/fortune/fortune500/2008/full_list/ 2. “Our Company’s Purpose”, Walmartstore.com, 10/19/2008 from http://walmartstores.com/ 3. “Fortune 500, 100 Best Companies to Work For.” CNNMoney.com. (February 4,2008): 10/19/2008 from http://money.cnn.com/magazines/fortune/bestcompanies/2008/full_list/index.html 4. Hale, Todd. “Understanding the Wal-Mart Shopper.” Nielson Trends & Insights:
Page 1. 10/19/2008 http://www2.acnielsen.com/pubs/2004_q1_ci_walmart.shtml 5. “Wal-Mart Stores Inc.”, Business, NYTimes.com, (October 19, 2008): from http://topics.nytimes.com/top/news/business/companies/wal_mart_stores_inc/index.html 6. “Wal-Mart Stores Inc.”, Business, NYTimes.com, (October 19, 2008): from http://topics.nytimes.com/top/news/business/companies/wal_mart_stores_inc/index.html 7.
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