Walmart business ethics

Introduction

“Appreciate everything your associates do for the business. Nothing else can quite substitute for a few well-chosen, well-timed, sincere words of praise. They’re absolutely free and worth a fortune.”

-Sam Walton

Like the founder of the world’s largest retail company said himself, Walmart has certainly appreciated everything their associates do for their business. Everything, including dying. While Walmart has been scrutinized in the past for unethical behavior, one of their most heinous acts in recent years has been secretly taking out life insurance policies on unsuspecting “rank and file” employees and cashing in on them after they die.

This highly publicized and shameless act is only one of the many reasons why Walmart has dozens of hate groups all over the internet, and even has an organization dedicated to watching their every move. Walmartwatch.org was created for the sole purpose of holding the company “fully accountable for its impact on communities, the American workforce, the retail sector, the environment and the nation’s economy.” (Walmartwatch.org)

With their low prices and ubiquitous presence, the company has attracted millions of customers looking to save money in America, and Walmart has now successfully expanded their stores beyond the U.S. into 14 other countries. (walmartstores.com) A very aggressive corporate strategy has made Walmart one of the most successful businesses in the world, but at what cost?

As of today, there are many people who view Walmart as a tyrannical, money-hungry bully, and they do little to counter those views. Yes, they provide financial support to charities, pour money into organizations that help low-income communities, and have even given generously to countries that have undergone natural disasters. However, a multi-billion dollar company giving away money and saying it does good work is not very sincere, nor is it convincing.

Actions speak louder than words, and Walmart must do more than give money to improve their reputation to the world. By identifying the company’s stakeholders, analyzing their strengths, weaknesses, opportunities, and threats, and recommending alternative corporate strategies, I think Walmart can hone their potential to be as respectable as they are inexpensive.

Stakeholder Analysis

Because they are such a large corporation, Walmart has many groups and individuals that have a stake in their well-being.

Market Stakeholders: Walmart’s market stakeholders are groups and individuals who are directly engaged with the company. They include Walmart’s stockholders, employees, their customers, the communities in which they operate, the government, their investors, suppliers, and creditors. Walmart’s market stakeholders are very important to the problem Walmart has with their public image for several reasons.

Their stockholders, the government, their investors, creditors and suppliers are effected by it because Walmart pays them based on how much income the company generates. With their aggressive behavior and constant criticism from the public and hate groups following and chastising their actions, the number of people who choose to shop at their stores may decrease, which in turn decreases the amount they have to pay these stakeholders. Employees are also affected because if Walmart does not do well, they may lose their jobs.

Their consumers rely on Walmart’s presence for groceries, pharmaceuticals and clothes and choose to shop there because it gives them an opportunity to save. If Walmart’s unethical behavior continues, they may lose customers and be forced to close some of their retail stores down. The communities in which they operate also have a stake in Walmart’s well being because of the employment opportunities the company offers to those that live around their stores.

Non-market Stakeholders: Walmart’s non-market stakeholders are groups and individuals who are not directly engaged with the company, but are affected by or can affect the company’s actions. They include labor unions, competing retailers, communities and the media. These non-market stakeholders are important to the problem and are also affected by Walmart’s bad reputation. Walmart has a strict anti-labor union policy. Not allowing their employees to unionize has added to their bad public image and has also gotten them into legal trouble.

In 2003 the National Labor Relations Board charged Walmart with illegal surveillance of union supporters. (uniglobalunion.org) 8 years later, the company is still fighting tooth-and-nail with union supporters, which makes them look stubborn and greedy. Competing retailers, especially locally owned and operated stores are also affected by Walmart’s presence. Their low prices and aggressive penetration into cities all over the world make it impossible for many small-scale retailers to compete, and force them to shut down.

Many consumers see this happening to other communities and fight to keep Walmart out of their neighborhoods. The media is also a non-market stakeholder because they make Walmart’s actions public, revealing their misdeeds to the world and giving people unflattering facts about how the company operates. The non-market stakeholders of Walmart look to hold the company accountable for their actions; in hopes of forcing them to improve the way they do business.

SWOT Analysis

Walmart’s strengths, weaknesses, opportunities and threats are as follows:

Strengths:

*Size; Walmart is the largest retail company in the world, with 706 discount stores, 2,913 super centers, and 184 neighborhood markets nation wide. Outside of the U.S., they have 4,112 stores in 14 different countries. (walmartstores.com) *They have an array of products all under one roof, making it a convenient one-stop shopping place for their customers. *Low prices

*Different divisions of the company attract different demographics, like Sam’s Club and Walmart Super Centers

*Prime locations

*Financial success makes it easy for them to give donations to organizations that help people around the world

Weaknesses:

*Bad public image and reputation follows Walmart as they look to expand their operations internationally *Lack of thorough research of different countries and cultures led to an unsuccessful attempt at opening stores in Germany *Low wages for part time employees

*Incentives are only provided to full-time employees *Outdated company policies

Opportunities:

*Shifting the company’s public image may increase sales *Numerous opportunities to expand internationally, especially in China, India and other Asian countries *Walmart’s introduction of Marketside stores in 2008. They are “small community pilot grocery stores specializing in fresh, delicious meals at great prices.” (walmartstores.com) There aren’t many around now, but their popularity may grow in coming years. *Growth of popularity of internet shopping

Threats:

*Emerging domestic competition from foreign stores expanding into the U.S., such as Germany’s Aldi. *Union supporters *Competing retail stores in foreign markets that understand the people of that country better *Walmart is constantly having legal disputes that could potentially cost them millions of dollars

Alternative Strategy Recommendations

Walmart is by no means struggling as a company. However, their high numbers and strong financial stability is over shadowed by their greed and lack of compassion. In order to combat this bad image and improve their reputation, they should take the following steps:

1. Allow their employees to unionize

While the main objective of every profitable organization is to make money, the rights of your employees should not be sacrificed in order to do so. Walmart has fought vigorously with union supporters over the years and has even been sued by the National Labor Relations Board for unfair treatment of their employees. (uniglobalunion.org) Relaxing its anti-union policy and allowing their employees to unionize would not only make their workers happier, but it would be a positive reflection on them, cut down legal costs, and make it easier for them to expand into Europe, a region that is known for having a heavily unionized workforce.

2. Pay their suppliers more for their products

Walmart attracts millions of customers everyday around the world because they offer their products at “everyday low prices”. But what many people do not realize is why Walmart is able to sell their premium brand products at discounted rates. Walmart is such a large and powerful company that they have the capabilities of pressuring their vendors into selling them large amounts of their concession at prices that make their suppliers almost no profit. (Fishman)

“To survive in the face of its pricing demands, makers of everything from bras to bicycles to blue jeans have had to lay off employees and close U.S. plants in favor of outsourcing products overseas.” (Fishman) This aggressive buying strategy the reason why you can go to Walmart and buy things like a years worth of Vlasic pickles for almost nothing. (Fishman) It is also the reason why many American factory workers have lost their jobs.

If Walmart were to trade their big-bully tactics of buying and selling for a more ethical business approach, they could bring back hundreds of jobs to the U.S. that they were responsible for people losing in the first place. It is inevitable that if Walmart were to pay its vendors a little more for their products then the prices at which they offer them in their stores would increase as well. However, if Walmart went public about the reason for the slight raises in their prices, I think many consumers would be supportive. That would shed a positive light on the company and may even attract customers that have avoided shopping at Walmart in the past.

3. Take better steps to reduce their contribution to environmental damage

In recent years, Walmart has taken necessary steps to reduce the company’s damaging impacts on the environment, “promising to reduce food packaging, sell more energy efficient light bulbs, and improve fuel efficiency in its trucking fleet.” (walmartwatch.com) These efforts, however, are countered by the sheer size of their stores and the company’s drive to expand rapidly. If Walmart were to act on the following recommendations, they would come closer to keeping their promise of improving their imprint on the environment. A. Cut down the size of their parking lots

B. Tear down the Walmarts that they discontinue operations in C. Use motion-sensor light bulbs in rooms that are not always being used in their stores D. Reduce their number of truck fleets to decrease their contribution to traffic and air pollution The fact that Walmart is the world’s largest retailer and their stores are open to the public 24/7 makes it difficult for them to have a noticeable reduction in their damage to the environment. These recommendations, however, are effective additions to the steps that Walmart is already taken to make the company more “green”.

Conclusion

Walmart is currently a very successful company, if not the most successful company in the world. Every year, they get larger and larger and are gainfully expanding into international territories. They are also expanding their retail sectors, which currently range from pharmaceutical products to gasoline. They are creatively finding new ways to satisfy their customers’ needs every year.

While they may be finding success financially, each year Walmart also gains the number of people and organizations that have animosity towards the company. Their current ways of operating have given them a reputation that is less than admirable. The way they treat their employees, do business with other companies, and impact the environment and the communities that they are present in must change if Walmart hopes gain the respect of people around the world.

The preceding recommendations are only a start to the many reforms that Walmart must make to live up huge corporate responsibilities they have as such a large company. If they stop being ruthless in their drive for expansion, stop being greedy towards their employees and suppliers, and do their part to take care of our planet, their public image can be improved and eventually, Walmart could be as popular for their good deeds to society as they are for their low priced goods.

Works Cited

Fishman , Charles. "The Walmart You Don't Know." Fastcompany.com 1 Dec 2003: Web. 13 Apr 2011. ."Is Walmart really a "Green" Company?." Walmartwatch.org. N.p., n.d. Web. 13 Apr 2011. . "Wal-Mart in Trouble with Labour Relations Board: Illegal Surveillance, Threats and Intimidation of Workers." uniglobalunion.org. 14 Jan 2003. Web. 13 Apr 2011. . www.walmartstores.com, “About Us” section.

www.walmartwatch.org