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The main issues in the Wal-mart case include the corporate social responsibility that the firm has adopted. In addition, the effect of Wal-marts expansion on local merchants who cannot compete favorably with Wal-mart due to their pricing strategy is discussed. Wal-mart has been rejected in many countries because of the adverse effects on local businesses.
The problems brought about by Wal-mart include loss of jobs and closure of business. The strategies used by Wal-mart such as the adoption of the ‘Wal-mart way’ is also discussed a major issue in this case.
Wal-mart is a multi-billion chain of stores and the employer of more than 2.1 million associates worldwide, serving customers at the rate of 200 million times per week. In addition, its 2009 fiscal year sales came to $401 billion. This of course comes with responsibilities to the community like corporate philanthropy and providing sustainable development programs.
Corporate social responsibility requires that as a company benefits in terms of profits, it should give back positively to the society that has enabled it to thrive. It requires that as a firm carries on its business operations, the ethical and legal components of the business be considered (Curt, 2009).
According to the four part corporate social responsibility model, the components of corporate social responsibility are economic, social, legal and philanthropic. Wal-mart has contributed economically to the community by supporting children’s hospitals, educational programs and charities. Legal responsibility refers to an organization operating according to the laws and regulations of the local, state and federal governments. Wal-mart has consistently operated within the boundaries of the law (Carroll, 1991).
Ethical responsibilities are mainly about fairness and justice and what consumers, shareholders, employees and the community see as passable (Carroll, 1991). Wal-mart has had many ethical issues especially because the company has caused the closure of many businesses. Although the company has caused many problems for local businesses, they are not responsible for the failure of those businesses.
Wal-mart seems to have capitalized on the economic and philanthropic sections of the model. Its environmental awareness campaign for instance was driven by the fact that environmental issues were increasingly becoming common in the United States. The idea was used to woo more customers to the company stores and increase profits.
Better still, wasn’t Wal-mart preaching water and sipping wine? Being the environmental awareness campaign champions, the establishments had devastating impacts on the environment in terms of heavy traffic snarl ups and sprawl.
The organization has the responsibility of ensuring that the environment does not suffer due to their business operations. Therefore, Wal-Mart must come up with ways of eliminating the inconveniences faced by the public. For example, the traffic problem can be reduced if Wal-mart employs people to direct traffic. In addition, the firm can increase the size of the parking lot which is specifically used by the customers.
Wal-mart has no responsibility to the local merchants as far as their continuity is concerned. The main concern for the company is to reach the targeted profits and sales volumes. Wal-mart has a responsibility to customers who come to purchase products from their stores and therefore they ensure the customer gets value. The small merchants are competitors and the aim is winning the customer over competitors.
Because of its low-cost goods and services coupled with the numerous corporate social responsibility initiatives, the company has succeeded in forcing small scale businesses out of the market. It has managed to build a strong brand and culture that makes it stand out. Consumers in most target markets flock the Wal-mart stores, at the expense of small merchants.
The company has managed to convince consumers that they provide the best commodities at a relatively low cost. But the question is whether this is a healthy trend or that Wal-mart is simply a monopoly that drives out competition. One of the important aspects that one considers before setting up a business is analyzing competitors in terms of what they offer, how they offer them i.e. general market research and analysis.
But their approach has been different and unhealthy to some extent as their strategy is to enter, conquer, win and manipulate. Because of the massive power of their brand in any market they establish their businesses; they have succeeded in getting a very large market share. Although this could be a good move, there is nothing as healthy as competition in business. It is a very important because it ensures that customers get value and quality.
By Wal-mart literally killing small businesses in all areas of their establishment, it is destroying competition and monopolizing the industry. This is what has driven out small merchants, who cannot keep up with the competition. Although Wal-mart is not in the business of assisting its competitors, it can help local vital businesses survive by ensuring that they participate in fair competition. Unfair price wars should be stopped since this destroys the small merchants.
Wal-mart has its own unique way of doing business which the founder, Sam Wal-mart, labeled as ‘Wal-mart ways’ and culture. This included aspects like ‘exceeding customer expectations’, ‘helping people make a difference’ and the ‘Ten-foot rule’ of always asking customers if they needed help. (Carroll, 2006).
He believed in stringent control of store operations, product quality and the monitoring of the company’s expenditure. Since he wanted to do business differently, he motivated his employees through promotions and making them feel like they also owned shares in the company. Because of this, he was termed a motivational genius.
His secrets to success were in quality services, low prices, and allowing employees to own part of the business. Some label his ways as Total Quality Management (Curt, 2009). Allowing employees own part of the business enables them to invest more of their positive energy in to the business.
The result of this method of managing people is that it creates employees who are highly motivated. The commitment and job satisfaction of employees is enhanced and this shows in the way they treat customers. They are dedicated and willing to an extra mile to ensure that the company goals are met.
The employees are enthusiastic about the success of the company because they are highly motivated. Sam Walton was very successful in motivating his staff by the giving them autonomy and a stake in the firm. He developed a specific way of doing things and this is what put Wal-Mart at the head of the pack.
Even though he is no longer present to motivate the staff, the culture that the founder of the organization established will continue in future even as new employees join the firm. Managers will ensure that a consistent culture is maintained by using the same methods used by Walton to motivate employees (Carroll, 2006).
The ‘buy America’ and ‘Environmental awareness’ initiatives were very effective as corporate social responsibility. The ‘buy America’ initiative was aimed at improving the state of the local businesses.
Wal-Mart started stocking their shelves with products that are made locally. The ‘buy America’ program was a good move to promote locally manufactured goods in America and also enable local manufacturers stay in business.
The environmental awareness campaign was done so as to sensitize people concerning the preservation of the environment. However, as the ‘buy America’ program took its roots and Wal-mart was satisfied that they had made their point to the public, they begun purchasing the products from China, abandoning their initial stand. (Curt, 2009).
So both the environmental awareness and the buy American programs were merely a publicity gimmick and far from genuine corporate social responsibility. This strategy cannot off-set the difficulties the local merchants have suffered because of Wal-mart.
As responsible corporate citizens and to avoid conflicts and resistance from communities they serve, Wal-Mart should be just and fair in their ways of operation to save small merchants. They should first of all carry out a feasibility study to understand the ways of life of community members in terms of culture, comparing prices and determining the level of competition (Carroll, 2006). Otherwise, killing other businesses in the market and imposing ‘Wal-mart ways’ to every community might not work best.
They should ensure that their employees are fully compensated for in case of a closure of any of their stores, because the ‘Wal-mart way’ allows employees to own some shares in the business. If for instance a store closes in a certain place, they should assure their loyal customers that they were committed to their welfare by not abandoning some of their initiated projects in the area. This will ensure that Wal-mart legacy lives on.
The opponents of Wal-mart were mainly interested in keeping Wal-mart out of the location so as to ensure their own continuity. They knew that if Wal-Mart was given a chance their businesses will close down. They wanted to maintain the status quo because these conditions are most favorable for local merchants and other competitors to succeed in business.
Engaging in the cause to keep Wal-Mart out is beneficial for the stakeholders as it will ensure that they continue in business. The individuals fighting the expansion of Wal-Mart are not fighting for an ideology but for their companies’ sake.
As the company looks into future expansion, several considerations should be laid down to reduce resistance and negativity from the markets they want to venture in. The company should consider all the four major components of the corporate social responsibility so that they do not reap at the expense of other businesses.
The company should strive not to disrupt the social order of the members of the society, but should balance between profitability and social responsibility. Resistance in German for instance was as a result of culture clash and Wal-mart’s non-conformity to rules governing businesses in the country. Therefore the best way to integrate is to conform to the culture so as to avoid censure (Carroll, 2006).
Reference List
Carroll, A. B. (2006). Business & Society: Ethics and Stakeholder Management Mason, Ohio: South-Western.
Carroll A. (1991). The Pyramid of Corporate Social Responsibility: Towards the Moral Management of Organizational stakeholders. Web.
Curt, H. (2004). The Wal-mart Way. Web.
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