Business Ethics, Law, and Sustainability Midterm Test: Walmart Case

Kusuma Wijaya (NIM 29113451)

Introduction Walmart is an American multinational retail corporation that has grown from a a single store based in a small Arkansas town in 1962, to be the largest private employer in the world in 2013. Currently the company operates more than 11,000 retail units in 27 countries with over two million employees. The company incorporated as Walmart Stores, Inc. in 1969 and was first publicly traded on the New York Stock Exchange in 1972. Walmart provides general merchandise: family apparel, health & beauty aids, household needs, electronics, toys, fabrics, crafts, lawn & garden, jewelry and shoes. Also, the company runs a pharmacy department, Tire & Lube Express, and Photo processing center as well. The company is the largest public corporation in the US and the world in terms of sales revenue by the Fortune Global 500 list in 2013, with total revenue of US$ 466.1 billion or increased by 5 percent for fiscal year ended January 2013. In addition, Walmarts net sale achieve US$ 274.5 billion, with the international contributed US$132.5 billion by 2013.

Walmart Corporate Culture The company has four "Basic Beliefs" which are the foundation of the companys culture. Those beliefs are: (1) Respect for the Individual, (2) Service to Our Customers, (3) to Strive for Excellence and, (4) Act with Integrity. Sam Walton, the founder of the company, believed running a successful business boils down to 10 simple rules. Those rules are: 1. Commit to your business, 2. Share your profits with all your associates, and treat them as partners, 3. Motivate your partners, 4. Communicate everything you possibly can to your partners, 5.

Appreciate everything your associates do for the business, 6. Celebrate your success, 7. Listen to everyone in your company, 8. Exceed your customers expectations, 9. Control your expenses better than your competition, and, 10. Swim upstream. These beliefs and rules helped Walmart become the global leader it is today.

Walmart Corporate Strategy The core feature of Walmarts strategy is offering lower prices and great service. The company is proud of its strategy and even incorporates it within its signature "Always Low prices, Always." The company uses its size, financial power, immense resources to dominate retail. To strengthen its competitiveness, Walmart pays relatively low wages, provides minimal benefits to its employees, and contracts with international manufacturing. Walmart purchases many of its items, particularly clothing, from developing countries to form scale economy. It also imported many goods from China, the world factory for its low cost. Walmart builds its low cost employment policies that help it to achieve extraordinarily low costs product. From the recruitment Walmart has tried its best to reduce the cost considering so big number of its employees. Walmart has some factories in developing countries, such as China, whose products are branded with Walmart name. With this method, Walmart pays much less to Chinese labors in this world factory and earn some advantages. Walmart is able to provide customers with the same goods with a significantly lower price. This is how Walmart is able to enjoy a profitable return in the current economic downturn despite of the fact that many retailers are badly affected and sales slowdowns and losses are occurring more frequently than ever.

Oppositions Walmart has been subject to criticism by numerous groups and individuals. Among these are labor unions, community groups, grassroots organizations, religious organizations, environmental groups and Walmart customers. They have protested

against the company's workforce policies and business practices, including charges of racial and gender discrimination. With close to 2.2 million employees worldwide, Walmart has faced a torrent of lawsuits and issues with regards to its workforce. These issues involve low wages, poor working conditions, inadequate health care, as well as issues involving the company's strong anti-union policies. Critics point to Walmart's high turnover rate as evidence of an unhappy workforce. Other areas of criticism include the corporation's foreign product sourcing, treatment of product suppliers, environmental practices, the use of public subsidies, and the company's security policies.

Walmarts Responses Walmart denies any wrongdoing and maintains that low prices are the result of efficiency. During a press conference in 2005, Walmart CEO H. Lee Scott defended its wages and health care plans, criticized by labor groups as inadequate, and said that the company is able to save customers big money as it drives costs out of its system In the spring 2005, Walmart faced strong opposition from two organization backed by labor union, Wake-Up Wal-Mart and Wal-Mart Watch. By the end of 2005, Walmart had launched Working Families for Wal-Mart to counter criticisms made by these groups by exposing the positive contributions of Walmart to communities and to society as a whole. Additional efforts to counter criticism include launching a public relations campaign in 2005 through its public relations website, which included several television commercials. The company retained the public relations firm Edelman, along with highly prominent political advisers and lobbyists, to interact with the press and respond to negative media reports, and has started interacting directly with bloggers by sending them news, suggesting topics for postings, and sometimes inviting them to visit Walmart's corporate headquarters. Walmart also has been criticized for its policies against labor unions. Walmart states that it is not anti-union but, "pro-associate," arguing that its employees do not need

to pay third parties to discuss problems with management as the company's opendoor policy enables employees to lodge complaints and submit suggestions all the way up the corporate ladder. Walmart continues the fight to keep its workers nonunion through connections on central government and in various government agencies.

Lesson Learned The Walmart case is an example on how a corporation, due to its size, wealth, and financial power, could retain its dominance to the key policy issues and stakeholders. The company applies its retail philosophy, of being the best, and winning, into its political and public affairs strategy. Using tools at its disposal, such as the top law firms, and top Public Relation (PR) firms, the company does battle in court with those who challenge it. In public, Walmart uses top of the line PR strategy firms to produce commercials for its stores and to portray the best possible image. Another way the company is successful is its ability thus far to keep out of the headlines any significant negative publicity. So even to report facts about Walmart is to present a conflicting picture of America's most successful business. On one hand, the millions who shop at Walmart's stores across America and other countries clearly enjoy the low prices, the huge variety of goods on sale, and the efficient service. The Walmart case is an example on how a corporation to improve its practices for its employees, its customers, and the surrounding communities in a more ethical and acceptable way.

References ColorOfChange, Sum of Us and the Center for Media Justice. (2013) Consumers, Big Data, and Online Tracking in the Retail Industry: A Case Study of Walmart. Peter Jacques, Rebecca Thomas, Daniel Foster et al. (2003) Wal-Mart or WorldMart? A Teaching Case Study, 513-533. In Review of Radical Political Economics 35 (4). Walmart Annual reports, 2012, 2013. www.walmart.com www.fortune.com