Wal-Marks sustainability Strategy

Group 13 Argoud Florian Debasish Das Lefresne Antoine Sevestre Benjamin

WAL-MART
-Founded in 1962 by Sam Walton in Rogers, Arkansas -Type : Discount store -Philosophy : Achieve highest level of efficiency , offer everyday low price -8500 stores in 15 countries, with 55 different names -84 % of the Americans had shopped at a Wal-Mart within the past year -2010: it was the world's largest public corporation by revenue

The Brand: -Very high purchasing power -Highly efficient supply chain -Very large scale of operation -Highest level of customer base -Unmatched pricing

Twentieth century problem: -Lack of resources in near future -Environmental impact due to large scale of operation -Increasing environmental and other policies

NEED FOR SUSTAINABILITY OF BUSINESS

WHY SUSTAINABILITY? Creates a competitive advantage The biggest business opportunity of the 21st century Reduce costs and generate savings

RELEVANCE TO WAL-MART -Decreasing customer base -Depleting resources -Increasing environmental policies - Increasing awareness among consumers -Maintaining daily low price philosophy -Increasing number of innovation -Increasing consciousness among stakeholders - Large scale of operation at stake

Increases the notoriety & the brand value

Reduce the environmental footprint

-Objection for green house gas emission -Increasing energy crisis

Wal-Mart's Environmental Legacy and Commitment Till Date

paid $1.15 million in fines to the state of Connecticut for the improper storage of pesticides and other toxins Paid $765,000 fine for violating petroleum storage tank laws at its auto service centers in Florida U.S. Environmental Protection Agency penalized the company $3 million in 2004 for violating the Clean Water Act in nine states

Wal-Mart Promises to Improve Health Care Coverage for Employees

The first major retailer to speak out in favor of environment in 1989 Unrivaled $20 million in cash donations, 1,500 truckloads of free merchandise, food for 100,000 meals after hurricane

The Major Goals Ahead : Wal-mart

1. To be supplied 100 percent by renewable energy
(Global green house gas strategy; Alternative fuels; Global Logistics; Energy, Design, construction and maintenance)

2. To create zero waste

(operational and Internal procurement; Packaging)

3. To sell products that sustain their resources and environment (Chemical intensive
products; Sea foods; Electronics; Food & Agriculture; Forest and Paper; China; Textiles )

Strategy: Wal-mart
1. Engage : Identify and work with a broader community that could provide information and other resources. 2. Explore : Analyze the life cycle of particular products or services and investigate the related environmental issues 3. Expand : Looking in the value chain to identify which business activities are matched to the issues

The Issue: -Fuel Consumption -Green house gases -Time -Cost Global Logistics Actions Taken: -Involving RMI -Improvement in fleet -Efficient n/w identification by the logistic team

Strategic Options: -Fuel efficiency process -Efficient network -Efficient mode of transportation

Evaluation: -Lower fuel consumption - 75 milliion dollar annual saving - competitive advantage

The Issue: -7th largest trading

partner -More than 50000 suppliers -Compliance to environmental standards

Strategic Options:
-Working in parallel -Search for alternative supplier -Benchmarking product standard

CHINA Evaluation:
-Remain unaffected by policy changes -Faced corruption problem - Lack of focus on environmental metrics

Actions Taken:
-Provided valuable knowledge & Process assistance -Worked in parallel

SEA FOOD: WAL-MART WAL-MART THREAT Continuity of supply ACTION TAKEN Encouraging cluster farming

ISSUES Depleting sea fishes The MSC program Price Environmental responsibility Fuel consumption & pollution

Rejection of non certified Taking fish from certified fish supplier Incurring loss Tarnishing of brand image Improve public awareness

External collaboration

Lowering of brand image Marine reserves

Strengths - MSC certification - transparency in the seafood supply chain. - Working alongside with NGOs -Working with better supplier - Accordance to governmental present & futures regulations. Opportunities

Weaknesses - Hard time to getting supply : high regulation since 1950, as many as 90% of the oceans largest fish have disappeared -Rigorous certification process

Threats

- short and long term reputation -Price : consumers are not willing to - better quality products offered to the pay extra for sustainably caught fish. customers. - Hard to get 100% wild caught fish certified under the MSC.

ELECTRONICS: WAL-MART WAL-MART THREAT Denial of product Environmentalist Environmentalist ACTION TAKEN

ISSUES

Hazardous substance usage

Recyclability Poor response of consumers Energy Consumption

Buying RoHS compliant product

Green engineering E-waste pogramme

Green house gasses Obsolete of existing products

Material innovation

Product cycle

Working with legislation

SWOT Electronics
Strengths -Creation of environmental subteams to assist the buyers -Competitive advantage : be the 1st one in the US to sell ROHS compliance PCs Opportunities - short and long term reputation - better quality products offered to the customers. - Good selling of the products. - Development of ROHS standards to other products.(TV) Weaknesses -Low inventory due to obsolescence -E-waste collection & cost.

Threats -Legislation : Different environmental policies between States. need to do something at the national level. -E-waste : we still havent figure out how to change peoples behavior

Textiles: WAL-MART WAL-MART THREAT Environmentalist ACTION TAKEN Using organic materials

ISSUES Pollution of water & soil The GOTS Price Environmental responsibility Buyers choice

Rejection of non certified ----------------------------------------TEXTILES Incurring loss Tarnishing of brand image Over stocking Encouraging organic materials

Contracting with farmers Running merchandising program

SWOT Textiles
Strengths
-Reduce cost -largest purchaser of cotton : gave a 5 years verbal commitment. - new process, more efficient which minimizes waste -the cost and labor requirements of certification absorbed by suppliers. - Long term relationship with supplier

weaknesses
- Cost of certification - Organic farmers cant grow cotton in the same field for an extended period.

Opportunity
-Use inputs with minimal toxicity -Reduce environmental impacts - Sustainability metrics ant monitoring process are still under development.

Threats
-Redesign the buying role : can be inefficient at the beginning. -Need to invest in new technologies : innovation

The

matrix
Environmental Attractiveness

High
Market Attractiveness
High Electronics Seafood

Medium
Textile

Low

Medium

Low

CFL Bulbs

Conclusion : Wal-Mart, the biggest retailer in the world decided anticipate the environmental issues that all the companies will have to face in a close future. Wal-Mart is aware that the sustainable development represents the biggest business opportunity of the 21st century Short term cost cutting VS Long term profit? Are the customers willing to follow Wal-Mart ?

Is this new business model sustainable in the time?

What will Wal-Mart do if this model leads to loss of market share & customers? Is a move back possible?

THANK YOU