Wal-Mart and its Stakeholders - Research Paper Example

Walmart and Its Stakeholders Table of Contents Company Profile 2 Walmart as a Responsible Corporate 5 Responsibilities for its Investors 6 6 Responsibilities for the Employees 7 Responsibilities for the Customers 8 Responsibilities for the Communities 8 Is Walmart Actually A Responsible Corporate? 9 Sex Discrimination in Walmart 9 Other Unethical Treatments to Workers 10 Child Labor Issue 12 Walmart in Unethical Competition 12 Walmart Harmful to the Environment 13 Hiring Illegal Immigrants 13 Ethical Reforms in Walmart 14 Conclusion 17 References 18 20 Company Profile Walmart at present is among the world’s biggest retailers and is counted as the largest employer in the international job market. The company comprises of a global network with over 8,692 retail outlets in 15 different countries rendering services to customers and their employees for over 200 million times each week. The company has accounted a figure of $405 billion sales revenue in 2010 making the company one of the leaders in sustainability and employment opportunities. Worth mentioning Walmart has already employed 2.1 million workers all around its outlets (Walmart Stores, “About Us”). The organization was founded by Samuel Walton and his brother J. L. Walton in the year 1962, in Arkansas. The discount stores for the first time gained a formal appearance with the incorporation of 18 stores located in America and registered itself with the name Walmart Stores, Inc. in 1969. Within the next three years it got listed in the New York Stock Exchange and became famous as the fastest growing companies by 1979. The next milestone was crossed by the company after it was rewarded the largest retail seller in the United States of America by the end of 1990. The company then soon set off for a global outlook by the establishment of a joint venture with another largest retailer of Mexico, The Cifra S.A. de C.V. The company next stepped out to the Canadian retail market with the purchase of 122 stores from the Woolworth Corporation. With all these strategies and its continuation of offering discounts the company soon recorded a earning of around $100 billion revenues which was the highest since its incorporation. The company then acquired the hypermarket chain of Germany and entered the European market for the first time. The next acquisition took place during 1999 when the company got hold of the stake of ASDA Group Plc, which was the third among the retail companies in UK. The company also entered the Japanese market by acquiring a largest retail company in Japan named The Seiyu, Ltd. by the year end of 2002 (Funding Universe, “Wal-Mart Stores, Inc”). Presently, the company has witnessed a percentage of increase on its annual sales from that of the last year, i.e. 2009, incurring total sales volume of $405,046. To state about its employment opportunities the company has a wide range of African-American, Asian, Pacific Islander, American Indian employees comprising more than 870,000 female employees in total, working in company’s different retail outlets around the globe. Apart from the fact that the company is indeed a diversified private employer, the company also has a diversified product range to serve its customers. It serves the potential customer through Walmart Supercentres, Discount stores, Sam’s Club Warehouse, and the Neighborhood markets (Walmart Stores, “Corporate Facts: Walmart by the Numbers”). With all these facts and figures till date the company owns a remarkable position in the world market according to its market share and competency that made it stand as one of the leading retail companies as well as the largest private employer. Being powerful and reputed the company certainly has a significant responsibility towards its stakeholders, i.e. the customers, the investors or the shareholders, the employees and of course to the community in which the company exists. Accordingly, the company also needs to compel a degree of business ethics not only to gain a sustainable amount of goodwill, but also to justify with the interests of its stakeholders in an overall perspective. Walmart as a Responsible Corporate To become a ­responsible corporate, a company needs to compel its responsibilities towards the stakeholders which include the investors, the employees and the consumers as well as the community in which the company is working at a wider point of view. This may be termed as the Corporate Social Responsibility or CSR. And to maintain the certain degree of Corporate Social Responsibility the company needs to follow the basic code of ethics, describing what is right for the company welfare and the community in whole. Walmart is also not excluded from the matter. These principles become much more important for a huge company like Walmart, because it not only builds a trust within the customers and employees, but also helps in achieving a certain amount of goodwill in the market. Goodwill in its accountability is termed as one of the most important intangible asset for a company in today’s date. This in turn attracts the investors to take a part in the company and hence increases the market share. Precisely, the maintenance of a fair amount of corporate responsibility shall in turn reward the company with competency and productivity (Werther & Chandler, “Strategic Corporate Social Responsibility: Stakeholders in a Global Environment”). Walmart therefore, also has a wide range of norms and value added services described for the stakeholders in all the 15 countries where the company’s units are located. Responsibilities for its Investors According to economists, investors in general prefer those companies which are highly sustainable in the market as well as posses the potential to generate profit in a volatile market. In this context, Walmart stands quite firm despite the recent economic down turn than any other retail company in the international market. As a proof to its sustainability, the company was recorded to provide 2% dividend to its shareholders during the fiscal 2009, before the end of recession. The company faced a reduction by 1.4 percent in its sales revenue during the period, but still was able to report a total income of $3.44 billion. However, the share price had decreased by 4 cents but the company was rendering 88 cents per share in the second quarter of 2009 in spite of getting affected by the currency fluctuations, food deflation and other variations of the economic down turn (Courtenay, “Why Investors Like Walmart (NYSE: WMT)”). Emphasizing on the shareholder’s value, the company in the current fiscal, i.e. 2010, had mentioned in its annual report to be more focused on its growth, leverage and returns rendered to the shareholders. The company thereafter shall carry on its strategy to expand through acquisition in the global retail market with some innovative layouts, with due consideration to provide increased leverage to its best parts and operating costs. And thus, the company in its long-term future perspective is getting much more focused to deliver higher return to its investors, as concluded by Mike Duke, the President and CEO of Walmart (Walmart Stores, “Walmart Issues 2010 Annual Report to Shareholders”). Responsibilities for the Employees Realizing the fact about the importance of business ethics, the company has described a wide range of significant measures to satisfy the employees’ as much as possible by providing them opportunities to grow in their respective working place. The company believes its employees to be a part of its sustainability mission. As stated by the company, it goes on with hiring more and more people accordingly from their respective region with its increased participation in the community enhancing the employment opportunity in the market. To put into account the company also performs a certain amount of training and development for its employees. For instance, the company has taken an active role in training youths in the rural parts of India in order to make them eligible for the jobs rendered in the retail market (Walmart Stores, “Global Sustainability Report”). According to the company data, it comprises for more than 1.4 million employees itself in the United States. The company also provides the employees with a benefit of health care. To sum up the company has, in the current fiscal, declared that any employee whether a part-time worker or a full-time worker working in the US centers is eligible to receive a certain amount of health benefit provided by the company. The plan has already enrolled almost 1.2 million employees and their dependents to get the assistance (Walmart Stores, “Corporate Responsibility”). Responsibilities for the Customers It is well known by the Walmart representatives that they need to depend on proper customer service to sustain their position in the market due to the fact that retailing is all about customers. Walmart’s strategy to render its product and services at a lower rate can attract customers, but only a satisfying service can be useful to increase their customer base and loyalty. Thus, the company has come forth with the idea of ‘responsible sourcing’, which implies that the company shall render products with high quality and safety. With this concern the company shall continue following the Global Social Compliance Program as stated in the company’s annual report (Walmart Stores, “Global Sustainability Report”). Responsibilities for the Communities Community for any given company refers to the environment in which it exists. Walmart in this regard has also ensured certain measures. To put into account, the company has three specific goals to justify its responsibilities towards the environment. First, it is the commitment to use renewable energy and produce those products which are harmless to the environment. The operations of the company are also directed to create nil amount of wastage in their production process. For instance the company’s subsidiary in the UK, the ASDA has been on a move to reduce its carbon footprints in a remarkable manner and was rewarded by the Carbon Trust Standard in 2009 by the government. Walmart has also granted certain extraordinary steps to reduce wastes in the course of its production. In this regard the company in its US stores has started to follow the EPA Food Waste Hierarchy from the year 2009. Even in Argentina the company along with Coca-Cola carried out several campaigns in order to recycle PET bottles. Some other steps taken by the company is to avoid plastic bag wastage, and using recycled cardboard in packaging. Hence, Walmart on its part plays a quite important role in serving the community with care (Walmart Stores, “Global Sustainability Report”). Is Walmart Actually A Responsible Corporate? Walmart certainly with all these news and updates seems to be quite aware of its responsibilities towards its stakeholders. But like any other big companies, Walmart too has certain drawbacks from its side. To sum up, there are numerous cases registered against the company to harm the interest of its employees and other stakeholders as well as its competitors too. Thus, all this occurrences gives rise to the question whether the company can be termed as an ethical corporate or not. A few of the issues are included in the following: Sex Discrimination in Walmart One of the allegations against the corporate giant is that the employees working in this company are affected by its practices of gender discrimination and low-wage rate for hourly paid employees. To put into account, the company was sued by one of its former employee on the basis of sex discrimination during 2001. The charge against the company was that, despite satisfying the eligibility criteria and applying for promotions, the company had perpetually discriminated its female employees from providing promotions and proper job assignments. The case also complained that the company was also discriminating the female workers in terms of wage by rendering more earnings to its male employees compared to that of female employees in spite of having equal experiences and knowledge. This not only happened with the employees working in the stores but also with some of the higher level executives (IMCR, “Wal-Mart: A Case of Employee Discrimination”). Other Unethical Treatments to Workers Apart from sexual discrimination, the company during the same year was sued on certain other unethical practices towards its employees. A few were based on treating their employees unfairly by forcing them to work for long hours after their schedule without any break and overtime payment. Moreover, employees also complained that the company had an anti-unionized practice which prevented the employees to meet union representatives. As a result there were people protesting against the company on the streets of 40 cities all around the United States during 2002. As commented in the Domini 400 Social Index by its project manager Kyle Johnson, Walmart had indeed been unresponsive to its labor welfare issues. In this context the company had received calls to change its unethical management practices repeatedly by its shareholders which the company did not consider seriously affecting the investor’s interest (IMCR India, “Wal-Mart: A Case of Employee Discrimination”). Child Labor Issue Another serious allegation against the company that came forth was the violation of child labor laws in its units all around the world. By the year 2000, the company was sued several times based on this issue. The US Department of Labor had fined the company with $135, 540 based on this complaint of violating the FLSA provisions. As per the allegation, the company was recorded to make minors work for long after their scheduled timing and even during their school hours. To put into the context, the investigation by the US Department of Labor stated that Walmart was found to employ around 85 minors in its 21 stores participating in loading and other activities which were legally proscribed to be performed by minors below the age of 18 (HRM Guide, “Wal-Mart Fined for Child Labor Violations”). Walmart in Unethical Competition Keeping aside the unethical issues related to labor laws, the company’s competitors also have registered several complaints against Walmart for performing unfair competition in the international market by serving products at a very low cost to its customers. Walmart by its product lining delivers products related to the basic needs of the customers that many other relatively small national retailers do. But by offering these products at such a low cost, the company’s strategy proves to be harmful for small entities in the market. Many small entities in this context were recoded to become bankrupt in competition to Walmart (Bandyk, “Wal-Mart to Destroy Small Businesses, Time Magazine Reports”). Walmart Harmful to the Environment The company has also been recorded to violate the storm water regulations prescribed by the Environmental Protection Agency. For instance, while opening up new factories in places like Oklahoma, Texas, and New-Mexico, the contractors were witnessed to violate the storm water regulations several times as well as create air pollution along with violating the terms of storage of petroleum regulations during 2001. These practices were noticed even in 2004 by the air pollution caused by Walmart’s extension, the Sam’s Club. This prescribed the company to pay a fine of $4 million which was followed by another fine of around $7.5 million regarding the violation of petroleum storage regulations in Florida during the same year (Augsburger & Mishra, “Case Study: Wal-Mart: Some Questionable Practices”). Hiring Illegal Immigrants Walmart was also recorded to offend the immigration rules of the US by hiring illegal immigrants to work as cleaners in the company’s stores. The fact was proved after an investigation by the Department of Labor which revealed that more than 250 immigrants were working in around 61 Walmart stores during 2003. This case was settled after paying an amount of $11 million. Again in 2005 investigation, 125 such immigrants were arrested from a construction site of the company, which replicated that the company was certainly ignoring the unethical practices carried on from its part (Augsburger & Mishra, “Case Study: Wal-Mart: Some Questionable Practices”). Hence, the company was not only witnessed to violate the interests of its employees, competitors and shareholders, but was also into a continuous unethical practice which was harming the community in whole. Critics include that, the strategies that derived Walmart to be at the top as a retail giant, on the contrary, were based on unethical practices towards the environment and its stakeholders by forcing small units to bankruptcy, rendering its employees with poverty level earnings and many other practices. This was not enough from the end of the company. It was documented that the company had perpetually refused to employ security guards in its parking zone despite repeated illegal incidents (DiMaggio, ““Is Wal-Mart just Evil?”). Ethical Reforms in Walmart From the above facts regarding the continuous practice of unethical issues by the company it can be fairly stated that in spite of gaining the highest position in the world’s retail market, Walmart has not been enough responsible towards its activities and stakeholders as it was expected to be. It is not the only company that is facing problems in justifying business ethics but is certainly among the few companies dealing with child labor, labor discrimination, and other illegal issues at the same time. These issues not only harmed the company’s reputation as an intangible asset but also did harm the company’s financial prospects with huge amount of fines and compensations. However, the company does seem to have some positive attributes in this context. Regarding Walmart it is not that the company has always been into unethical practices. There are many aspects which can bring about positive changes in the world economy. As economists state, with the opening of new stores and the expansion of the old ones, the company is likely to generate vast job opportunities to the native people. The company has on the contrary been recorded to be a regular participant in donating huge sums to the needful and betterment of the society. For example, Walmart’s donation figure exceeded $200 million during 2005 which helped almost 1 million different business entities indirectly benefiting the customers and employees residing in the local area. Additionally, the company had in 1995 started a program named The Teacher of the Year, with the motto to educate children in different rural and urban schools. Inclusively, in regard to its criticism for failing to compel proper labor health care initiatives, the company had also established another program enforcing various attempts to justify employee health care and environmental issues. Apart from these the company also took certain preliminary measures, like making their employees aware of the company’s rules and regulations along with the government norms in order to abolish internal problems of discrimination based on wages and gender (Augsburger & Mishra, “Case Study: Wal-Mart: Some Questionable Practices”). Conclusion Walmart has been into controversies all around the world due to the continuous activities of unethical practices within the company. A number of these go in favor of the company while a number of them oppose the company to be sufficiently ethical in its practices. Walmart in this case has a lot to deal with other than fines to settle lawsuits. With the given scenario the company has already entered a crucial phase where ethical reforms have become the prime objective. Notably it was not that the company’s officials did not take any action against the repeated complaints. A few of its measures were to practice zero waste management, compel 100% renewable energy and enforce separate management task forces to deal with the problems of child labor and other labor welfare related issues. But still the world has witnessed such unethical practices again and again. The reason for such repeated occurrence of lawsuits against the company is the faulty implementation in its managerial framework. This is why the reforms which look theoretically effective, turns to fail in the real practice. Therefore, the company must take a firm initiative to enforce its adapted code of ethics in a proper manner with the aim that it can achieve the prestige to be an ethical corporation. 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