Wal-Mart Analysis from a CSR Perspective - Essay Example

Analysis of Wal-Mart from a Corporate Social Responsibility (CSR) perspective Word count: 2340 Wal-Mart is a United States multinational business corporation, which was formed in 1962 and later incorporated in 1969; the company runs warehouses and discount department business. King and Lawley (2012, p.567) stated that Wal-Mart has been among the highest revenue earners in the previous 2 years, employing over 2 million employees and having over 10,000 ranches in close to 20 countries. Wal-mart is a family owned business owned by Wal-tons who hold over half of the Wal-Mart shares. The biggest company growth was witnessed in 1980s, when it grew from being a regional to an international company. From South America, the company opened branches in all coasts of the continent boosting its revenue correction. As Wal-Mart dealt with most of the America glossary, the announcement to improve the nutritional value of its brand was a two-way strategic move since it served as a marketing strategy to win more customers and a social responsibility strategy. The social responsibilities exhibited by Wal-mart are based on its positioning in the market, its employees, the revenue it generates and the goodwill by the company management. Corporate social responsibility (CSR) refers to the rule whereby the business get into self-dogmatic process to plough back its earning to enhance social welfare. Different people argue differently concerning corporate social responsibility. Some view CSR as a way to win over customer while others think it is actually a diversion of the real intention of any business and its economic gain. However, according to Hill and Langan (2014, p.1) "…the strategic importance of corporate social responsibility for both large and small businesses only continues to grow”. It is also argued that corporate social responsibility is a good tool to reduce workers turnover and helps in the recruitment process too. According to Lee (2007, p.34), the founder of Wal-Mart Sam Walton, insisted that among company main objective was giving customer high quality products, which often there before presumed enough to be considered corporate social responsibility. This was until he died in the year 1992 where afterwards the company took a divergent perspective of donating or giving out the monetary contributions outlook of the corporate social responsibility. For example, according to Mermod and Idowu (2013, p.32), Wal-Mart contributed money and commodities for Hurricane Katrina relief. Today, Wal-Marts benevolent donations are above 1 billion every year. This indicates the difference in the level of corporate social responsibility between the founder and those who succeed him. The company business nature makes it venerable to social responsibilities more than other business since it deals directly with the customers and therefore more likely to be faced with the problems. In 2005, Wal-Mart ventured into sustainable program strategy that aimed at making their products more environmental friendly. They designed new greenhouses that would reduce the amount of gas released to the eco system (Wal-Mart, n.d). The company also started installing solar panels in most of their stores as a way of harnessing clean energy. Its work was acknowledged by an environmental body in the United States of America and earned the company an award in the year 2007. In addition, a report by American Life Project noted that the issues of business communal accountability in the industry were well applied in the Wal-Mart trade models. It was evident that most statistics on the corporate social responsibility by many firms were not in contest, but rather in favour of Wal-Mart. With time, Wal-Mart has implemented initiatives that focus on corporate social responsibility and these initiatives runs all-round the customers’, suppliers’, and all stakeholders’ social needs. According to Wal-Mart (n.d), the company grouped corporate social responsibilities into four groups., with the first being social responsibility group under which Wal-Mart promoted women economically by providing training to many of these women. The company provides American people with healthy food and helps in eradication of hunger; for instance, it implemented the school feeding programs in most of America less privileged regions. According to Ferrell, Fraedrich and Ferrell (2010, p.101), the company was also in the forefront in trying to help with disaster management and help in promoting local farming. They also stated that Wal-Mart was devoted to buying local farmed raw materials (food produces) worth over $40 billion in the United States. Thirdly, under the environmental responsibility the company embarked on programs to minimize their energy intake, use of more recyclable shopping bags, dealt with cleaning i.e. garbage collection and came up with stricter guidelines to try to sustain these projects. Finally, Wal-Mart had company responsibility under which the company maintained high personnel security, guarantees company governance and observance, promoted essential standards and ensured its worldwide stakeholders were all engaged. This was a good illustration by Wal-Mart on the globalization of corporate social responsibility. Recently, according to CSR press releases events and reports (Wal-Mart, n.d b), Wal-Mart foundation launched the ‘MyFreeTaxes Program’ offering eligible taxpayers free-tax preparation in 2013. The foundation also donated close to $5 million to eradicate senior hunger. Moreover, it contributed the equivalent to help in responding of earthquake technology to warn people beforehand. Later that year, Wal-Mart announced a holiday campaign whose main role was to help fight hunger after which it announced reduction especially in their products prices. Moreover, the company has engaged in a solar energy projects in Puerto Rico and California were tremendous eco-friendly corporate social responsibility, and after the women day, the company carried out an intensive women health care project. These are just but a few recent works on the corporate social responsibility that Wal-Mart will grandly take the benefits on. Despite the fact that Wal-Mart had put so much into corporate social responsibility, the company experienced much boost in its global growth in the same period. According to Martinand Patel (2014, p.3), Wal-Mart growth was motivated by the local initiatives that always aimed at helping the society in the locality. The wrangles are obvious to erupt when the majority shareholders hold a different mind-set with the minority. The main aim of the minority will be to gain maximally on the share they hold with the company. They will mostly be waiting for the dividend, but if the majority shareholder decides to either plough back, or give a significant amount to charity; there often arises. However, the most important achievement is what the company builds between them and the community, not what shareholders get or attribute to their capital control (Horrigan 2010, p.169). Horrigan also attributes partially the growth of Wal-Mart to the association with the corporate social responsibility body. On the other hand Aras and Crowther (2010, p.89), raised four arguments; first, the real purpose of any corporation should be to serve the whole society. Second, he also argued that the corporations should be able to contribute to the society by making financial impacts. Third, he also said that the corporation should implement guidelines that follow the first and the second arguments. He lastly argued that the business wealth should be shared equitably with those who have made it possible for the business to make that revenue. With this regards, the social responsibility seem to be in the scholarly point of view as good as one that need proper legislation. Although not many of the shareholders, would agree with Aras and Crowther (2010), Wal-Mart way of operation almost agreed with him 50%. Only the legislation had not been documented and the sharing of revenue fairly with all the shareholders and the society. In respect to the tensions that surrounded Wal-Mart business model, corporate social responsibility was automatically going to be affected negatively. According to Fuller and Mangematin (2015, p.3), the whole business operations were in tension with them being at numerous risks and uncertainty both socially and economically. This is the greatest obstacle that seems to be on the company social responsibility function way. The other factors bringing about tension include alteration of the sum of payments made to the Supplement Nutrition Assistance Plan, extra public support plans and the varying in the eligibility requirement of public support plans. According to Meyer (2003, p.89), increased top-level attention to non-financial measures had been motivated by belief that both financial and non-financial measures would lead to good business models. In this case,Wal-Mart had continuously taken away the rights of its over two million employees in exchange to corporate social responsibilities. These conflicts between these two interesting factors brought in the tension that affected the contribution of the company to the social programs. Nevertheless, it is worth acknowledging the other business models used by Wal-Mart; these models included pricing, pressure over seller, merchandise variety, price awareness and customer service (Porter 2008, p.45). These business models especially the pricing models seemed to be the source of success in past, but wrangles in the present. Wal-Mart business model then raised the concern on its ability to sustain social project fairly without infringing on what Hoque (2000, p.176) said was pushing its human resources to shortage. The company admission that the tension in the business model was reducing the profit margins was then a clear indication that the company would reduce its social project funding such as donations to fighting hunger. The Wal-Mart corporate social responsibility credentials have been great but with this tension in the business models, it would do more harm than good to these credentials. With the growth of the company to internationals standard, the company was greatly exposed to criticism in this respect. This erupted even more with the bankruptcy of Kmart’s in 2002, hence waving the perception of the public on its profound business models. Scott tenure as the chief executive officer of Wal-Mart was so much questioned on it human resource practices. The company was always criticized of mistreatment of non-managerial staff by paying them less wages and providing poor benefits (Carroll and Buchholtz2014, p.659). This was much further fuelled when the company fails to grant several attempts of their employees forming a union. This damaged the company image and as a counter measure, the company resulted to offering better salaries and improved benefits to the non-managerial staffs. The company also went a notch higher by even offering better and improved health and sanitation benefits to their employees. Wal-Mart being a low cost pricing business and by virtual of its formation being a tradition discount retailer felt the great impact with the increase in the tax blackest and other international laws that have been set. The main reason why Wal-Mart handled corporate social responsibility so efficiently to an extent of building a global image was because of the favourable tax and international laws. The change in the laws then called for change in strategies. Mike Duke who is the current CEO of Wal-Mart was caught in a managerial dilemma on whether to change the current business models. This was in order to fight at par with other business organizations or continue with the current model and face profit margin reduction hence affecting the global image on its ability to contribute effectively to the corporate social responsibilities programs. Nevertheless, the company had to make a bold move to contain the situation. It could not raise the prices that would signify the change in the business model. On the other hand, it is practically impossible to cope with the over whelming social responsibility with the current profit margin. This would extensively change the investors earning. Like any other business, the aim of the company is to maximize the shareholders earnings and hence the arising of this tedious dilemma to deal with. In case the company would have to deal with this problem to exhaustion, then it is either sticking with the corporate social responsibilities or standing with the business core function of maximizing the shareholders earnings. Another scenario would also be whereby the company can either change the business model from being a traditional discount retailer to another business model that would precisely earn them more revenue to deal with the high cost initiatives they needed to handle, both corporate and social responsibilities. In my own fair view, the reason why most corporations are retrogressing in the corporate social responsibilities duty is the international business laws that limit the companies in their earning by unduly imposing high and unnecessary tax brocks. It is often obvious that this company will also want to make profit too, but if their earning is further reduced by the barriers in form of tax, then they won’t be willing and able to contribute in the socials responsibility functions. It would be more prudent if the international organization were given some incentives inform of tax reduction as a way of encouraging social work. Proper guidelines should also be put in place in order to maintain the consistency, goodwill and good faith in carrying out social responsibilities. I would put the assistance made during the Japan earthquake as a clear indication as to the need to have and continuously nature the need for corporate social responsibility. Wal-Mart in particular is an exceptional disaster contributing company in it elaborates social functions. In conclusion, the need to relook at the corporate social responsibility from all angles is now; moreover, more needs have erupted globally. The continuous hunger disasters and floods and the way Wal-Mart have handled the cases in the past leaves much to be desired in the private business corporate social responsibility and their efficiency. More social responsibility have also arisen, the illiteracy levels in Africa, the humanitarian needs in Asia, the Ebola menace also in Africa and the human right advocacy all over the world are just but a few. Those social projects that have been handled by the Wal-Mart business have always been a success. It is the responsibility of the companies to handle its employee’s social responsibilities. The health of these employees should be guaranteed in their place of work, they also have a responsibility to remunerate them fairly with no discrimination, and these are part of the company internal social responsibilities. Other companies should learn from the Wal-Mart situation also on the need to balance between the business models and the effects it would cause to the corporate social responsibilities. References Aras, G., &Crowther, D., 2010. A handbook of corporate governance and social responsibility.Burlington, VT: Ashgate. Carroll, A., and Buchholtz, A., 2014. Business and Society: Ethics, Sustainability, and Stakeholders Management. New York, Random House Inc. Ferrell, O. C., Fraedrich, J., & Ferrell, L., 2010. Business ethics: ethical decision making and cases:Mason,South-Western Cengage Learning. Fuller, B., &Mangematin, V., 2015 “Special issue call for papers: Business models” Long range planning, 32, 1-3 Hill, P.R.,&Langan, R., 2014. Social responsibilities of a business: Handbook of research on marketing and corporate social responsibility, 25(2), 122-133. Hoque, F., 2000.E-enterprise: business models, architecture and components. Cambridge, Cambridge University Press Horrigan, B., 2010. Corporate social responsibility in the 21st century debates, models and practices across government, law and business. Cheltenham: Edward Elgar King, D., & Lawley, S., 2012.Organizational behaviour. Oxford, Oxford University Press. Lee, S., 2007.Sam Walton: business genius of Wal-Mart. Berkeley Heights, NJ:Enslow Publishers Martin, G., & and Patel, A., 2011. Going Local:MaineCenter for Economic Policy. Maine Center for Economic Policy, 57(9), 1-7. Mermod, Y.A. &Idowu, S. O., 2013. Corporate social responsibility in the global business world. Heidelberg: Springer Meyer, M.W., 2002. Rethinking performance measure: beyond the balanced scorecard. Cambridge: Cambridge University press Porter, E.M., 2008. Competitive strategy: technique for analyzing industries and competitors: New York: The Free Press. 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