Categories
Management

Case study on Wal-Mart

Introduction

As one of the leading retailers in the Unites States, the Wal-Mart Corporation has dedicated itself to ‘saving people money in order to improve their lifestyle’, as the company’s mission suggests. However, with many competing stakeholder interests, and pressure to keep prices low, many company policies have come under criticism, and have faced many changes. Whether these policies are assisting in keeping Wal-Mart’s mission intact, or whether the company needs to follow a different company policy, is discussed herein.

Stakeholder Interests

As there are many stakeholders to satisfy, including customers, employees, suppliers, owners, regulating authorities, environmental groups and the community at large, there is often an emphasis placed on a particular stakeholder group which the company strives to serve. In Wal-Mart’s case, it is the customers (Wal-Mart, 2011). However, many other community groups are also highlighted as working together with the company for its improvement, but customers remain as the central focus. This is mainly for three reasons, as listed below.

Customers

Firstly, customers are the major stakeholders for the business, and often bring in the most profits. Without customers, the business would not function, as there would be no-one to buy the company’s products. Secondly, customers make up the majority of Wal-Mart’s target market. Without a target market, there would be no functionality between the company’s products and return for services. Thirdly, customers increase company growth. Without customers to bring in more repeat business for the company, there would be no growth, both monetary and structurally.

Employees

Wal-Mart heavily invests in their people, especially with its associates and college programs. With particular emphasis on providing opportunities for those interested in Wal-Mart’s price-cutting philosophy, it serves to strengthen ties within the company, and also to further links to the community at large. However, in recent times, there have been several issues arising within the company about employee performance and pay disputes, which have resulted in strikes and other negotiation agreements. The company still has to improve their employee relations and staff management if they are to remain as a retail market leader.

Suppliers  

As one of the more strategically operated departments of the company, suppliers are required to adhere to stringent ethical and production requirements, in order to provide the best product to the customers. This ensures that prices are kept down on the final item, and suppliers are routed through the company’s supplier policy, for the purposes of pacifying multiple suppliers throughout the extended supply chain. Usually, there are two stakeholder strategies which can be implemented: an aggressive strategy or a cooperative strategy (Co and Barro, 2009; Mottner and Smith, 2009). Wal-Mart seeks to take the latter approach, so that a sense of interdependence is established, leading to a fulfilment of set objectives.

Owners

Also known as stockholders, these key individuals have controlling interests in the company, and seek to ensure that the company is run in an efficient and effective manner. However, as Wal-Mart began as a family-owned and operated business, this led to numerous problems. Many of the family members of the Wal-Mart franchise left the company and sued joint stockholders, who happened to be siblings, for rights and royalties. This affected profitability and ended up costing the stockholders millions of dollars in legal proceedings. However, as the stock ownership rights were purely a family matter, only the individual portfolios were affected monetarily, and the company continues to function despite the rift in family ties.

Regulating Authorities

Though the company strives to abide by the law, it has becoming increasingly difficult for the company to manage legal operations, especially as this aspect has been complicated by Wal-Mart’s expansion beyond United States borders. The corporation has been impacted by change at all levels as they conduct business and expand their operations throughout the globe (Mujtaba and Maxwell, 2013). Recently, Wal-Mart Mexico has encountered bribery issues with local officials, which has led to financial losses for the business and a tarnished company image. Legalities in the company need to be streamlined so that ethical conduct in placed in higher regard, especially in countries outside of the United States.

Environmental Groups

Since its inception, Wal-Mart has been dedicated to environmental sustainability, and has spearheaded a number of initiatives in both the United States and other countries in which it operates. Despite its dedication to using renewable energy, creating zero waste and selling products that sustain people and the environment, it has come under public scrutiny by various environmental groups, and is currently in the middle of a multi-million dollar lawsuit regarding its practices. Wal-Mart, therefore, needs to take greater care to implement its environmental policies and ensure that their employees are aware of the importance of the environment and its protection to the company.

Community at Large

Overall, Wal-Mart has an obligation to the community at large for its sustainable operation and the products and services it provides. After all, business is about how communities and managers interact and create value (Freeman, 2010). These particular stakeholders are the driving force behind Wal-Mart’s profitability and the consumption of its products and services. It also encompasses all major stakeholders into one large group, which Wal-Mart looks to pacify.

            Conclusion

In summary, Wal-Mart has established itself as a retail giant, which has many different stakeholders, but seeks to serve all by meeting stakeholder interests. Ultimately, a corporation continues to exist only by meeting the minimum expectations of its key stakeholders. Therefore, Wal-Mart needs to streamline its operations, and ensure that the customers, employees and the community at large are efficiently provided for and effectively prioritised as key to company profitability and growth.

References

Co, H. and Barro, F. (2009). Stakeholder Theory and Dynamics in Supply Chain Collaboration. International Journal of Operations & Production Management, 29(6), 591-611.

Freeman, R. (2010). Managing for Stakeholders: Trade-Offs or Value Creation. Journal of Business Ethics, 96(1), 7-9.

Mottner, S. and Smith, S. (2009). Wal-Mart: Supplier Performance and Market Power. Journal of Business Research, 62(5), 535-541.

Mujtaba, B. and Maxwell, S. (2013). Wal-Mart in the Global Retail Market: its Growth and Challenges. Journal of Business Case Studies, 3(2), 18-20.

Wal-Mart. (2011). Wal-Mart 2011 Annual Report. Retrieved May 2013, from: http://www.walmartstores.com/sites/annualreport/2011/default.aspx