Case Analysis: Wal-Mart

Alfonso Soloiro
10/28/13
BUS 365

Walmart is known worldwide as a powerhouse in consumer goods retailing. You could almost find anything you want at Walmart at the most affordable price, however Walmart has gained a negative reputation regards ethical behaviors and their working environment. Walmart first began in 1962, when its founder Sam Walton opened the first Walmart Discount store in Arkansas. His plans towards Walmart and its ethical behavior seems the total opposite than what he had planned for its future and sustainability. Walton believed in customer satisfaction and hard work. Walmart claimed early on that a formal ethics program was unnecessary because the company already had Walton’s tradition of ethics. As the years went by Walmart would go from the most admired company in America to one of the most hated. One of the main ethical issues that’s been haunting them for years involves their employees and their treatment. Wal-Mart is known for its poor treatment of all employees. In fact, the average Wal-Mart hourly sales employee earns under $250 per week. Most full-time employees are working for $7.50 per hour for 28-40 hours a week. As a result of this pay scale, the majority of Wal-Mart employees are living well below the poverty line (PBS, 2010). Part of the reason that that Wal-Mart’s employees receive such low pay is that Wal-Mart is a notoriously antiunion company. The unionized retail workers in the United States that do not work at Wal-Mart on average make 25 percent more annually than those employees that work the same job at Wal-Mart (PBS,2010). The benefits of the employees at Wal-Mart have also been criticized. After several years of trying to silence the critics of its employee benefits program by improving the plan offered to employees, Wal-Mart instituted a huge cut back on employee health-care in October 2011. The new employee health care program states that any employee that works less than 24 hours per week will lose all health insurance plans that the company may be providing them. In addition any future employees that work an average of 24 to 33 hours a week will no longer be allowed to include a spouse as a part of their health care plan. Wal-Mart will continue to do its best to put a positive spin on the way that it treats their employees, but these facts cannot be denied. As a result of Wal-Mart’s tendency to overlook the importance of taking care of its employees, the company’s image has been permanently damaged. Another big issue that has been haunting Wal-Mart over the years is their constant problems with the environment, and has been targeted as a violator of safe environmental practices. Environmentalists complain that the company’s stores often on the outskirts of rural communities eat up open space, replacing farms and forests with concrete and pavement. And the company has been fined repeatedly in recent years by various agencies for environmental negligence. For example, in 2005, Wal-Mart paid $1.15 million in fines to the state of Connecticut for the improper storage of pesticides and other toxins that polluted streams near its stores there, according to the website WakeUpWalMart.com. A year earlier, Florida fined the company $765,000 for violating petroleum storage tank laws at its auto service centers. The company admits that it failed to register its fuel tanks and to install devices that prevent overflow, and that it did not perform monthly monitoring, and that it blocked state inspections. That same year, Georgia fined Wal-Mart $150,000 for contaminating water outside of Atlanta. And the U.S. Environmental Protection Agency penalized the company $3 million in 2004 for violating the Clean Water Act in nine states. This helps analyze how Wal-Mart has not been keeping up with the external environment of their business. They are sometimes too focused on making profits, and are willing to take the fines, however the image of the organization has been damaged by these constant issues. Wal-Mart in the past few years has been struck with multiple accusations and issues that have damaged its image and positioning in the marketplace, however they have begun taking actions on reducing its bad image. Wal-Mart, the world’s largest retailer, has decided to offer products with less harmful chemicals, increase the use of recycled materials, reduce fertilizer use in agriculture, and increase energy efficiency in the products its stores carry. The new standards apply to Wal-Mart stores in the United States and elsewhere around the world. Wal-Mart aims to grow both the supply and demand for recycled plastics so they can be diverted from landfill and get a second life. More than 29 million tons of plastics are sent to landfills every year in the United States at a cost of about $6.6 billion annually. The company is working with cities to increase plastic recycling and with suppliers to increase the use of recycled content and make packaging more recyclable. Changes in packaging are already being implemented in product categories such as beverage, over-the-counter drugs, dairy creamers and berry containers. Another important way Wal-Mart has been trying to change their unethical image is my contributing in disaster management projects. The company donated over 1.5 million in relief aid for the victims of the Haiti earthquake, including money in donations and goods. They have been improving the standard of living for customers worldwide by having large charitable donations that are provided through the Wal-Mart foundation. They have also embarked on a health initiative to address the growing problem of obesity in America. They have met with the First Lady Michelle Obama to discuss the issue and take actions by lowering prices on its fruits and vegetables and reduce the amount of fats, sugars, and salts in the foods they sell. Today Wal-Mart remains the preferred shopping retailer for consumers mostly because of their low prices, especially after the recession. Consumers have begun to slowly forget the many ethical issues Wal-Mart has had in the past few years, and are attracted to their competitive pricing. Consumers tend to criticize Wal-Mart for their unethical behaviors, however they still tend to shop their because of their affordable prices. Wal-Mart understands this, and is doing things to not only be the most affordable retail store, but to also have good relationships with the communities they are in. Wal-Mart need to keep being aware to their external environment looking for new opportunities, and also being aware of threats that could hinder their positioning. Employees and their working environment are also very crucial on how communities could view the organization. If employees are happy working there, they will be more customer oriented and friendly. Employees are a big part of any big organization like Wal-Mart, establishing better health programs and salary wages employees will be satisfied and will reach their full potential.