The statement of the case report is to provide the reader with clear understanding of the case study Wal-Mart, the Main Street Merchant of Doom. Actually, in this case, we want to know clearly how Wal-Mart’s size and impact on local communities and also the environment. Other than that, we also look further that issue related the corporate social responsibility. Actually, this report we will focused of the case study Wal-Mart, Main Street Merchant of Doom on the following topics: (a) problem and issue identification, (b) analysis and evaluation of facts, and (c) recommendations and conclusion at the of the case study.
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Furthermore, this case study report will discuss some of the challenges that faces and must overcome by the Wal-Mart to remain competitive both nationally and internationally. According to Carroll and Buchholtz (2009), the main challenge that Wal-Mart faces today is correcting its bad reputation. Other than that, local citizens are develop the groups in an attempt to stop the large Wal-Mart Supercenters from ever gaining a foothold in their community throughout the country.
One example situation that occurred in Boulder, Colorado when Wal-Mart tried to build a large Supercenter by proposing a “green” store. Carroll and Buchholtz (2009) stated that because of protesters have no financial stake, the organizers take an action to protest Wal-Mart’s entrance into Boulder, Colorado. However, this situation was differ from the downtown merchants where Wal-Mart maybe force out of business from them.
1.2 Description of the case
Wal-Mart: the Main Street Merchant of Doom, Carroll and Buchholtz stated that, since its beginning in 1962 by Sam Walton, with first small target of rural towns and less than ten thousand people. Wal-Mart goal was to provide loyal customer service, fast, friendly service and consistently low prices” (Carroll and Buchholtz). Wal-Mart targeted to expended their company into the large cities and become international stores spread throughout the world.
Wal-Mart Stores had four major retail divisions, Wal-Mart Supercenters, Discount Stores, Neighborhood Markets, and Sam’s Clubs warehouses with more than 100 million customer per week visited Wal-Mart stores.
Wal-Mart socially responsible for their actions and provides thousands of jobs, low prices and high value and services to all their loyal customers. Sam Walton started to get Wal-Mart involve in environmental awareness. Wal-Mart also started making shelf tags from “100 percent recycled paper” because of socially responsible for the environmental awareness (Carroll and Buchholtz).
In other side, small merchant and communities in America feel uncomfortable and fear when Wal-Mart and his merchants arrive at this town and their can’t longer be the providers of the basic consumer goods and services. The communities made a complaint about Wal-Mart’s offer the low prices to customer and Wal-Mart just comes and takes over the small stores then it’s give effect to downtown merchants
The successfulness and failures of the company to opened up their stores throughout the countries is depend how impact that company bring and give to their communities. Some example shows that the communities assumes Wal-Mart’s with its low cost reputation can’t be affect the other some resort communities in Steamboat Springs, Colorado. But its different situation when Wal-Mart attempt to expansion their company in New England and other countries because the Wal-Mart wanted to insulate their unique cultures from what they considered to be the offensive consumerism (Carroll and Buchholtz).
There are some local merchants have to pulls out their business because of purchasing power, provide lower price and aggressive marketing by Wal-Mart to the customer. Even though Wal-Mart become the largest retailer across the country, but their decision to expand their business an international as wrong action when using brute force and Wal-Mart not respecting the culture or language their communities.
2. PROBLEM AND ISSUE IDENTIFICATION
2.1 Central facts of the case
The central fact of these case began when opening Wal-Mart’s Store and Sam Walton had a small target of rural towns with populations less than ten thousand people. Sam Walton targeted to expended and opened their company or stores into large cities and become international stores spread throughout the world. Sam Walton started to get Wal-Mart involve in environmental awareness to Buy American plan and the Environmental Awareness program. Even though, Wal-Mart using aggressive growth and continue their challenges to became successful when opening up the store throughout the countries but it’s still have other part that Wal-Mart failures to faced and overcome it .
There are several issues risen in Wal-Mart case whether this is the major or minor issues. The issues began when Wal-Mart’s have conflict with American communities whereas its involve the community’s environment and the small merchants. Other than that, Wal-Mart launched “Buy American” program and “Environmental Awareness” campaign. Wal-Mart faced the barriers to domestic expansion with its opponents in New England and California. In its short history shows that Wal-Mart has closed five stores and this way give impact to employee that losing their job and loyal customer. Other issues involve in this case when Wal-Mart began to expansion their business an international and it’s become conflict when Wal-Mart take it easy about cultural sensitivity or clashed in certain countries.
According to Carroll and Buchholtz, In Business & Society: Ethics and Stakeholder Management, in 2001 Wal-Mart became the world’s largest retailer with $191 billion in sales. Wal-Mart Stores had four major retail divisions, Wal-Mart Supercenters, Discount Stores, Neighborhood Markets, and Sam’s Clubs warehouses with more than 100 million customer per week visited Wal-Mart stores.
Time line events
1960s:
Sam Walton opened up first discount store in Roger, Arkansas
1980s:
1981, Wal-Mart become the American largest retailer because of Sear, J.C. Penney, Target, Kmart
1981, Wal-Mart opened up the store in small Louisiana town
1983, Wal-Mart enter in Pawhuska, Oklahoma and the other local stores pulls out the business.
1984, Wal-Mart Buy American program
February, 1986 Wal-Mart estimates that this program can restores 4538 jobs to American communities.
1989, Wal-Mart started a campaign about the Environmental Awareness that Wal-Mart’s aware to our land, air and water.
1990s:
1990, there are some or dozens of activist groups against Wal-Mart expansion
November 1990, Wal-Mart used employees to scribble down price and list merchandise in their store.
December 31, 1990, Wal-Mart closed their store in Louisiana
November 5, 1991, Wal-Mart successful to opened up their store in Iowa City
October 6 1998, Sam Walton’s family created charitable program of the Walton Family Charitable Support Foundation.
June 1999, Asda Chain already take over by Wal-Mart and now has stores and depots across the United Stated.
2000s:
2001, Wal-Mart become the world’s largest retailer and get $191 billion in sales
July 2003, Wal-Mart opened up its stores in Beijing after opened 22 stores in China
2006, Wal-Mart closed their stores in Germany and sold to Metro, Germany’s largest retail group,
2007, Wal-Mart make a mixed reception in cities and towns by continuing their experience thorough out America.
July 2007, operate more than 2,750 retails unit in Wal-Mart International and employs more than 500,000 in some countries.
2007, Wal-Mart get $45 billion in net sales
2008, Wal-Mart successful to opened up first whole sales facility in India
Time line can make you clearly understand the whole case or issues that involve from beginning until the ending of case study. Time lime is about chronology story or case that assist you to identify the issues or problem easier and avoid the omitted significance issues.
2.2 Assumptions about these facts
According these fact that come up several assumption that would be reason of Wal-Mart’s success their company throughout the countries. Wal-Mart became the largest retailer throughout the century when it’s pulling out the small merchants from business. Sam Walton was still categorized as successful person while he get many criticism and challenges from various side. Wal-Mart’s “Buy American” and “Environmental Awareness” programs shows that it’s company is good example of ethical responsibility. This program shows Wal-Mart is always careless or awareness about socially responsibility or it’s just the Wal-Mart gimmick
2.3 Major issue arise in this case
The major overriding or primary issues rise in this case are about socially responsibility that involved size and impact of Wal-Mart’s on local communities. The others major issues also include ethical behavior and competition. There is a lot of conflicting perceptions in this primary issue that include in this case and should be considered the positive and negative impact of communities. This major issues include the threat of putting local small merchants out of business, the creation of urban sprawl, and the traffic congestion created when the company decides to locate in a particular city (Carroll and Buchholtz).
2.4 Sub-issues or related issues are present in the case
According the case study in this case shows that, the related issues that include lawsuits, other activists organization and labors unions. According to Carroll and Buchholtz, In Business & Society: Ethics and Stakeholder Management, the company has been accused of paying wages so low that workers cannot live off of them, making employees work off the clock without overtime pay, paying few or low benefits, and taking advantage of illegal immigrants. In previous year, company faces many case lawsuit that related with company irregularities.
ANALYSIS AND EVALUATION OF FACTS
3.1 Stakeholders and challenges, threats or opportunities
Consumers is primary stakeholder because they are a main user and also customer who are enjoy to shop at Wal-Mart stores because Wal-Mart offer product with the “low price” and also high value of their product and service.
Challenges to Consumers, especially in small rural towns, they depend on Wal-Mart to supply them with the basic things they need (Carroll and Buchholtz 772) mean they need Wal-Mart as much as Wal-Mart need them.
Threat to consumer when Wal-Mart buy the cheaper good from China and the good have poor quality which is the primary safety features and it would indirectly lead customer of American especially in high risk of consumable goods and also can harm customers
Wal-Mart quickly developed a core of loyal customers who love the fast, friendly service coupled with consistently low prices” (Carroll and Buchholtz 772). This can be exposed when demand from consumers is increase, it not only gives Wal-Mart advantages but also opportunity to consumer could benefit from the development of new product and services .
Owners are the stakeholders in this case. Owners are the user or consumer that owns the shares of Wal-Mart and they have interest in profit from the business. For example, from this case Sam Walton are founder and he also employee shareholders.
Sam Walton has challenges when he starts the business he should fulfill what consumer need and because of that he put the objective and goal to make customer comfortable and like to shop at Wal-Mart. His goal was to provide loyal customer service and “fast, friendly service coupled with consistently low prices” (Carroll and Buchholtz 772).
Threat when the questionable of labor practice are dispute and Wal-Mart involved of many lawsuits because company give low wages to the employee.
Sam Walton as innovator want developed his store with apply concept by training people as merchants not just the employees and this concept give big opportunity by big responsibility to Sam.
Community for this case is the local environment and all area nearby Wal-Mart stores such as Pawhuska Oklahoma, Iowa City, Kinder Louisiana, and Boulder Colorado.
Community considered Wal-Mart as their friend and they waiting Wal-Mart open in their place with open arms. When “Sam Walton opened his first store in Rogers, Arkansas,” he had a goal to target “small, underserved rural towns with populations of no more than ten thousand people.
Some communities opposed the expansion of Wal- Mart to their areas because “they wanted to insulate their unique cultures from what they considered to be the offensive consumerism that is usually generated by Wal-Mart‟s presence (Carroll and Buchholtz 776).
Wal-Mart establish program in “Environmental Awareness” and offered to “build green”. This is opportunity for the company and show company concern and community.
Government is indirect stakeholder, Wal-Mart has the violent growth and expands their business in an international stage also in United Kingdom, Japan, Germany and all country cooperates and dealing with Wal-Mart.
Challenges when Wal-Mart give impact to governmental planning because Wal-Mart being labeled as world’s largest retailer and their sales more than $191 million.
When Wal-Mart wants develop the business in the international stage them has faced difficulties in terms of language and culture. Wal-Mart also have lack responsibility to given rise barrier to both domestic and expansion.
This case discusses Wal-Mart’s “buy America” plan and international expansion. The Buy American plan is the one of Wal-Mart’s early effort to their corporate social responsibility.
Employee is the person who works for Wal-Mart. Wal-Mart has over 1 million employees which is 1.2 million employees in US and “links” worldwide. When employees are employed in Wal-Mart they are trained to work in manner of Wal-Mart needed.
The challenges to employee, when new Wal-Mart is being construct, there are regularly hundreds of construction workers and other related employees working to build the Wal-Mart.
Threat to employee is when Wal-Mart putting the small business out of the business and treat the employees in supplier company in negative manner. Affect much of relationship between Wal-Mart and the employees.
The opportunity when Wal-Mart provides many jobs and give incentive to the employees, they are trained with participation of the stock option, they are also offered by profit share incentive bonuses, and they also encouraged improving in customer services.
3.2 If relevant assess the economic, legal, ethical, and philanthropic responsibilities the company have, and describe the nature and extent of these responsibilities.
Corporate Social Responsibility (CSR) is about how companies run the business processes to construct an overall positive impact on society. Wa-Mart have both direct and indirect stakeholders and it impact on the outside environment. Wal-Mart analyzed company’s CSR situation using the 4-part of the CSR model which is Economic responsibilities, legal responsibilities, ethical responsibilities and philanthropic responsibilities.
Economic Responsibilities:
First of all is an economic responsibility. The economic responsibilities have been sufficiently fulfilled. Wal-Mart is clearly profitable with net sales totaled $345 billion in 2007. Because company have clearly profitable, all bases for all other aspects of CSR have been set very well.
Legal Responsibilities:
The second is the legal responsibilities, Wal-Mart is considered as the most sued company in America because Wal-Mart involved many lawsuit. It is because the questionable of labor practice and company give low wages to the employee. This show Wal-Mart have lack of legal responsibility.
Ethical Responsibilities:
Wal-Mart’s Buy American and also have Environmental Awareness plan are suitable example to show company’s effort in ethical responsibilities. Sam Walton is founder for this company, he offered his employees with profit sharing and stock option to employees can share in company’s wealth but he doesn’t fulfill responsibility in the direction of the small merchants cause them out from business when it enters a town. It show company lack in their ethical responsibilities.
Philanthropic Responsibilities:
In this area, Wal-Mart has fared well and effective management and has been done numerous corporate citizenship initiatives such college scholarships, fund-raisers and donate a huge amount which is $50 million to the business school at the University of Arkansas. They also have establishes the Walton Family Charitable Support Foundation to facilitate their corporate philanthropy.
3.3 Apply appropriate ethical theories or concepts to determine the ethicality of an action or to analyze ethical issues.
In case Wal-Mart: The Main Street Merchant of Doom, we have identified several ethical theories and concept. In this case, Wal-Mart has committed to conduct some ethical wrong toward its country, community, and competitors. It has been proven when Wal-Mart has been importing cheap goods from China and its having poor quality which is the primary safety features. This would indirectly lead to customers in the American especially in high risk of perishable goods and also can harm customers. In this situation, the principle of ends should be applied by Wal-Mart. Principle of end comes from non-consequentialism ethical theory which is under Kantian ethics (categorical imperative). According to Kant, under this principle we must respect humanity and never exploit others in order to achieve our objective.
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In order to achieve the Wal-Mart objective which is trying to maximize the profit and safe product by lowering their standard rather than sell the quality product, unconsciously give risk to their customer. The other ethical concept for this situation is ethics and consumer which is product safety and liability. Wal-Mart should apply due care theory when to sell their product and obligate to take all reasonable steps to ensure that the products are safe. By holding the business, Wal-Mart also should strictly liable for any harm cause by their product and Wal-Mart is responsible to produce safer product and services. So, strict product liability should be applied by Sam Walton for his business which is Wal-Mart. In this case also has stated that if Wal-Mart is an independent nation, it can be China’s eighth-largest trading partner.
The second is principle of universalizability. This principle should be applied in this case when Wal-Mart is putting small businesses out of business. Wal-Mart has treat employees in supplier companies in a negative manner, Wal-Mart competitors also has received the subsidies that the competitor does not receive. Wal-Mart also getting a new employee with an unfair way when get the new employees that do not have valid documents in order to get a cheaper price. As the Kant said about principle of universalizability, act only on rules that you would be willing to see everyone follow. In order word, Wal-Mart must treat other people with the same way as we want other people treat us. There also have some principle of ends that should applied by Sam to Wal-Mart here which is should not exploit other people in order to achieve their objective.
The other ethical theory is still from non-consequentialism ethical theory which is under principle of right under categorical imperatives. This principle mean decision maker must consider the right of all affected people using human right reasoning. This is applying when Wal-Mart has closed five stores in its short history. In this situation, Wal-Mart should consider many thing when decide to close the store such as how the workers’ lives after a close the store. The impact of the closure of five stores that caused many of them lost their jobs. Wal-Mart should provide plenty of incentive to workers who lose jobs due to closure of the store.
Wal-Mart also should have corporate social responsibility when they have claims to care about the environment and have duty on it. But the real is Wal-Mart just lied about what they has been said. The slogan that Wal-Mart does in order to get the attention from its customer and make their customer believe with their claims. In fact, Wal-Mart had lied about having an environmental person dedicated to these issues. It is more like to avoid and problem will disappear by giving a false statement to the customer. It showed when Wal-Mart ignores the effect of putting chemicals on the environment. These chemicals can cause defects and also endanger the health of the community.
3.4 If the case involves company actions, evaluate what the company did or did not do in handling the issue affecting it.
In case Wal-Mart: The Main Street Merchant of Doom, there has involves several company actions. First action that company does is by given profit sharing, incentive bonuses, and stock option so that the Wal-Mart associated can share in the wealth. This is one of the ways by Sam Walton, the founder of Wal-Mart in order to empower his employees. The reason Wal-Mart do this action because he want his employees own shares in that company so that everyone works hard to achieve the same goal.
The second action done by this company is The Buy-American and Environmental Programs. This program is doing in order to restore public confidence in the products Wal-Mart because before this Wal-Mart has made ​​many people in the America loses jobs. Wal-Mart’s “Buy America” program was a result of a 1984 telephone conversation with Bill Clinton. This two action made by Wal-Mart has been strongly support Wal-Mart to be as one of the corporate social responsibility. It means that, Wal-Mart have the obligation to develop and implement courses of action that aid in social issues that give effect to the society. Wal-Mart entered the purpose of this program is to attract back their customers after community lost confidence to them.
The other action by Wal-Mart is national expansion. Wal-Mart should cease to move aggressive and need to make changes. If Wal-Mart can adapt their appearance and attitude towards society, maybe society also can give chance to Wal-Mart in order to expand their business in new area. But, if Wal-Mart still continues with aggressive strategy, it is hard to see how it will be able to go through to these markets without major conflict.
The last action taken by Wal-Mart is international expansion. Wal-Mart should consider the language and cultural in the new area because they may face difficulties in terms of it. The best way to handle this problem is Wal-Mart should conduct some research on the country that they want to operate before expand their business. There are two types of cultures that Wal-Mart must know before expand their business international which are the business culture and the culture of the community.
RECOMMENDATIONS AND CONCLUSION
For recommendation, Wal-Mart can expand their business internationally but they should remain consistently with their strategy. While Wal-Mart make a decision to expansion their business in global or internationally, they should continue expand the same strategy and standardize the local market conditions while open stores in internationally and rural place.
Purchasing from local manufacturers will have some benefits to improve and expansion in the region. It can save the local manufacturers from the global recession or shut down and will increase the profit for local manufacturers. Buying more products from local manufacturers means more job opportunities for local and reducing unemployment rate.
Good quality and low price are the major attractions of the retailing giant. Wal-Mart should provide its products at low price and sometimes importing and exporting products from other country to other country will be costly and caused to increase the price of products so Wal-Mart should make effort to identify those products are costly to import/export produce them from the local manufacturers. But nowadays China is Wal-Mart’s most important supplier in the
world has played a key role in the firm’s global purchasing business. Purchasing products from China is reasonable for Wal-Mart and it has a lot of benefit for china which is more job opportunities, increase profit.
One of the reasons if Wal-Mart wants to expand in every country and survive for long time should produce some of its products from local suppliers. Providing products from local suppliers will have some benefits for both. The benefits for Wal-Mart are persistence relationship with local country and producing those products are spoiling easily and are difficult to import/export.
Local supplier will benefit from Wal-Mart’s stores which are using their own resources and reducing unemployment rate.
In my opinion Wal-Mart could survive in German if tried to provide some of its products from Germany’s suppliers which was help them increase business relations and use German’s resource and to save Germany from the loss the jobs.
Purchasing from the local market at a reasonable price will lead to good business relations. This will increase the market share and also purchasing from local help to provide good quality of products because of short time of production to consumption.
http://www.organicconsumers.org/corp/walmartchina113004.cfm
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