Wal-Mart: The Future Is Sustainability

1. Executive Summary

Wal-Mart Stores, Inc is a symbol and icon of American business which started off as a small town business to become the world largest public corporation, serving 176 million customers with more than 3000 stores internationally. Founded by Sam Walton in 1962 in Rogers Arkansas, it quickly grew at an accelerated rate during the next 40 years, with revenue of USD $405.6 billion, second behind Exxon Mobil in 2008. Walton famous mantra, "sundown rules" means "Why put off until tomorrow what you can do today?" is embedded in their work culture and ethics, with a high dedication to customer care. Their "ten-foot rules" where Wal-Mart employee pledged that they will greet the customer in the eyes and offer assistant to customer when they got ten feet within them. Wal-Mart reportedly can save the average family $3200 annually and $287 billion annually in consumer purchase by providing customer with lower prices goods in its chain store. However, this positive side of Wal-Mart also brings discussion and call of negative impact its' businesses and operation have on society through their competitors, suppliers and employees.

After analyzing the case we figured out the following key issues:

 Effects on competitor's stakeholder

 Relationship with supplier stakeholder

 Issues with employees stakeholders:

o Employees benefits

o Stance on unions

o Workplace condition and discrimination

o Illegal immigration

o Sweatshop workers

 Ethical leadership issues

 Issues with environmental stakeholder

After analyzing the key issues in the case we come up with the following suitable recommendation to be implemented:

 Local government intervention

 Work closely with supplier and support them

 Monitor the cash flow

 Rent the old building or make it factory or store

 Work closely with contractor plan how to avoid traffic problem

After implementing the above recommendations we hope the following expected outcome:

 Protection of small and weak competitors

 Protection of the rights of the employees

 Co-operation of competitors

 Protection of corporate ethical culture

 Company can sustain with its environment and stakeholder healthier

 Good reputation of the company (Wall-mart)

2. Situational Analysis

Key Issues

Following are the key issues in the case:

Effects on competitor's stakeholder

The greatest complaint against Wal-Mart is that by providing lower prices consumer goods to consumers, it put competitor especially local stores out of business. Accused of predatory pricing and pushing down wages and benefits in towns where it operate, Wal-Mart defend themselves by claiming that it is their purpose to provide quality, low-cost products to the average consumer. In order to compete against Wal-Mart, competitors are forced to reduced wages, with studies shows as much as 5 percent reduction of wages are noticed once Wal-Mart operate at a new location. As a result, some activist group and citizens protest to refuse Wal-Mart to operate at their towns.

Relationship with supplier stakeholder

Streamlining the company operation and excellence to handle, move and track merchandise among its vast distributions and retails areas have able Wal-Mart to keep cost down and stay to its promise of "everyday low prices" or EDLPs. They work closely with suppliers to cut down prices in order to reduce price to consumer. For instance, packaging and shipping cost are kept to a minimum to improve sustainability. In 2008, the group introduce its "Global Responsible Sourcing Initiative" which outline agreement with supplier to comply to rigorous social and environmental standards set by government agencies, 20 percent improvement in energy efficiency, elimination of delivery of defective goods throughout their supply chain and 95 percent of procured source from the suppliers must receive highest rating on environmental and social practices. Critics however believe that putting pressures to achieve these standards will not work as the size and complexity of the supply chain itself would present a challenge in tracking and enforcing such standards, those shifting more cost burden to suppliers.

When suppliers do not meet these requirements, Wal-Mart would cease to carry the suppliers' product, which in most cases would mean substantial financial burden to the suppliers. Wal-Mart thrives on its size and volume and many companies depend on Wal-Mart bulk demand for their business. Company such as Clorox, Revlon and Kellogg's has substantial supply term in bulk quantity. This made Wal-Mart their major customer and thus has substantial influence that can be disconcerting. This continuous drive to reduce cost down have forced many suppliers to move their operation from the US to China in taking advantage of lower labor cost, making China as the eight-largest trading partner of Wal-Mart, at the expense of jobs in the US. Some estimates have put around 80 percent of Wal-Mart supplies come from vendors' station in China. This is against the principle of the founding father of Wal-Mart in promoting "Buy America" campaigns for Wal-Mart products.

Issues with Employee Stakeholders

Employee Benefits

Although Wal-Mart is the largest retail employer in the world, it has been criticized for providing low wages and benefits to its employee. It also been accused in failing to provide health insurance to more than 60 percent of its staff. In a memo sent by its executive vice president for benefits, Susan Chambers encourage of hiring more part time workers which is healthier and thus more productive to cut down health benefit cost as part time workers are not entitle to it. After some bad press, Wal-Mart have taken