The Walmart Way, Case Study Example

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Case Study

Business often seems more about the bottom line than anything else. In a capitalist society such as ours, most believe that corporate culture and business expansion is good for people, communities, the economy, and success. So when a single company becomes so successful and dominant that it threatens to eventually become a monopoly, how do you continue to promote the same business practices, and is it fair to smaller businesses to contend with a company that is so difficult to compete against? These issues provide challenges to the case of Wal-Mart, and whether they are an ethical company that exhibits fair business characteristics.

Key issues: it is difficult to determine whether the positives Wal-Mart brings to a community outweigh the negatives. The company who spends over $150 million dollars on local charities is the same company who has been accused of ruining downtown businesses and aesthetics in a significant number of towns. It is known that the impact Wal-Mart will have is considerable, and a key issue to determine is whether or not Wal-Mart is good for communities, or if the consequences outweighs the good.

If Wal-Mart competes fairly, do they practice legally or morally objectionable behavior in order to achieve corporate ambitions? As noted in the case study, Wal-Mart has been accused of predatory pricing that is designed to eliminate competition. The theory is that they use their buying power and influence over suppliers to undercut other sources within a community. Such a practice would constitute a breach of ethical and possibly legal standards.

An additional issue is how Wal-Mart’s corporate ambitions tie to the priorities and needs of a host community. We know that they have made considerable philanthropic efforts by supporting numerous charities, and as noted in the case study they are the largest private employer in the United States. As a corporation that is perceived by many as damaging to the communities they belong, it is understandable why many view this company with suspicion.

Facts: there are many facts that we can consider from the case study, and there is enough information provided that other resources are not required. From a more positive perspective, Wal-Mart is the largest private employer in the United States, providing employment and livelihood to many people. They are philanthropic, contributing over $150 million to charities and local non-profit organizations. They have a history of increasing tax revenue for the community where they build, as Wal-Mart operations are almost always successful and can contribute to a minor real estate boom as other businesses locate to be in close proximity to try to take advantage of the traffic Wal-Mart generates.

For a more negative perspective, Wal-Mart may employ many, but provide generally low wages and few benefits that their employees can afford. Although they can increase tax revenue for a community, it is often short lived as smaller businesses close because they cannot compete, leading to blighted downtown areas when many close or relocate. Wal-Mart is often accused of practicing predatory pricing, and have been the subject of many lawsuits that accuse them of underpaying and forcing employees to work through breaks. Accusations of depriving illegal workers of labor law protections have also been levied.

Stakeholders: As with any publicly traded corporation, shareholders and corporate executives represent the two stakeholder groups that most directly affect the choices Wal-Mart makes. They serve many stakeholder groups, but customers are the ones that ultimately they are trying to attract. The case study mentions how the company receives high marks with effectively providing customers with their wants and needs, contributing to their success. Other stakeholders would include suppliers whom Wal-Mart works with to brings goods into their store, and politicians whom Wal-Mart will often have to interact with on zoning and other issues to get their stores approved for a given location. The community as a whole is a major stakeholder, as the impact Wal-Mart has is well documented. The community will likely experience many positive and negative outcomes as a result of this new arrival.

The problems: what many communities struggle with is how to balance the positive impact of a Wal-Mart store to their community with the negative aspects. These problems include how smaller, local businesses can survive, and how Wal-Mart corporate goals can be made to more closely align with community needs to avoid ethical dilemmas. In addition, how to avoid the negative impact of a significant economic development that Wal-Mart brings into many communities on a routine basis. Bear in mind that as a corporation, Wal-Mart cannot be expected to ignore profits when faced with community issues and challenges.

Stakeholder perspectives: Shareholders and corporate executives are interested in profitability, utilizing business strategies to achieve financial goals. The case study points out that this interest includes possible expansion, and Wal-Mart has a tendency of converting into larger, even more dominant Super Wal-Marts. They are now the largest grocery store business in America and also seek that kind of expansion. Customers seek convenience and value, which is where most people have given Wal-Mart high marks in their achievements. As Wal-Mart has been very effective in keeping prices low while offering the convenience of shopping for most of your needs in one store, they claim to provide for their customers better than others do.

The other stakeholders have a vested interest in Wal-Mart’s success, but there are conflicts and competing interests. Suppliers rely on their business with Wal-Mart to maintain sales volume, but as they must adhere to many of Wal-Mart’s wishes they must occasionally question the benefits of the relationship. Employees rely on Wal-Mart for their livelihood, but as many work at wages under the poverty level and struggle with being able to afford medical benefits they must also feel frustration toward their company. Communities struggle with a broad array of benefits and challenges associated with having the successful store present.

Overall problem: When welcoming a new Wal-Mart store, adaptability to what will be a rapidly changing and dynamic business environment for pre-existing stores and business community becomes vital. It is not easy, and you cannot expect every business to be able to survive in what will become a much tougher competitive environment. As stated previously, balancing the positive and negative aspects of a new store arrival is necessary, and a plan should be implemented to minimize the negative and enhance the positive aspects as much as possible.

Solution #1: Try to make it go away. Based on history, many of the positive elements of a new Wal-Mart store are short lived. The case study cites sources that estimate for every two jobs Wal-Mart adds to a community, three are lost. Earned wages commonly go down, and increased tax revenues do not last when smaller businesses fail. Many communities have fought against Wal-Mart coming in, and it does not appear to be an easy fight to win given the capabilities of such a large corporation. Although some benefits are short-lived, there are others that stay, such as value, convenience, and philanthropy. Even with positive, long lasting benefits, this may be the right solution if ethical concerns for a community outweigh the benefits. Solution #2: Integrate. In order to address some of the concerns relating to Wal-Mart destroying traditional, main street small businesses, why not invite them in? Some communities may be able to integrate Wal-Mart into their downtown areas, keeping such areas vibrant by providing traffic to area businesses, restaurants, etc. Local businesses will want to change their offerings in a way where they would not directly compete as Wal-Mart does have a considerable advantage in those situations. This solution could be partially successful in addressing the ethical dilemma of Wal-Mart, though it is not a perfect solution.

Solution #3: Adapt. It is difficult to fight progress, and it is inevitable that most communities will face a challenge like Wal-Mart or something similar. The case study has many examples of smaller businesses adapting in the face of intense competition. They succeeded by offering more personalized service, a different selection of merchandise, special services such as consultations, etc. There are valid case studies where this has been successful, and therefore it could be successful again. This solution should also involve vigilance, as pricing, employee practices and other behaviors should be aggressively monitored. Litigation should be initiated to ensure proper legality that infringes on moral and ethical standards for all stakeholders.

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