Here is a paper i recently wrote for my Business Ethics class on the Sustainability of Wal-Mart. Written by Tony Jefferson at Colorado Technical University.
Wal-Mart: The Future Is Sustainability
Do you think Wal-Mart is doing enough to become more sustainable?
Wal-Mart over the years has had many image problems. Their approach to sustainability, however, is certainly helping repair its image around the world. They work with their suppliers to reduce packaging and shipping. Wal-Mart plans to reduce packaging by 5% by 2013, reflecting its desire to improve sustainability.(Ferrell, Fraedrich, & Ferrell, 2013, p. 329) Manufactures working with Wal-Mart must certify compliance with laws and regulations where they operate, as well as rigorous social and environmental standards set by government agencies. In 2009, suppliers in China began the process of compliance and other Wal-Mart suppliers followed. By 2012, suppliers must work with Wal-Mart to make a 20% improvement in energy efficiency and create a plan to eliminate defective merchandise from reaching the Wal-Mart supply chain.(Ferrell et al., 2013, p. 329) Also by 2012 all of Wal-Mart suppliers must source 95% of their production from factories receiving the highest ratings on environmental and social practices.(Ferrell et al., 2013, p. 330) Many critics, however, state that Wal-Mart will not be able to carry out many of its goals because of the many suppliers required to keep Wal-Mart functioning. With Wal-Mart’s size and power it wields it can force suppliers to play by its rules.
1. What are the problems that Wal-Mart has faced, and what has the company done to address them?
Wal-Mart, as many other large companies, faces many problems and issues that would take many books to review and analyze. I’ll focus on two in this question: The employees of Wal-Mart and the effect of Wal-Mart on communities. Wal-Mart has a long history of employee disenfranchisement, from pay, health benefits, low wages, discrimination and employment of illegal immigrants the list can drag on and on. Wal-Mart discourages unions and has done so since the days of founder Sam Walton. (Ferrell et al., 2013, p. 331)This may be a contributing factor to why the employees get treated so poorly. Recently Wal-Mart recognizes its failures and is trying to better its relationship with employees. Wal-Mart has been accused of failing to provide health insurance for more than 60% of its employees, when the public caught wind of this injustice, shares for the company plummeted by 27%. (Ferrell et al., 2013, p. 330). In lieu of bad press received from the treatment of employees Wal-Mart raised pay tied to performance and improved its health benefits package by lowering deductibles and implementing a generic prescription drug plan estimated to save employees $25 million. (Ferrell et al., 2013, p. 331). In any organization of the size and employee population of Wal-Mart issues of discrimination and poor workplace conditions will abound. In December of 2005, Wal-Mart was ordered to pay $172 million to more than 100,000 California employees in a class-action lawsuit claiming that Wal-Mart routinely denied meal breaks, rest breaks and altered time cards to prevent overtime (Ferrell et al., 2013, p. 331). As far as communities go many local stores fear the effects of bringing a Wal-Mart to their neighborhoods. Wal-Mart is known for causing local businesses to close because of the constant threat of having to compete with the low price guarantee of Wal-Mart. Many local companies aren’t on the same level financially as Wal-Mart and are forced to close because they can’t match the low prices and availability that Wal-Mart provides. Wal-Mart has tried to counter this negative image by having more local suppliers and trying to better the community they occupy. This is a good effort but not enough to save the local community from the effects of Wal-Mart.
Why has Wal-Mart tended to improve performance while other retail outlets have been suffering financially?
As previously stated the Wal-Mart mantra is everyday low prices and most times competitors can’t compete with the money and power that Wal-Mart wields. Wal-Mart is a very aggressive company and will price check similar products from rivals to make sure they are giving customers the lowest price. Recession shoppers appreciate the marketing ploy and will ignore other stores because of the low price guarantee. In turn other stores suffer in sales and eventually either play second fiddle or close all together.
Ferrell, O., Fraedrich, J., & Ferrell, L. (2013). Business ethics: Ethical decision making and cases (9th ed.). Mason, OH: South-Western.