case study – wal

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Case Study Wal-Mart The Future isSustainability

Wal-Mart Stores, Inc., is an icon of American business. From small-town business tomultinational, from hugely controversial to a leader in renewableenergy, Wal-Mart haslong been a lightning rod for news and criticism. With 2008 sales ofover $405.6 billionand more than two million employees worldwide, the worlds largestpublic corporationmust carefully manage many different stakeholder relationships. It is achallenge that hassparked significant debate.

Although Wal-Mart reportedly can save the average family $3,200annually, thecompany has historically received plenty of criticism regarding its

treatment of employees,suppliers, and economic impacts on communities. Feminists, activists,and labor unionleaders have all voiced their beliefs that Wal-Mart has engaged inmisconduct in order toprovide low prices. However, Wal-Mart has been turning over a newleaf. New emphases ondiversity, charitable giving, and sustainability have contributed to Wal-

Marts revitalizedimage.

The story of Wal-Mart and its low prices includes both positive andnegative impacts


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on society. Positively, Wal-Mart reportedly saves consumers over $287billion annually,equating to about $950 per person. On the flip side, research showsthat communities canbe negatively impacted by Wal-Marts arrival in their areas.

This analysis attempts to show both sides of the controversy. Itbegins by brieflyexamining the growth of Wal-Mart, and then discusses Wal-Martsvarious relationshipswith its stakeholders, including competitors, suppliers, and employees.

Some of theethical issues concerning these stakeholders include accusations ofdiscrimination, illegalimmigration issues, and leadership misconduct as demonstrated byWal-Mart former vicechair Thomas Coughlin. Yet, in an effort to show Wal-Marts attemptsto position itselfas a socially responsible company, this case also examines Wal-Marts

sustainability plans, its ethical initiatives, and former CEO Lee Scottsimpressive leadership qualities. The analysis concludes by highlighting

Wal-Marts strategy during the most recent recession and recovery.

HISTORY: THE GROWTH OF WAL-MARTThe story of Wal-Mart began in 1962, when founder Sam Waltonopened the first Wal-Mart Discount Store in Rogers, Arkansas. Although it had a slow startdue to lack of funds,Wal-Mart grew at an accelerated rate during the next forty years. Thecompany grew froma small chain to more than 7,000 facilities in thirteen countries. In2008 Wal-Mart opened


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its 3,000th international store. Only Exxon Mobil had more revenuethan Wal-Mart did in2008. The company now serves more than 176 million customers peryear.Much of the success that Wal-Mart has experienced can be attributedto its founder.A shrewd businessman, Walton believed in customer satisfaction andhard work. Heconvinced many of his associates to abide by the ten-foot rule, whereemployees pledgedthat whenever they got within ten feet of a customer, they would look

the customer in theeye, greet him or her, and ask if he or she needed help with anything.Waltons famousmantra, known as the sundown rule, was: Why put off until tomorrowwhat you cando today? Due to this staunch work ethic and dedication to customercare, Wal-Martclaimed early on that a formal ethics program was unnecessary because

the company hadMr. Sams ethics to follow.

In 2002 Wal-Mart officially became the largest grocery chain, toppingthe Fortune500 (a position it held seven times between 2002 and 2009). Thecompany also has becomeknown for its efforts toward sustainability growth. Former Wal-Mart

CEO Lee Scott waseven ranked seventh in the Ethisphere list of 100 top contributors tobusiness ethics,based on his support of sustainability. Additionally, FortunenamedWal-Mart the most


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admired company in America in 2003 and 2004. Although it has slippedsince then, itremained high on the list in 2009, when it was ranked eleventh mostadmired.

EFFECTS ON COMPETITOR STAKEHOLDERSPossibly the greatest complaint against Wal-Mart is that it puts othercompanies out ofbusiness. With its low prices, Wal-Mart makes it harder for localstores to compete. Wal-Mart is often accused of being responsible for the downward pressureon wages and benefits

in towns in which the company is located. Some businesses have triedto file lawsuitsagainst Wal-Mart with mixed success, claiming that the company usespredatory pricingto put competing stores out of business. Wal-Mart counters bydefending its pricing,asserting that its purpose is to provide quality, low-cost products tothe average consumer.

Yet, although Wal-Mart has saved consumers millions of dollars and is apopular shoppingspot for many, there is no denying that many competing stores go outof business onceWal-Mart comes to town.

In order to compete against the retail giant, other stores must reducewages. Studieshave shown that overall payroll wages, including Wal-Mart wages, arereduced by 5 percentafter Wal-Mart enters a new market. As a result, some activist groupsand citizens haverefused to allow Wal-Mart to take up residence in their towns.


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RELATIONSHIPS WITH SUPPLIERSTAKEHOLDERSWal-Mart focuses on keeping costs low to achieve its everyday low

prices (EDLPs) bystreamlining its company. Well-known for operational excellence in itsability to handle,move, and track merchandise, Wal-Mart expects its suppliers tocontinually improve theirsystems as well. Wal-Mart often works closely with suppliers to cutprices in order to savethe consumer money. For instance, Wal-Mart typically works withsuppliers to reducecosts of packaging and shipping, which lessens costs for consumers. In2006, Wal-Martlaunched a plan to reduce packaging by 5 percent, an initiativereflecting Wal-Marts desireto improve sustainability.

In 2008, Wal-Mart introduced its Global Responsible SourcingInitiative, whichcontains the following policies and requirements that will be included innew supplieragreements: Manufacturers facilities must certify compliance with laws andregulations where they operate as well as rigorous social andenvironmental

standards, set by government agencies, beginning with suppliers inChinain January 2009 and for all other Wal-Mart suppliers in 2011. By 2012, suppliers must work with Wal-Mart to make a 20 percentimprovement in the energy efficiency inside the top 200 factories inChina


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that Wal-Mart directly sources from. Suppliers must create a plan to eliminate, by 2012, defectivemerchandisereaching the Wal-Mart supply chain. And by 2012, all suppliers Wal-Mart buys from must source 95percentof their production from factories that receive the highest ratings onenvironmental and social practices.

If achieved, these goals will increase the sustainability of Wal-Martsuppliers

significantly. Some critics, however, believe that pressures to achievethese standards will shift moreof a cost burden onto suppliers. Since Wal-Mart is specificallytargeting its largest suppliernetwork in China, many believe these lofty goals will be hard toimplement in the allottedtime period and will be hard to enforce and track due to the intricatemaze of suppliers

in China and other countries. When suppliers do not meet its demands,Wal-Mart ceasesto carry the suppliers product or, often, will find another supplier forthe product at thedesired price.

Wal-Marts power centers around its size and the volume of productsneeded.

Many companies depend on Wal-Mart for the bulk of their business.Examples areClorox, which does 23 percent of its business with Wal-Mart, Revlon(22 percent),and Kelloggs (12 percent). This type of relationship allows Wal-Mart toinfluence


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terms with its vendors. Indeed, there are benefits to suppliers; asthey become moreefficient and streamlined for Wal-Mart, they help their othercustomers as well.Numerous companies believe that supplying Wal-Mart has been thebest thing fortheir businesses. However, many have found the amount of power thatWal-Martwields to be disconcerting.

come from American stores. However, the quest to maintain low priceshas pushed many The constant drive by Wal-Mart for lower prices can

have a negative effect onsuppliers. Many have been forced to move production from the UnitedStates to lessexpensive locations in Asia. Wal-Mart imports around $20 billion inproducts fromChina and encourages its suppliers to move production there in order to`lower costs.Chinas annual exports amount to $583 billion, and Wal-Mart ranks asChinas eighthlargesttrading partner. Companies such as Master Lock, Fruit of the Loom, andLevis,as well as many other Wal-Mart suppliers, have moved productionoverseas at theexpense of U.S. jobs.This was not founder Sam Waltons original intention. In the 1980s,

after learning thathis stores were putting other American companies out of business,founder Sam Waltonstarted his Buy American campaign in which much of Wal-Martsmerchandise would


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Wal-Mart suppliers overseas, and some experts now estimate that asmuch as 80 percentof Wal-Marts global suppliers are stationed in China.

ETHICAL ISSUES INVOLVING EMPLOYEESTAKEHOLDERSEmployee BenefitsMuch of the Wal-Mart controversy over the years has focused on theway the companytreats its employees, or associates as Wal-Mart refers to them.

Although Wal-Mart isthe largest retail employer in the world, it also has been highlycriticized for its low wagesand benefits. Wal-Mart has been accused of failing to provide healthinsurance to morethan 60 percent of its employees. Many part-timers are not eligible,although efforts havebeen made to increase the coverage of part-time workers. In a Wal-

Mart memo sent to theboard of directors by Susan Chambers, Wal-Marts executive vice-president for benefits,Chambers encouraged the hiring of more part-time workers while alsoencouraging thehiring of healthier, more productive employees. After this badpublicity, Wal-Martsstock decreased 27 percent between 2000 and 2005.Because of the deluge of bad press, Wal-Mart has taken action toimprove relationswith its employee stakeholders. In 2006, Wal-Mart raised pay tied toperformance in about


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one-third of its stores. The company also improved its health benefitspackage for 2008by offering lower deductibles and implementing a generic prescriptionplan estimated tosave employees $25 million. A Wal-Mart spokesperson claims that morethan 90 percentof employees are currently insured and that the company is takingsteps to increase thatnumber.

Wal-Marts Stance on UnionsSome critics believe that workers benefits could be improved if

workers could becomeunionized. However, unions have been discouraged since Wal-Martsfoundation. Sam Waltonbelieved that unions were a divisive force and might render thecompany uncompetitive. Wal-Mart maintains that it is not against unions in general, but that it seesno need for unionsto come between workers and managers. The company says that it

supports an open-doorpolicy in which associates can bring problems to managers withouthaving to resort to thirdparties. Wal-Mart associates have voted against unions in the past.

Although the company officially states that it is not opposed to unions,Wal-Martoften seems to fight against them. Critics claim that when the word

unionsurfaces at aWal-Mart location, the top dogs in Bentonville are called in to instantlythwart unionmovement. In 2000, seven of ten Wal-Mart butchers in Jacksonville,Texas, voted to join


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the United Food Workers Union. Wal-Mart responded by announcing itwould only sellprecut meat in its Supercenters, getting rid of its meat-cuttingdepartment. Although Wal-Mart offers justifiable claims for actions such as this, many see thecompany as aggressivelyworking to prevent unionization in its stores.However, Wal-Marts stance against unions has not always held up inforeign countries.In China, Wal-Mart faced a similar decision regarding unions. To growin China, it

appeared necessary to accept a union. Poor working conditions and lowwages were generating social unrest and the government wasattempting tocraft a new set of labor laws giving employees greater protection andgivingthe All-China Federation of Trade Unions (ACFTU) more power. In2004,the Chinese Labor Federation pushed Wal-Mart to allow the formation

ofunions. As a result, Wal-Mart technically allowed this, but critics claimthatWal-Mart made it increasingly difficult for the workers to form newunions.In 2006, employees announced the first formation of a Wal-Martunion,and within a week, four more branches had announced their formations

of unions. Wal-Mart initially reacted to these announcements bystating itwould not renew the contracts of unionized workers. However, thepressuremounted, and later that year Wal-Mart signed a memorandum with the


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ACFTU allowing unions in stores. Chinese Wal-Marts are now some ofthefew worldwide Wal-Marts that have unionized workers.

Workplace Conditions and DiscriminationDespite accusations of low employee benefits and a strong stanceagainst unions, Wal-Martremains the largest nongovernment employer in the United States,Mexico, and Canada. Itprovides jobs to millions of people and has been a mainstay of FortunesMost Admired

Companies list since the start of the twenty-first century. However,in December 2005,Wal-Mart was ordered to pay $172 million to more than 100,000California employees ina class-action lawsuit claiming that Wal-Mart routinely denied mealbreaks. The Californiaemployees also alleged that they were denied rest breaks and thatWal-Mart managers

deliberately altered time cards to prevent overtime. Similaraccusations began to pop up inother states as well. Wal-Mart denied the allegations and filed anappeal in 2007. In 2008,Wal-Mart agreed to pay up to $640 million to settle sixty-three suchlawsuits.Wal-Mart also has received accusations of discrimination from itsfemale employees.Although women account for more than two-thirds of all Wal-Martemployees, they makeup less than 10 percent of store management. Wal-Mart insists ittrains and promotes women


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fairly, but in 2001 an internal study showed that the company paidfemale store managersless than males in the same positions. In 2004, a federal judge in SanFrancisco grantedclass-action status to a sex-discrimination lawsuit against Wal-Martinvolving 1.6 millioncurrent and former female Wal-Mart employees. The plaintiffs claimedthat Wal-Martdiscriminated against them in regard to promotions, pay, training, andjob assignments.Wal-Mart argued against the class-action suit, claiming that

promotions were made on anindividual basis by each store. So far, the company has not been able toappeal the case.Yet, interestingly enough, Wal-Mart also has received recognition forits goodtreatment of female workers. Between 2007 and 2009, the National

Association for Female Executives recognized the company three years

in a row as a Top Company for Executive Women. It makes one

wonder if Wal-Mart truly is trying to turn over a new leaf in how ittreats its female employees.

Illegal ImmigrantsIn October 2003, a series of raids by U.S. Immigration and CustomsEnforcement officialsrevealed that 250 illegal immigrants were working on cleaning crews at61 Wal-Mart storesin 21 states. Several Wal-Mart contractors had hired theundocumented workers fromMexico, Eastern Europe, and other countries. In March 2005, thisinvestigation ended in a


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landmark $11 million civil settlement. According to a Wall StreetJournalarticle, three topWal-Mart executives knew the companys cleaning contractors usedillegal immigrants yetdid nothing to stop the practice. The immigrants worked as many asseven days a week forless than minimum wage.Wal-Mart answered these charges with an unusual response. Itadmitted that it knewabout the illegal immigrants because it had been cooperating with thefederal government

for three years prior to the raids. Wal-Mart officials also remarkedthat the reason whythey did not end ties with the contractors was because the federalgovernment asked themnot to do so. Additionally, Wal-Mart pointed to a prior lawsuit againstWal-Mart by theImmigration and Naturalization Service (INS) because the companyrequired immigrants

to show more verification than required by law. Accordingly, ourcompany was veryhesitant to ask for more assurances about the status of ourcontractors employees, statedWal-Mart spokeswoman Mona Williams.

Sweatshop WorkersWal-Mart has taken measures to show that it is against sweatshoplabor. In 2003, it hired

an anti-sweatshop expert to expand its global inspection program. Thefollowing year,Wal-Mart teamed up with the nonprofit Business for SocialResponsibility to reinforce itsglobal monitoring programs.


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However, in December 2007, Wal-Mart fell prey to criticism afterSenator Byron Dorganaccused the company of selling Christmas decorations made in Chinesesweatshops. Theinformation came from a National Labor Committee study indicatingthat workers as youngas 12 were working 15-hour days for as little as 26 cents an hour. Inresponse, Wal-Mart statedthat it was investigating the allegations and emphasized its codeagainst such practices.

ETHICAL LEADERSHIP ISSUESAside from Sam Walton, many other distinguished people have beenassociated with Wal-Mart. One of them is Hillary Clinton, who served on Wal-Marts boardsix years beforeher husband took the presidency. Another is former board vice chairThomas Coughlin,

although Coughlin achieved his fame for the corporate scandal hecaused.In March 2005, Coughlin was forced to resign from the board ofdirectors for stealingas much as $500,000 from Wal-Mart in the form of bogus expenses,reimbursements,and the unauthorized use of gift cards. Coughlin, a protg and huntingbuddy of Sam

Walton, was a legend at Wal-Mart. He often spent time on the roadwith Sam Waltonexpanding SAMs CLUB locations. At one time he was the secondhighest-ranking Wal-Mart executive and was a candidate for CEO.


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In January 2006, Coughlin agreed to plead guilty to federal wire-fraudand tax-evasioncharges. Although he took home millions of dollars in compensation,Coughlin secretlyhad been using Wal-Mart funds to pay for a range of his personalexpenses, includinghunting vacations, a $2,590 dog enclosure at his home, and a pair ofhandmade alligatorboots. Coughlins deceit was discovered when he asked a subordinate toapprove $2,000 inexpense payments without receipts.

Wal-Mart rescinded Coughlins retirement agreement worth more than$10million; and for his crimes, he was sentenced to 27 months of homeconfinement,$440,000 in fines, and 1,500 hours of community service. Wal-MartspokespersonMona Williams said the experience was embarrassing and painful.Someone we

expected to operate with the highest integrity let us down in a verypublic way. Thecase created concerns about leadership, corporate governance, and theethical cultureof Wal-Mart.

PROBLEMS WITH ENVIRONMENTALSTAKEHOLDERS

Like many large corporations, Wal-Mart has been targeted as a violatorof safeenvironmental practices. The Environmental Protection Agency (EPA)hascited Wal-Mart for violating storm water regulations and air qualityrestrictions.


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In 2005, Wal-Mart received a grand jury subpoena from the U.S.AttorneysOffice in Los Angeles, California, seeking documents and informationrelatingto the companys receipt, transportation, handling, identification,recycling,treatment, storage, and disposal of certain merchandise constitutinghazardousmaterial or hazardous waste.However, probably the greatest environmental concern associated withWal-Mart has been urban sprawl. The construction of a Wal-Mart can

stressa citys infrastructure of roads, parking, and traffic flow. There havebeenconcerns about the number of acres of city green space devoured byWal-Martconstruction (Wal-Mart Supercenters occupy about twenty to thirtyacres ofland). Another issue is the number of abandoned stores (between 350

and 400annually), deserted when the company outgrows locations. Currently,over 26million square feet of empty Wal-Mart space existsenough to fill 534football fields.Allegedly, Wal-Mart goes out of its way to prevent other retailcompanies from buyingits abandoned stores, contributing to the empty spaces.

Sustainability 360Wal-Mart has attempted to address its environmental stakeholders bybecoming a greenercompany. Some of the company goals include the following:


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Reducing greenhouse gases at existing store, club, and distributioncenter bases aroundthe world by 20 percent by 2012 Designing new prototypes to be 25 to 30 percent more efficient bythe end of 2009 Developing and implementing innovative energy-efficient technologyinto existingand new stores

Reducing the amount of packaging in the supply chain by 5 percent by2013 (whichthe company has promoted through annual packaging expos)

Currently Wal-Mart is working on four main green areas: wasteimprovement andrecycling, natural resources, energy, and social/community impact. Wal-Marts long-termgoals are to be supplied 100 percent by renewable energy, create zerowaste, and carryproducts that sustain the environment and its resources.

Sustainability LeadershipWal-Mart has already taken strides to obtain its sustainabilityobjectives. It has opened twoenvironmentally friendly stores in McKinney, Texas, and Aurora,Coloradolocationschosen for their different weather and climate considerations. Thestores get electricityfrom solar panels and wind turbines. The company hopes these

experiments will provideexamples of the ways building owners, scientists, engineers, architects,contractors, andlandscape designers can work together to create stores designed tosave energy, conserve


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natural resources, and reduce pollution. According to Wal-Mart vicepresident KimSaylors-Laster, this is one step in Wal-Marts plan of being supplied by100 percentrenewable energy. Wal-Mart intends to take information gained atthese stores and applyit to new stores.To reduce energy consumption, Wal-Mart facilities are conservingenergy in twomajor ways. First, most new stores include a daylighting featureenabling stores to dim

or turn off lights as daylight increases and enters through skylights,thereby reducing thedemand for electricity during peak hours. Second, Wal-Mart managesenergy consumptionby centrally controlling the heating and cooling of U.S. Wal-Martstores.Wal-Mart is also attempting to reduce fossil fuel use and to sell moregreen products.

Throughout 2009 Wal-Mart tested new technologies, including twotypes of hybrid trucksand two alternatively fueled heavy-duty trucks, in order to achieve itsgoals of creating amore environmentally friendly trucking fleet. Wal-Mart is proud topoint out that between2005 and 2008 the company increased its fleet efficiency by 25percent through its use of

new technologies, routes, and loading procedures. Wal-Marts new goalis to double itsfleet efficiency by 2015.Additionally, Wal-Mart has announced a goal to reduce phosphates, awater pollutant


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that encourages the growth of oxygen-depleting algae and can kill fishand other wildlife,in laundry and dish detergents by 70 percent by 2011. The companyhopes to use itsworldwide influence to make a global difference in sustainabilityinitiatives. Our reacharound the world puts us in a unique position to drive sustainablechange across nationalboundaries and into the global supply chain, said Craig Herkert, Wal-Mart President andCEO of the Americas.

Wal-Mart is also trying to get its associates personally involved withsustainability.Approximately 500,000 Wal-Mart associates throughout the UnitedStates have participatedin the Personal Sustainability Project (PSP), a voluntary programencouraged by formerCEO Lee Scott. Associates at Wal-Mart stores would selectsustainability goals and make

commitments to monitor their progress for several weeks. The PSPcounts successes, suchas recycling over 3 million pounds of plastic, and encouraging people towinterize theirhomes and switch to low-energy fluorescent light bulbs, but alsoincludes health goals.Healthier employees are better for the environment, for the health-care system, and for the

business. Participants have lost a collective 184,000 pounds and 20,000have quit smoking.The PSP has also been launched in Brazil, Canada, and Japan.

To measure how its eco-friendly products are faring with consumers,Wal-Mart


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launched the Wal-Mart Sustainability Live Better Index in 2007. Thisindex allowsWal-Mart to track, on a state-by-state basis, consumers demand forlow-cost products,health and welfare products, and green products. In the sustainabilitycategory, consumerscan track adoption rates at Wal-Mart in the following categories:compact florescent lightbulbs, organic milk, extended-life paper products, organic baby food,organic cleaningproducts, and organic coffee. Wal-Mart believes that consumers can

make a consciousdecision to purchase them for their environmentally friendly and cost-saving benefitsversus conventional versions. So far results have been good, with a 66percent increase inaverage adoption rates.Even during the 20082009 economic recession, Wal-Mart tried toportray itself as a

firm that cares about green initiatives. It continued to partner withother large companiesto promote green jobs. In 2009, Wal-Mart announced its intention tocontribute$5.7 million in grants to the U.S. Conference of Mayors and VeteransGreen Jobs tosupport the creation of green jobs in the United States. Wal-Martexpects the money to

be used to train the workforce in the growing sector of the greenindustry. The companybelieves it is making a profitable investment, as 10 percent of jobgrowth in the UnitedStates is expected to be in the green-collar sector by 2032. Withthis investment, Wal-


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Mart hopes to encourage mayors to promote jobs in their cities greenindustries andprovide veterans with training in green skills. It is clear that Wal-Martis trying to improveits relationship with environmental activists and stakeholders.

Savings: Is Going Green Cost-Effective?Wal-Marts green initiatives have secured it the goodwill of manyenvironmentallyconscious consumers, but does going green save the company costs inother ways? So farWal-Marts initiatives have racked up the following savings:

$25 million/year in savings from auxiliary power systems on trucks torun the airconditioning when trucks are stopped. The store further plans todouble the fuelefficiency of its new heavy-duty trucks by 2015. $7 million/year in savings from replacing all incandescent bulbs instore display ceilingfans with compact fluorescent bulbs.

WHAT IS WAL-MART DOING TO IMPROVEETHICS AND SOCIAL RESPONSIBILITY?Although it has received much criticism in the past years, Wal-Marthas been working toimprove its ethical reputation along with its reputation forsustainability and corporategovernance. In 2004, Wal-Mart formed the Global Ethics Office andreleased a revisedGlobal Statement of Ethics. The intent of the Global Ethics Office isto spread an ethical


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corporate culture among its global stakeholders. The Global EthicsOffice providesguidance on ethical decision making based on the Global Statement ofEthics and an ethicshelpline. The helpline is an anonymous and confidential way forassociates to contact thecompany regarding ethical issues. Additionally, Wal-Mart has an EthicalStandards Teamthat consists of 200 associates. The intent of the team is to monitorthe compliance ofsupplier factories with the companys Standards for Suppliers and

local laws.In 2005, Wal-Mart introduced a full-page newspaper ad that promotedthe companysconcern with ethics and its stakeholders. Its newspaper ad was adirect letter from Wal-MartCEO Lee Scott. The ad stated that it was time for the public to readthe unfiltered truth

about Wal-Mart and time for it to stand up on behalf of a workforcethat included 1.2 millionAmericans. Scott called for Congress to increase the minimum wageand noted that Wal-Mart had increased spending on employee health insurance.Wal-Mart also has contributed significantly to disaster managementprojects. Thecompany donated millions to relief efforts for Hurricane Katrina,

$300,000 to support floodrelief efforts in Southern Brazil, and $3 million for earthquake reliefin China. Wal-Martattempts to help its associates who are caught in disasters, allocating$2 million in grants for


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associates whose homes have been damaged and creating a toll-freenumber for associateswho need help.Despite its efforts, Wal-Marts reputation was significantly tarnishedagainwith the Coughlin scandal. It was therefore eager to reestablish itscredibility withstakeholders. It found its solution in the person of Lee Scott, CEO ofWal-Mart fromJanuary 2002 to January 2009. Lee Scott was recognized as a leaderin investing in

clean energy. Due to him, many California facilities are now powered bysolar energy,and the energy needs of 15 percent of Texas stores can now be metwith wind power.Scotts leadership had such a positive effect on the company that hewas given oneof the top spots in the 100 Most Influential People inBusiness Ethics in 2008. Wal-Mart has taken great

strides to portray itself as an ethically responsiblebusiness with good leadership.The companys reputation for low prices helpedWal-Mart to remain a healthy business even during the20082009 recession. Wal-Mart claims a commitmentto improving the standard of living for customersworldwide, and has backed that claim with largecharitable donations, amounting to $423 million globally

in fiscal year 2009. Its key retailing strategy is offering a broadassortment of merchandiseand services at everyday low prices (EDLP) while fostering a cultureclaiming to rewardand embrace mutual respect, integrity, and diversity. Wal-Mart hasalways targeted lowerincome


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customers, a strategy that paid dividends during the 20082009recession. Whilemany companies struggled to re-brand themselves as affordable, Wal-Mart had an earlyadvantage. Wal-Mart is known for excellent market orientationfocusing on consumers,defeating competitors, and increasing shareholder value.

WAL-MARTS RESPONSE TO THEFINANCIAL CRISIS

Interestingly enough, the financial meltdown of 20082009 may haveenhanced Wal-Martsreputation. Unlike many stores, Wal-Marts sales increased by 2percent in 2008 as shopperssought good deals. An influx of new shoppers forced Wal-Mart tocreate better crowdcontrolmeasures in its New York stores after an employee was trampled todeath and others

were injured on Black Friday 2008 by a mob of shoppers. Althoughrefusing to admit anywrongdoing in the incident, Wal-Mart agreed to have its crowd-control

measures approved

by safety consultants (in addition to providing $400,000 to victims ofthe incident). Wal-Mart is also donating $1.5 million to a Nassau County social service

program.In addition to creating better safety measures, Wal-Mart has launchednew initiativestargeting families facing financial dilemmas. For example, the companyformed the Wal-Mart


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MoneyCard, a reloadable Visa debit card to help lower-incomeconsumers who do not usetraditional checking accounts. Because of the economic crisis, Wal-Mart has decreased thefees for this card; consumers can now purchase it for $3, rather thanthe $9 it cost originally.The card has no overdraft fees, and the fees for maintenance andreloading are low. With thismove, Wal-Mart hopes to save consumers $500 million in money servicefees each year.The Wal-Mart Foundation has partnered with United Way and One

EconomyCorporation to provide free filing and tax services for low-incomeconsumers. TheWal-Mart Foundation is donating a $3.6 million grant to this endeavorin an attempt todemonstrate social responsibility while increasing the popularity of itsstores.

THE FUTURE OF WAL-MARTWal-Mart can be viewed through two very different lenses. Some thinkthat the companyrepresents all that is wrong with America, and others love it. Inresponse to criticism andin an attempt to initiate goodwill with consumers, the company hascontinued to improve

stakeholder relationships and made efforts to exhibit itself as anethically responsiblecompany. Although it has faced controversy regarding competition,suppliers, employees, andworkplace discrimination, it has increasingly demonstrated concern forits stakeholders.


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Wal-Marts endeavors that have sparked consumer attention deal withsustainabilityinitiatives and social responsibility. Its goals to decrease its waste andcarbon emissionsextend to all facets of its operations, including suppliers. Though someconsider theseobjectives to be unrealistic, the effort demonstrates Wal-Martsdesire (whether throughgenuine concern for the environment or for its own bottom-lineprofits) to become a moresustainable company.

Similarly, Wal-Marts creation of an ethics and compliance programshows it has comea long way since its beginning when formal ethics programs weredeemed unnecessary.Likewise, its initiatives to help families during the recession helped toreinforce its imageas a caring company. Both critics and supporters of Wal-Mart alike arewaiting to see

whether Wal-Marts efforts will position the company as a large retailcompany dedicatedto social responsibility.

case study – wal

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