WalMartinSundown Rule The Sundown Rule One Sunday morning, Jeff, a pharmacist at a Wal-Mart store in Harrison, Ark. , received a call from his store. A store associate informed him that one of his pharmacy customers, a diabetic, had accidentally dropped her insulin down her garbage disposal. Knowing that a diabetic without insulin could be in grave danger, Jeff immediately rushed to the store, opened the pharmacy and filled the customer’s insulin prescription.
This is just one of many ways your local Wal-Mart store might honor what is known by our associates as the Sundown Rule. It’s a rule we take seriously at Wal-Mart. In this busy place, where our jobs depend on one another, it’s our standard to get things done today – before the sun goes down. Whether it’s a request from a store across the country or a call from down the hall, every request gets same-day service. These are our working principles. The Sundown Rule was our founder, Sam Walton’s twist on that old adage ‘why put off until tomorrow what you can do today.’ It is still an important part of our Wal-Mart culture and is one reason our associates are so well-known for their customer service.
The observation of the Sundown Rule means we strive to answer requests by sundown on the day we receive them. It supports Mr. Sam’s three basic beliefs: 1. respect for the individual, 2. customer service 3. and striving for excellence.
At Wal-Mart, our associates understand that our customers live in a busy world. The Sundown Rule is just one way we try to demonstrate to our customers that we care. The Wal-Mart Culture As Wal-Mart continues to grow into new areas and new mediums, our success will always be attributed to our culture. Whether you walk into a Wal-Mart store in your hometown or one across the country while you ” re on vacation, you can always be assured you ” re getting low prices and that genuine customer service you ” ve come to expect from us. You ” ll feel at home in any department of any store… that’s our culture.
Wal-Mart has become an American icon in a very short period of time. When you think of the companies at the cornerstone of American heritage, Wal-Mart is one of the first that comes to mind. They have grown drastically in a relatively short period of time, when compared to other companies their size, and have clearly defined themselves as an industry leader. They have achieved this status in many ...
3 Basic Beliefs Learn more about the three philosophies Sam Walton built the company on. The Story of Wal-Mart ” The secret of successful retailing is to give your customers what they want,’ Sam wrote in his autobiography. Sam’s Rules For Building A Business In his 1992 book ‘Made in America’, Sam Walton compiled a list of ten key factors that unlock the mystery. Helping People Make A Difference Sam Walton believed that each Wal-Mart store should reflect the values of its customers and support the vision they hold for their community. Exceeding Customer Expectations As Wal-Mart associates we know it is not good enough to simply be grateful to our customers for shopping our stores – we want to demonstrate our gratitude in every way we can! Sundown Rule The Sundown Rule was Sam Walton’s twist on that old adage, ‘why put off until tomorrow what you can do today’. Ten Foot Rule’I want you to promise that whenever you come within 10 feet of a customer, you will look him in the eye, greet him and ask him if you can help him.’ Pricing Philosophy Thanks to the legacy of Sam Walton, Wal-Mart is a store you can count on every day to bring you value for your dollar.
The Wal-Mart Cheer We do have fun, we do work hard, and we always remember whom we ” re doing it for – the customer. 3 Basic Beliefs Sam Walton’s 3 Basic Beliefs the company was built on. Sam Walton built Wal-Mart on the revolutionary philosophies of excellence in the workplace, customer service and always having the lowest prices. We have always stayed true to the Three Basic Beliefs Mr. Sam established in 1962: 1.
Respect for the Individual 2. Service to Our Customers 3. Strive for Excellence Respect the Individual’ ‘Our people make the difference’ is not a meaningless slogan – it’s a reality at Wal-Mart. We are a group of dedicated, hardworking, ordinary people who have teamed together to accomplish extraordinary things. We have very different backgrounds, different colors and different beliefs, but we do believe that every individual deserves to be treated with respect and dignity.’ Don Soderquist, Senior Vice Chairman of Wal-Mart Stores, Inc.
Wal-Mart's philosophy has always been to provide everyday low prices and superior customer service. But this philosophy might have stared potential customers away from Wal-Mart. Many people, including myself, have the misconception that Wal-Mart only sells necessities that the average working class family can afford. An extreme eye opener for me was a recent television commercial by Wal-Mart. I ...
(Retired) Service to Our Customers We want our customers to trust in our pricing philosophy and to always be able to find the lowest prices with the best possible service. We ” re nothing without our customers. Strive for Excellence New ideas and goals make us reach further than ever before. We try to find new and innovative ways to push our boundaries and constantly improve. ‘Sam was never satisfied that prices were as low as they needed to be or that our product’s quality was as high a they deserved – he believed in the concept of striving for excellence before it became a fashionable concept.’ Lee Scott, President and Chief Executive Officer of Wal-Mart Stores, Inc. The Story of Wal-Mart The Story of Wal-Mart Many trace discount retailing’s birth to 1962, the first year of operation for Kmart, Target and Wal-Mart.
But by that time, Sam Walton’s tiny chain of variety stores in Arkansas and Kansas was already facing competition from regional discount chains. Sam traveled the country to study this radical, new retailing concept and was convinced it was the wave of the future. He and his wife, Helen, put up 95 percent of the money for the first Wal-Mart store in Rogers, Arkansas, borrowing heavily on Sam’s vision that the American consumer was shifting to a different type of general store. Today, Sam’s gamble is a global company with more than 1.
3 million associates worldwide and nearly 5, 000 stores and wholesale clubs across 10 countries. The ‘most admired retailer’ according to FORTUNE magazine has just completed one of the best years in its history: Wal- Mart generated more than $256 billion in global revenue, establishing a new record and adding more than $26 billion in sales. The company earned almost $9. 1 billion in net income and grew earnings per share by more than 15 percent. But it all started with an understanding of what consumers want from a retailer. ‘The secret of successful retailing is to give your customers what they want,’ Sam wrote in his autobiography.
By exploiting core competencies firms can develop value creating strategies which are superior to their competitors. Wal-Mart are experts at using there core competencies to become superior to their competitors. There are three resources which allow a company to create a core competency. Tangible resources consist of assets that can be seen, financial resources (borrowing capacity), physical ...
‘And really, if you think about it from the point of view of the customer, you want everything: a wide assortment of good quality merchandise; the lowest possible prices; guaranteed satisfaction with what you buy; friendly, knowledgeable service; convenient hours; free parking; a pleasant shopping experience. ‘You love it when you visit a store that somehow exceeds your expectations, and you hate it when a store inconveniences you, or gives you a hard time, or pretends you ” re invisible.’ While other discounters such as Kmart quickly expanded across the country in the 1960 s, Sam was able to raise the funds to build only 15 Wal-Mart stores. Wal-Mart got the boost it needed in 1970 when its stock was offered for the first time on the New York Stock Exchange. The public offering created the capital infusion that grew the company to 276 stores by the end of the decade. By focusing on customer expectations, Wal-Mart was growing rapidly in 11 states. In the 1980 s, Wal-Mart became one of the most successful retailers in America.
Sales grew to $26 billion by 1989, compared to $1 billion in 1980. Employment increased tenfold. At the end of the decade there were nearly 1, 400 stores. Wal-Mart Stores, Inc. branched out into warehouse clubs with the first SAM’S Club in 1983. The first Supercenter, featuring a complete grocery department along with the 36 departments of general merchandise, opened in 1988.
Wal-Mart had become a textbook example of managing rapid growth without losing sight of a company’s basic values. In Wal-Mart’s case, the basic value was, and is, customer service. Ironically, technology plays an important role in helping Wal-Mart stay customer focused. Wal- Mart invented the practice of sharing sales data via computer with major suppliers, such as Proctor & Gamble.
Every time a box of Tide is rung up at the cash register, Wal-Mart’s data warehouse takes note and knows when it is time to alert P&G to replenish a particular store. As a result, Wal-Mart stores rarely run out of stock of popular items. Sam’s Rules For Building A Business Sam’s Rules For Building A BusinessPeople often ask, ‘What is Wal-Mart’s secret to success?’ In response to this ever-present question, in his 1992 book Made in America, Sam Walton compiled a list of ten key factors that unlock the mystery. These factors are known as ‘Sam’s Rules for Building a Business.’ Rule 1 Commit to your business.
"Supply chain management is the flow of goods, services, and information from the initial sources of materials and services to the delivery of products and activities occur in the same organization or in other organizations" (Horngren 695). This approach enables Regal Marine (R. M) to be highly effective, efficient, and profitable. More over supply chain management effectively manage your supply ...
Believe in it more than anybody else. I think I overcame every single one of my personal shortcomings by the sheer passion I brought to my work. I don’t know if you ” re born with this kind of passion, or if you can learn it. But I do know you need it.
If you love your work, you ” ll be out there every day trying to do it the best you possibly can, and pretty soon everybody around will catch the passion from you – like a fever. Rule 2 Share your profits with all your Associates, and treat them as partners. In turn, they will treat you as a partner, and together you will all perform beyond your wildest expectations. Remain a corporation and retain control if you like, but behave as a servant leader in a partnership. Encourage your Associates to hold a stake in the company. Offer discounted stock, and grant them stock for their retirement.
It’s the single best thing we ever did. Rule 3 Motivate your partners. Money and ownership alone aren’t enough. Constantly, day-by-day, think of new and more interesting ways to motivate and challenge your partners.
Set high goals, encourage competition, and then keep score. Make bets with outrageous payoffs. If things get stale, cross-pollinate; have managers switch jobs with one another to stay challenged. Keep everybody guessing as to what your next trick is going to be. Don’t become too predictable. Rule 4 Communicate everything you possibly can to your partners.
The more they know, the more they ” ll understand. The more they understand, the more they ” ll care. Once they care, there’s no stopping them. If you don’t trust your Associates to know what’s going on, they ” ll know you don’t really consider them partners. Information is power, and the gain you get from empowering your Associates more than offsets the risk of informing your competitors.
Rule 5 Appreciate everything your Associates do for the business. A paycheck and a stock option will buy one kind of loyalty. But all of us like to be told how much somebody appreciates what we do for them. We like to hear it often, and especially when we have done something we ” re really proud of. Nothing else can quite substitute for a few well-chosen, well-timed, sincere words of praise.
Many advise against the coming of a Wal-Mart to their town, arguing that it will only bring negative consequences to the economy, but most of their pleas to stop Wal-Mart are thoughtless. On the contrary, Wal-Mart is a positive force sweeping through the United States generating town growth, new jobs, customer traffic and increased tax revenues. Wal-Mart is great for the economy in that it brings ...
They ” re absolutely free – and worth a fortune. Rule 6 Celebrate your successes. Find some humor in your failures. Don’t take yourself so seriously. Loosen up, and everybody around you will loosen up. Have fun.
Show enthusiasm – always. When all else fails, put on a costume and sing a silly song. Then make everybody else sing with you. Don’t do a hula on Wall Street.
It’s been done. Think up your own stunt. All of this is more important, and more fun, than you think, and it really fools the competition. ‘Why should we take those cornballs at Wal-Mart seriously?’ Rule 7 Listen to everyone in your company. And figure out ways to get them talking. The folks on the front lines – the ones who actually talk to the customer – are the only ones who really know what’s going on out there.
You’d better find out what they know. This really is what total quality is all about. To push responsibility down in your organization, and to force good ideas to bubble up within it, you must listen to what your Associates are trying to tell you. Rule 8 Exceed your customers’ expectations. If you do, they ” ll come back over and over. Give them what they want – and a little more.
Let them know you appreciate them. Make good on all your mistakes, and don’t make excuses – apologize. Stand behind everything you do. The two most important words I ever wrote were on that first Wal-Mart sign, ‘Satisfaction Guaranteed.’ They ” re still up there, and they have made all the difference.
Rule 9 Control your expenses better than your competition. This is where you can always find the competitive advantage. For 25 years running – long before Wal-Mart was known as the nation’s largest retailer – we ranked No. 1 in our industry for the lowest ratio of expenses to sales. You can make a lot of different mistakes and still recover if you run an efficient operation. Or you can be brilliant and still go out of business if you ” re too inefficient.
Many retail stores are created by an owner that has a very creative idea for marketing products. Not all stores seem to stay in business partly due to the lack of interest shown in later years of the business's growth. The chains that tend to succeed are of course financially backed but the owner of the stores stays creative and innovative in their ideas to keep promoting the chain. One of the ...
Rule 10 Swim upstream. Go the other way. Ignore the conventional wisdom. If everybody else is doing it one way, there’s a good chance you can find your niche by going in exactly the opposite direction. But be prepared for a lot of folks to wave you down and tell you you ” re headed the wrong way. I guess in all my years, what I heard more often than anything was: a town of less than 50, 000 population cannot support a discount store for very long.
Helping People Make A Difference Helping People Make The Difference Wal-Mart’s community involvement approach is a unique one. Our community involvement programs are guided by Associates who live in the local area and understand its needs. Our Associates combine financial and volunteer support to assist organizations that make a positive difference in local communities. In addition, Wal-Mart Stores, Inc.
, has launched several national efforts to help the larger, U. S. community. To find out more about how Wal-Mart benefits communities nationwide, visit web for the latest news, program information and to learn more about the things that Wal-Mart and SAM’S CLUB associates – your neighbors – do for towns and cities every day, all across the country.
Exceeding Customer Expectations Exceeding Customer Expectations At Wal-Mart, we receive letters daily from customers praising individual associates for giving exceptional service. Sometimes they write to express their appreciation for services as simple as a smile, an associate remembering their name or someone carrying out their purchases for them. Other times they write of incidents that seem almost heroic – for instance, Sheila who risked her own safety when she jumped in front of a car to prevent a little boy from being struck, Phyllis who administered CPR to a customer who had suffered a heart attack in her store, Joyce who threw a plate on the floor to assure a young mother that a set of dishes was truly unbreakable and Annette who gave up the Power Ranger she had on layaway for her own son so that a customer’s son could have his birthday wish. Years ago, Sam Walton challenged all Wal-Mart associates to practice what he called ‘aggressive hospitality.’ He said ‘Let’s be the most friendly – offer a smile of welcome and assistance to all who do us a favor by entering our stores.
Give better service – over and beyond what our customers expect. Why not? You wonderful, caring associates can do it and do it better than any other retailing company in the world… exceed your customers’ expectations. If you do, they ” ll come back over and over again.’ As Wal-Mart associates we know it is not good enough to simply be grateful to our customers for shopping our stores – we want to demonstrate our gratitude in every way we can! We believe that doing so is what keeps our customers coming back to Wal-Mart again and again. Ten Foot Rule The Ten Foot Rule One of Wal-Mart’s secrets to customer service is our ’10-foot attitude,’ handed down to us by Wal-Mart Founder, Sam Walton. During his many store visits, he encouraged associates to take a pledge with him: ‘…
I want you to promise that whenever you come within 10 feet of a customer, you will look him in the eye, greet him and ask him if you can help him.’ This pledge is what we now call our ’10-foot attitude,’ and it was something Sam had practiced since childhood. He was always ambitious and competitive, and by the time he reached college at the University of Missouri in Columbia, Sam decided he wanted to be president of the university student body. In his words, ‘I learned early on that one of the secrets to campus leadership was the simplest thing of all: speak to people coming down the sidewalk before they speak to you… I would always look ahead and speak to the person coming toward me. ‘If I knew them, I would call them by name, but even if I didn’t I would still speak to them. Before long, I probably knew more students than anybody in the university, and they recognized me and considered me their friend.
I ran for every office that came along.’ Not only was Sam elected to just about all of those offices, but he also carried that philosophy into the world of retail, where you can see it practiced every day by Wal-Mart associates throughout the world. (Sam was president of the senior men’s honor society, QE BH, an officer in his fraternity, president of the senior class and captain and president of Scabbard and Blade, the elite military organization of ROTC. ) Pricing Philosophy Sam Walton always knew he wanted to be in the retailing business. He started his career by running a Ben Franklin franchise store and learned about buying, pricing and passing good deals on to customers. He credits a manufacturer’s agent from New York, Harry Weiner, with his first real lesson about pricing: ‘Harry was selling ladies’ panties for $2 a dozen. We’d been buying similar panties from Ben Franklin for $2.
50 a dozen and selling them at three pair for $1. Well, at Harry’s price of $2, we could put them out at four for $1 and make a great promotion for our store. ‘Here’s the simple lesson we learned… say I bought an item for 80 cents.
I found that by pricing it at $1. 00, I could sell three times more of it than by pricing it at $1. 20. I might make only half the profit per item, but because I was selling three times as many, the overall profit was much greater. Simple enough.
But this is really the essence of discounting: by cutting your price, you can boost your sales to a point where you earn far more at the cheaper retail than you would have by selling the item at the higher price. In retailer language, you can lower your markup but earn more because of the increased volume.’ Sam’s adherence to this pricing philosophy was unshakable, as one of Wal-Mart’s first store managers recalls: ‘Sam wouldn’t let us hedge on a price at all. Say the list price was $1. 98, but we had paid only 50 cents. Initially, I would say, ‘Well, it’s originally $1. 98, so why don’t we sell it for $1.
25?’ And, he’d say, ‘No. We paid 50 cents for it. Mark it up 30 percent, and that’s it. No matter what you pay for it, if we get a great deal, pass it on to the customer.’ And of course that’s what we did.’ And that’s what we continue to do – work diligently to find great deals to pass on to our customers.
Thanks to the legacy of Sam Walton, Wal-Mart is a store you can count on every day to bring you value for your dollar. And that’s why at Wal-Mart, you never have to wait for a sale to get your money’s worth! Here are three of our pricing philosophies we follow at Wal-Mart: o Every Day Low Price (E DLP) Because you work hard for every dollar, you deserve the lowest price we can offer every time you make a purchase. You deserve our Every Day Low Price. It’s not a sale; it’s a great price you can count on every day to make your dollar go further at Wal-Mart. o Rollback This is our ongoing commitment to pass even more savings on to you by lowering our Every Day Low Prices whenever we can. When our costs get rolled back, it allows us to lower our prices for you.
Just look for the Rollback smiley face throughout the store. You ” ll smile too. o Special Buy When you see items with the Special Buy logo, you ” ll know you ” re getting an exceptional value. It may be an item we carry every day that includes an additional amount of the same product or another product for a limited time. Or, it could be an item we carry while supplies last, at a very special price. The Wal-Mart Cheer Give me a W! Give me an A! Give me an L! Give me a Squiggly! Give me an M! Give me an A! Give me an R! Give me a T! What’s that spell? Wal-Mart! Whose Wal-Mart is it? My Wal-Mart! Who’s number one? The Customer! Always! Don’t be alarmed if you hear these enthusiastic shouts from our associates as you ” re shopping at your favorite Wal-Mart store.
All the noise is our Wal-Mart cheer. Some people may think it’s corny, but we ” re proud of it. It’s the way we show pride in our company – in fact, we hope you ” ll join right in. Over the years, our company has grown to include stores, associates and customers in many parts of the world, so now our cheer can be heard in many different languages. What is the origin of the Wal-Mart cheer? Our founder, Sam Walton was visiting a tennis ball factory in Korea, where the workers did a company cheer and calisthenics together every morning. He liked the idea and couldn’t wait to get back home to try it with his associates.
He said, ‘My feeling is that just because we work so hard, we don’t have to go around with long faces all the time – while we ” re doing all of this work, we like to have a good time. It’s sort of a ‘whistle while you work’ philosophy, and we not only have a heck of a good time with it, we work better because of it.’ We do have fun, we do work hard, and we always remember whom we ” re doing it for – the customer Wal-Mart International Operations Wal-Mart International Operations Wal-Mart became an international company in 1991 when a SAM’S Club opened near Mexico City. Just two years later, Wal-Mart International was created to oversee the growing opportunities for the company worldwide. Since then, the International segment has enjoyed rapid growth and consumer acceptance. Today, customers at more than 1, 500 units in nine countries prove Wal-Mart’s Every Day Low Price promise is a message clearly understood in any language. Wal-Mart International employs more than 330, 000 associates in Argentina, Brazil, Canada, China, Germany, Korea, Mexico, Puerto Rico and the United Kingdom.
Wal-Mart also owns a 37. 8% interest in Seiu, Ltd. , a leading Japanese retailer. Case Analysis: Wal-Mart History/Development/GrowthS am Walton founded wal-Mart in 1962. Much of Wal-Mart’s success can be attributed to him. He was very simple and ran his company that way.
He emphasized hard work and ambition. When the company was in its earlier stages he made it a point to visit every Wal-Mart once a year. He didn’t just visit each Wal-Mart and talk with management. He would lead a cheer with the associates. The term associates, which he picked up from his experience working for JC Penney’s.
He also ran a Ben Franklin franchise with his brother that became extremely profitable. He eventually lost the lease on the store and founded Wal-Mart. They originally started off with 15 stores in the state of Arkansas. David Glass took over as president of the company in 1984. Then in 2000 Lee Scott was named CEO. Scott happened to be recruited by David Glass early in his career.
Wal-Mart is now the largest retailer in the world with revenues of 165 billion. Internal Strengths and Weaknesses At first glance Wal-Mart seems to be exactly like the next retailer such as Kmart. There are a few distinguishing characteristics that separate them from the rest. First, they always build distribution centers before opening store locations, which saved costs on distribution overhead. Second, they have the most sophisticated inventory system. It operates in real time.
As soon as an item is scanned at checkout it is directly sent to inventory and new products are automatically ordered. This process also helps with speedier projections and sales information. Third, they have an outstanding company culture. The same culture that Mr. Sam himself had emulated. Along these same lines, they emphasized a high value for associates, which is what they call their employees.
As well as being more service oriented. They also found the delicate balance between having low prices and appearing too cheap. External Environment During the 80’s and early 90’s retailers when through some difficult times. There was a large increase in competitive pressure, which resulted in much lower margins.
At the time most households did not have much discretionary spending. Therefore consumer spending was very limited. There was only enough money for the “essentials.” The entire economy was in a recession. Around 1998, unemployment was at an all-time low.
Total household income was up and inflation was very low. All of a sudden buying power was higher and consumers were willing to buy. The United States is still experiencing one of the longest periods of economic expansion in its history. SWOTStrengthso Distribution center so Culture Inventory Systems Bargaining WeaknessesOpportunitieso More store so Incorporate grocery item so Buy out remaining competition Threat so Competition Corporate Level Strategies At the corporate level, Wal-Mart tries to stay ahead of the game.
From the very beginning they have been for rapid expansion. They are currently located in nine different countries as well as all 50 states. They have also tried new retail formats such as Sam’s Club. They also take pride in their stores upgrading and refurbishing. They are also building new distributions centers all the time. They are currently working on expanding into Canada, Asia, South America, and Europe.
They also have their own dog food line name after Sam’s dog, ‘Ol Roy, which was a top seller. Business Level Strategies At the business level there is a large emphasis on customers, .”.. provide what they want, when they want it; at a value.” They also take a lot of pride in their associates. Average employees make 7.
50/hour. They also incorporate teamwork into each store. They stress that employees treat each other how they want to be treated. Recommendations As far as recommendations are concerned I couldn’t really come up with anything. The only thing that came to my mind was the grocery store.
If Wal-Mart incorporated groceries into their stores they would put all the rest out of business. I don’t think they would have to be cheaper either. The convenience of going to Wal-Mart and getting your grocery shopping done at the same time would be too easy to exploit. They seem to be expanding already as it is but I would definitely continue expansion. TEACHING CASE STUDY: WAL-MART OR WORLD MART By: Justin Ervin, Kurt Fens ke, Daniel Foster, Jennifer Gogo, Peter Jacques, Rebecca Thomas and Matthew Tun no Special Thanks to Carol Thompson for her patient guidance with this research. Contact: Peter Jacques Abstract Wal-Mart is by far the largest retailer in the United States.
It consistently puts competitors out of business, and has sales larger than the Gross National Product of most countries. However, on average, it pays its employees lower wages than most retailers and uses contractors who use sweatshop labor overseas to produce goods that have been labeled ‘Made in America.’ Wal-Mart is accused of increasing the need for social services in areas where its stores are leading employers, as many employees qualify for public assistance. Wal-Mart is also in the business of making moral decisions for its customers such as refusing to carry Previn, a ‘morning-after’ pill, and censoring music and videos. This teaching case study aims to draw out discussion about these issues in undergraduate ethics and political economy classes. In particular, some questions we hope arise from this study include: What are the responsibilities of a corporation, especially one as large as Wal-Mart? Should a corporation be concerned with the effects it has on a society, ecosystem, or community? What are the rights of communities when it comes to allowing or not allowing businesses into their area? What are the policy implications? This case study aims to raise more questions than answers in these areas, in the hope that classes can use the study as a guide for lively discussion about the marketplace, social welfare, cultural homogenization, labor and other issues in the context of expanding global corporate influence in society. Wal-Mart or World-Mart? Introduction Wal-Mart is a company that most Americans are familiar with, a company with stores that offer everything a person could need at low prices.
What began as a company based in a small Arkansas town has grown to be the largest employer in the United States. By 1998, Wal-Mart had the fourth highest annual sales revenue of any American company and had stores throughout four continents. It is estimated that within a few years, twenty cents of every retail dollar spent in the U. S.
will be spent at this store. Yet, most people are probably not familiar with how big Wal-Mart truly is, how it became so big, nor how powerful it is. In order to minimize operating costs and maintain low prices, Wal-Mart pays relatively low wages and provides minimal benefits to its employees. Yet, Wal-Mart has taken some fairly drastic measures to ensure that their workforce is not able to form unions. Wal-Mart purchases many of its items, particularly clothing, from developing countries, including the U.
S. Commonwealth of Saipan. This case study will consider the implications this policy has on laborers and development in those countries, as well as production and employment in the U. S. Despite the positive public image it portrays, Wal-Mart’s size and growth have also allowed it to force other stores out of business, often causing a disintegration of communities and ultimately reducing consumer choices. One question this case study considers is whether Wal-Mart has lived up to its image as an American success story.
Although focused on Wal-Mart, this case study is more than a study of one particular large U. S. corporation, because it analyzes the effects corporate growth and size have on social, political and economic systems on the local, national and international levels. Numerous multinational corporations (MNCs), including Wal-Mart, have annual sales greater than the gross domestic product of the majority of countries in the world.
This implies that MNCs are potentially becoming more powerful than national and local governments. This shift in power, in many instances, allows corporations to have an increasingly stronger influence on social, political, and economic aspects of people’s lives. Studying the role of the multinational corporation is crucial to understanding the future of societies throughout the world. Over the past 30 years, sales of the world’s 500 largest MNCs have increased by sevenfold; yet, worldwide employment during this period has remained virtually unchanged. Since labor is relatively immobile, while capital (money, machines and technology) is extremely mobile, power to determine where and how business is carried out clearly lies with corporations.
This dichotomy has a dramatic impact on social, political, and economic systems: for example, cities, states, and countries are offering extremely favorable terms in order to attract corporations, which in nearly every case are not concerned with the long-term, and possibly not even the short-term, interests of the area into which they locate. We trust this case study will increase your understanding of the role of MNCs in contemporary societies. Behind the slick advertising and low prices of increasingly large corporations lies an encroachment on every aspect of life. However, the growth of large corporations throughout the world is not an inevitable process. It is our hope that this case study will provide you with a better understanding of MNCs and the effects that the process of their increasing size and power has on social, political, and economic aspects of life in all societies. World-Mart: Big and Getting Bigger Wal-Mart has grown from a single store opened by the late Sam Walton in 1962 to a global corporation.
In the face of corporate competition – before Walton had opened 20 stores, there were 250 Kmart stores. The dramatic growth of Wal-Mart Corporation has reflected the dynamism with which Sam Walton operated the organization, maintaining the marketing principles of low prices and customer satisfaction that he practiced and preached while becoming the single largest retailer in the world. Employees Wal-Mart is presently the largest private employer, hiring directly for its own needs, in the United States. As of early 2000, there were an estimated 885, 000 Wal-Mart employees in the United States, with another 255, 000 employees internationally.
Number of Employees 1997 1998 1999 Wal-Mart 675, 000 728, 000 825, 000 Kmart 307, 000 265, 000 261, 000 Sears 335, 000 296, 000 324, 000 JC Penney 252, 000 260, 000 260, 000 Dayton Hudson 218, 000 230, 000 244, 000 As shown in the table above, Wal-Mart’s American labor force at year-end 1999 was nearly as large as those of its three largest competitors in the general merchandise retail trade; Kmart, Sears, and JC Penney. In fact, at year-end 1999, Wal-Mart had nearly as many employees in the United States as General Motors (608, 000 employees in 1999) and Ford (371, 800 employees) combined. Sales Exhibiting tremendous growth in sales revenue, particularly in the 1990 s, Wal-Mart’s annual sales revenue has continues to rise – 1999 sales revenue exceeded $164 billion. While its competitors have shown marginally increasing sales, or even fluctuating levels, Wal-Mart’s sales have consistently increased by 15-30 percent from one year to the next. Imagine your personal income increasing by these percentages from one year to the next, for seven consecutive years! Sales Revenue ($000, 000) 1991 1995 1996 1997 Wal-Mart 32, 602 82, 494 93, 627 104, 859 Kmart 29, 563 31, 713 31, 437 Sears 32, 250 34, 995 38, 236 41, 296 JC Penney 16, 648 21, 419 23, 649 30, 546 Dayton Hudson 16, 115 23, 516 25, 371 27, 757 In 1991, Wal-Mart’s annual sales revenue of $32. 6 billion was only slightly higher than that of Sears ($32.
By 1997, Wal-Mart’s revenue from sales was higher than Sears, JC Penney, and Kmart combined. In 1998, Wal-Mart ranked as the fourth largest U. S.
corporation in terms of sales revenue, behind only General Motors, Ford, and Exxon. Its 1998 sales revenue exceeded such industry giants as Toyota, General Electric, IBM, Daimler-Benz Group, Phillip Morris, AT&T, Sony, Nissan, Nestle, Boeing, Mobil, and Texaco. In fact, only 30 countries had levels of gross domestic product – simply defined as the value of total goods and services produced in a country – higher than Wal-Mart’s sales revenue in 1998. It is incredible to think that Wal-Mart’s sales revenue in 1998 was more than the entire official economic production of such countries as Greece, Finland, Portugal, Ireland, New Zealand, Israel, and Philippines. Working Poor? This section of the case study outlines the more vital issues facing United States Wal-Mart employees. The focus will be primarily on what Wal-Mart terms as ‘associates’: the people stocking shelves, working the registers, handling retail sales, and greeting customers at the door.
This emphasis underlies the fact that associates number nearly 800, 000 and constitute, by a large margin, the majority of Wal-Mart’s workforce. Always striving to cut inventory and operating overhead while cultivating employee moral, loyalty, and enthusiasm were posited as two of Wal-Mart’s guiding principles by Sam Walton when he was first starting the company. How can Wal-Mart cut operation costs and simultaneously create an environment which motivates employees and promotes their loyalty? The aim of this section is to provide information necessary for readers to answer this question. The basic theoretical approach to management at Wal-Mart is to treat associates as equals, to keep them fully informed of company developments, to invite them to share their own suggestions regarding company policy and practice, and to make them feel that their contributions are important and that they are listened to. It seems probable that employees would be happy to be working for such a company, one listed in the top one hundred companies to work for by Fortune, Hispanic Magazine, and Latina Magazine. While most estimates place national annual median income between $25, 000-$30, 000, the average full-time Wal-Mart employee is paid around $12, 000 annually including bonuses provided through the company’s profit sharing.
The low income of full-time Wal-Mart associates may be in part a reflection of their work week. Wal-Mart classifies as ‘full-time’ any employee who works a minimum of twenty-eight hours per week. Moreover, Wal-Mart makes no commitment to provide associates with a guaranteed minimum hourly work week. If a store’s profits decline, management may simply cut associates’ hours resulting in the loss of benefits held by ‘full-time’ employees.
A shorter work week may partially explain why half of Wal-Mart associates, including some full-time, qualify for food stamps and even cash assistance in the more welfare- oriented states. According to Walton himself, wages at Wal-Mart have always been ‘as little as we could get by with at the time.’ The average Wal-Mart associate make $7. 50 an hour, the national average for most general merchandise workers is $8. 71. An associate at the Flagstaff, Arizona, Wal-Mart claimed that in her department, eight of the ten employees hold a second job, and a few were forced to hold three jobs just to make ends meet. An article in Wall Street Journal noted, ‘Perhaps more than any other U.
S. Company, Wal-Mart has relied on stock incentives to motivate otherwise low paid employees, giving them a feeling of ownership and hope for wealth.’ Between 1981 and 1991 the profit sharing bonus paid out to employees averaged six percent of their wages. Introduced in 1971, the profit sharing and stock ownership plans provide an incentive for employees to work hard as they have shared interest in the overall well being of the company. Theoretically, their own incomes become linked to their productivity. From the perspective of the company, these plans have several benefits: a) Wal-Mart does not need to pay high labor costs when the company is not experiencing profit growth; b) associates are motivated to work hard; and c) stock benefits can be used to redirect complaints about poor pay. The program is structured using a formula based on profit growth.
Employees are awarded a contribution to their profit sharing plan according to their wages, which employees can keep or cash out when they leave the company. In addition to stock gained through the profit sharing program, employees can have a percentage taken from their paycheck to purchase Wal-Mart stock from which Wal-Mart matches fifteen percent up to $1, 800 annually. All full-time associates are eligible for participation in Wal-Mart’s medical plan once they have completed their ninety day probation period. However, less than forty percent of Wal-Mart’s eligible employees participate in the plan: ‘[Wal-Mart employees] who choose not to participate [in Wal-Mart’s health care plan] usually get their health care benefits from a spouse or the state or federal government.’ Wal-Mart’s recent acquisition of Canada’s Woolco can provide some insight into Wal-Mart’s attitude towards their obligation to their employees as well as how they treat employees compared to other companies. Holding true to their anti-union stance Wal-Mart simply refused to buy the seven Woolco stores that had unionized, leaving 1, 000 Canadians jobless.
For many of the remaining employees, the buy-out meant lower wages; for example, former auto mechanics suffered a halving of their wages when Woolco’s auto repair shops were converted to Wal-Mart lube shops; five hundred fairly paid Woolco warehouse workers were fired and rehired as Wal-Mart associates for near minimum wage irrespective of their experience, and 750 former Woolco supervisors were informed that if they wished to keep their $28, 000 annual salary they would have to increase their work week from forty to fifty-two hours. In the province of Quebec, French is the official language and, for some, the only language they speak. Yet, when Wal-Mart took control of the Woolco located in Quebec they required employees to sign contracts that were only made available in English. 1.
Does Wal-Mart provide its associates with a fair wage? What would you consider a ‘fair wage?’ Should corporations provide fair or living wages to employees? 2. Is profit sharing and stock ownership an adequate substitute for wages? 3. What would be the impacts of below subsistence wages on a local community? On local government revenue? On family life? ‘Right to Work:’ Wal-Mart Wins Again ” Wal-Mart Wins Again.’ Wal-Mart won a court ruling against the United Food and Commercial Workers (UFCW) in October of 1999. The right of a union to organize workers at the location of labor [see sidebar] was temporarily restrained and the union was banned from Wal-Mart property. Wal-Mart, the leading direct private employer in the United States, had once-again avoided the union.
Wal-Mart won another battle with the unions in court, even though the judge was found to own more than $500, 000 of Wal-Mart stock. However, the judge was later forced to step down from the case due to his conflict of interest with Wal-Mart. WHAT ARE WORKERS RIGHTS TO ORGANIZE? The National Labor Relations Act (NLRA) of 1935 protects the right to organize into labor unions. This law created the National Labor Relations Board to mediate the tensions between workers and employers and ensure the free flow of commerce.
Under this act, workers have several important rights: 1. Right to self organization 2. Right to ‘form, join, or assist labor organizations’ 3. Right to bargain collectively through representatives of the workers’ own choosing 4.
Right to concerted activities which are for the purposes of collective bargaining 5. Right not to join a union Also, the NLRA prohibits ‘unfair labor practices.’ Unfair labor practices includes the following: 1. Dominating or interfering with the formation of a union. 2. Discrimination in hiring or promoting any person due to their union affiliation or non affiliation.
As well as firing an employee because they have filed a complaint or given testimony about a violation of worker rights or unfair labor practices. 3. Refusing to bargain with a union; conversely it is illegal for a union to coerce employees into bargaining or not bargaining. An Arizona representative of the UFCW argues that the giant retail firm has illegally tampered with the workers’ right to organize, which is established through the National Labor Relations Act of 1935. The union has brought charges against Wal-Mart that the corporation has destabilized the bargaining process by not conducting labor relations in good faith and it has obstructed organizing activities that are legally protected to provide ‘workers’ rights.’ The National Labor Relations Board (NLRB) agreed with these charges in three specific cases. In decisions dated April 9 th, 1999 (in the initial NLRB ruling), August 27 th, 1996, and September 30 th, 1993, Wal-Mart was found to have threatened associates affiliated with protected organizing activities.
In Ontario, Canada, even though the union was voted down by employees by a margin of more than 3 to 1, the province of Ontario certified the United Steelworkers Union to represent the workers in that store because the province found the firm interfered with the organizing process. Robin Za as, an associate, won a suit against Sam’s Club for being threatened due to protected organizing activities. The NLRB found that the management in her branch of Sam’s Club threatened promotions and raises because she was trying to start a union at her work place. The UFCW claims that Wal-Mart was tampering with the union process in several ways, including ‘stacking’ voting departments with anti-union workers. According to Jim Mclaughlin, a representative of the Arizona UFCW, if workers were to unionize, they would make an average of $5. 00 an hour in wages and benefits above what they make now.
Income from ‘full-time’ Wal-Mart wages are low enough that about half of all Wal-Mart employees are estimated to be eligible for food stamps. Mclaughlin argues, ‘There is no justice in their workplace right now.’ Also, considering that one study estimates that for every person Wal-Mart employs, they displace 1. 5 full-time workers somewhere else in that geographic job market, low wage Wal-Mart jobs are taking over higher-paying retail and grocery jobs. This is why some studies say social service needs, such as food stamps, healthcare, etc, go up in an area where Wal-Mart is a major employer.
Given that there are over 800, 000 Wal-Mart employees in the United States, such a wage increase would substantially increase Wal-Mart’s operating costs. In order to offset this increase in costs, Wal-Mart would likely argue that it would need to increase prices or lay-off large numbers of workers if workers unionized. (Or could they simply lower salaries of the executives or overall profit margins? ) To say that Wal-Mart is not unionized is not entirely correct. One meat department in one store in Texas voted to unionize. After this vote, Wal-Mart implemented a policy to begin using pre-packaged meat in order to close the butcheries in their stores, but has denied the closures are related to the union and have anything to do with bargaining in good faith, an aspect of the Labor Act. Wal-Mart has been found to have violated this law in 1999, when the NLRB found that Sam’s Club had threatened to close a store in Landover Crossing, Maryland if the store unionized.
4. How is it that such a large employer, who pays low wages, offers limited health benefits, and inconsistent working hours been able to create a ‘union-free zone’? 5. If there are difficulties in the Wal-Mart workplace for Wal-Mart workers, are low prices worth these difficulties? For whom? 6. Are low prices/ low wages versus higher prices / higher wages the only real choices? What are other scenarios? 7. What is the effect on the community when many community jobs are low wage jobs? 8. As you refer to the NLRA sidebar on workers rights, can you suggest any other rights you think workers should have? Cheaper Clothes: At What Price? Wal-Mart’s vendors pay the following wages to their workers in Third World factories: Nicaragua – 15 cents / hour Guatemala – 65 cents / hour Bangladesh – 20 cents / hour Haiti – 67 cents / hour El Salvador – 61 cents / hour Mexico – 61 cents / hour With such low wages for those who make the clothing, Wal-Mart can profit greatly while still providing low prices to its customers.
In a global labor market, it is the companies who can find the cheapest, most exploitable conditions, with little worker protection or regulations who will profit the greatest. The fact is that many of these wages do not match up to minimal living standards in these countries. According to the doctrine of the free traders, Third World countries have an economic advantage with their cheap labor. The question is not only whether the Third World will catch up, but also how far the American worker falls behind. The American worker is now in competition with children who will work 60 hours a week for pennies an hour. American workers will lose production jobs to these countries unless American workers are willing to match the labor deals in the Third World.
The commitment to low prices seems to rely on the exploitation of Third World labor, and this factor should be taken into account when Wal-Mart makes claims about ‘always the lowest prices.’ The International Labor Organization (ILO) The ILO is the labor rights organization at the UN that focuses on labor rights and treatment throughout the world. They are founded on the conviction that ‘social justice is essential to universal and lasting peace.’ Unlike many mainstream economists who argue that economic growth leads to social justice, the ILO advocates that ‘economic growth is essential but not sufficient to ensure equality, social progress and the eradication of poverty.’ . The ILO states that only strong social policies within just and democratic societies can alleviate the exploitation of labor worldwide. The ILO produced its Declaration on Fundamental Principles and Rights at Work in 1998 at its 86 th convention. All nations signing the agreement must adhere to the following fundamental rights: 1. ) freedom of association and the effective recognition of the right to collective bargaining 2.
) the elimination of all forms of forced and compulsory labor 3. ) the effective abolition of child labor 4. ) the elimination of discrimination in respect of employment and occupation Wal-Mart itself promotes its ‘Vendor Standards’ but they have yet to assimilate the principles of the ILO, with their intent to create a world based on social justice and equality. Contrary to its Vendor Partner Standards, Wal-Mart’s labor practices represent below subsistence wages for the workers who are supposed to be protected through their implementation. For example, Mandarin International, a Taiwanese garment vendor for Wal-Mart, working with one of Wal-Mart’s ‘vendors of the year’ for 1997, Fruit of the Loom, fired 186 workers in El Salvador for belonging to a union.
Wal-Mart also routinely purchases merchandise from factories in Latin America where workers are forced to work overtime, verbally abused, not given clean drinking water, denied health care, and limited to bathroom breaks by armed guards. H. H. Cutler sports apparel, owned by VF Corp, producer of Wrangler and Lee jeans, was reportedly sewing ‘Made in the USA’ labels on garments produced in Haiti and sold at Wal-Mart. A 1992 NBC dateline expos’e also found that garments sewn together by 12 year olds in Bangladesh had ‘Made in the USA’ labels sewn into them and were sold at Wal-Mart under such pretense. In light of this, Wal-Mart’s claims of ‘Made in the USA’ products are not as truthful as they would like us to believe.
9. How does the use of overseas labor affect your community? 10. What are the consequences of Wal-Mart’s low prices for laborers abroad? ‘Made in the USA ” Saipan, the governmental seat of the Commonwealth of the Northern Mariana Islands (CNMI, ) is important to our study of Wal-Mart because in 1986, it became a commonwealth of the United States. Therefore, textiles and other products manufactured on the island can technically wear the ‘Made in USA’ label, which Wal-Mart proudly waves. But in the island garment factories of Saipan, US labor standards have not been enforced. Because Saipan is exempted from the US Immigration and Nationality Act (INA, ) foreign-owned companies are located in the CNMI and are allowed to recruit tens of thousands of foreign laborers each year.
Foreign laborers vastly outnumber the local, resident workers and have not been protected by labor laws. In the 1986 Covenant to Establish a Commonwealth of the Northern Mariana Islands (CNMI), the US government granted the concession that minimum wage laws need not be enforced. The average Saipan textile worker sewing US garments earns $3 an hour. These workers — mostly young women — could be fired and deported for a variety of reasons; if they refused to work overtime, including unpaid ‘volunteer hours;’ participated in political or religious activities; asked for a higher wage; criticized labor conditions; did not have an abortion if they became pregnant; refused to lie to inspectors; or tried to organize a union. Yet the 1986 Covenant states that the CNMI would need to comply with American law on fair labor standards (see Right to Work: Wal-Mart Wins Again).
However, as we have seen in the previous section on international labor practices, sweatshop labor is rampant.
In fact, the plight of these 14, 000 overseas workers from China, Korea, the Philippines, Thailand, and Sri Lanka, along with 2, 500 local and US workers (Chamorro & other Micronesian’s) have become the concern of various groups. Saipan has been the target of media attacks about its coercive labor practices. In fact, in January of 1999, an international labor union and three human rights organizations filed a class-action lawsuit in California against US corporations using sweatshops in Saipan. Among a group of top retailers, including Tommy Hilfiger USA, J. Crew, and the GAP, the lawsuit charges: Wal-Mart has shipped approximately 7.
3 million pounds of garments (worth approximately $43. 8 million) manufactured in sweatshops in the CNMI. This conduct violates state, federal, and international law. The United Stated government has taken some steps to address these concerns. In October 1999, the US National Labor Relations Board (which oversees treatment of labor by American firms) entered into a Memorandum of Understanding with the Mariana Islands (CNMI).
The memorandum appears to be a compromise between the sweatshop conditions and full implementation of the National Labor Relations Act (NLRA.
) Specifically, the Memorandum refers to the ‘protection of non-resident workers’ in the CNMI and recognizes that the CNMI retains authority over immigration and that a CNMI government official will act as a liaison to the NLRB. (One might ask how exactly a ‘non-resident worker’ is defined in the document and why it is necessary for a governmental official to act as a liaison. ) In return, the document requires the CNMI authorities to recognize their non-resident workers (which number over 14, 000) as employees under the NLRA. The CNMI authorities are also expected to refrain from reviewing collective bargaining agreements. As well, they must comply as follows: grant protection against deportation of persons claiming labor discrimination which are in violation of the NLRA; issue necessary documentation to allow non-resident workers to stay in the CNMI while looking for alternative employment; and finally, ease the reinstatement of workers found to be unlawfully discharged. Have things improved? After a 1998 Senate Hearing on the alleged labor abuses, Saipan clothiers agreed to allow monitors in their manufacturing sites.
Yet there is a decreasing availability of ‘indigenous’ items in Saipan’s biggest retailing group. Carline B. Sabean stated that ‘local’ manufacturers only hold about five percent of the market, and most items are imported from the mainland. This is an interesting observation, considering that much of the manufacturing on Saipan is shipped to the US mainland.
One gets the picture of the same item being produced in Saipan by someone being underpaid [$3 an hour], shipped to the US, and then shipped back to Saipan and shelved with a price that the person who actually sewed the garment could not afford to pay! Saipan’s only institution of higher education received drastic cuts in funding: ‘Governor Pedro P. Tenorio has called on government offices to explore ways to trim down expenditures like reduction in overtime and work hours.’ This includes drastic cuts to the Northern Marianas College, in order to ‘curb potential distraction in its delivery of education.’ In 2000, ‘Average Weekly Help-Wanted Ads declined slightly more in the third quarter than in the second, which is indicative of lower demand for workers in a state of economic decline.’ Apparently, the economic strength and stability in the Northern Mariana Islands is declining, even with the heavy contract load negotiated by industry giants like Wal-Mart. 11. What would happen if Wal-Mart changed their overseas labor practices and stopped using underpaid labor? 12. Why doesn’t the U.
S. government step in and enforce U. S. labor laws as a condition of ‘Made in the USA’ labels? Claims vs. Reality: Is Wal-Mart a Good Neighbor? Wal-Mart pursues a hometown identity for itself in every community it enters. It displays this identity through its ‘People Greeters,’ those happy people welcoming you as you enter any Wal-Mart in the country.
Wal-Mart claims to proudly display and frequently sell locally-made merchandise in the store. After much searching, it was determined that ‘locally-made’ for Flagstaff, Arizona refers to a few decorative items at the register such as imitation Native American pots and wood-crafted coyotes with handkerchiefs around their necks. Wal-Mart reaches out to the community in that it allows associates who grew up in the area to direct outreach programs as they are more likely to understand the needs of the community. Associates seem to be given a great deal of freedom in terms of community involvement, such as the charities to which funds are donated.
Much of the funds, after all, come out of their pockets: the Wal-Mart Foundation matches up to $2000 for funds raised by associates and donated by customers. Wal-Mart announced it contributed $163 million in 1999 to charities nation-wide; what it does not announce is that sum includes private contributions from associates and customers, not simply corporate monies. Wal-Mart promotes educational values by offering college scholarships to graduating seniors as well as money ($500) for classroom supplies given to the teacher of the year. In Flagstaff, for example, students apply for Wal-Mart scholarships every year. The ‘Competitive Edge’s cholarship, based on ACT/SAT scores and interest in certain fields and in certain universities, is an award of $20, 000 to a teen who is chosen. In addition, ‘Community Leadership’ awards of $1000 are given to seniors who apply.
Wal-Mart also educates the public about recycling and other environmental topics with the help of the ‘Green Coordinator,’ a specially trained associate who coordinates efforts to make the store environmentally responsible. Although Wal-Mart claims to have given more than $1 million in Wal-Mart Environmental grants to community recycling and environmental education programs in 1999, in Flagstaff the Green Coordinator could not be located. IT’S OUR NEIGHBORHOOD TO OThe urban bike trail and large, deep wash (gully) along the expansive parking lot of Wal-Mart in Flagstaff, AZ was declared by the city as the very worst place of trash litter – including large pieces of metal and plastic. For years, Wal-Mart overlooked the fact that the business their store attracted was the source of the litter. The local cycling club, weary of endless hours of trash clean-up, started a campaign with the manager. Each day a different member requested to speak to the manager and mentioned the heavy trash problem, defining it as a Wal-Mart responsibility.
Two months later another local club chose the trail as a ‘Forest Week’ project, bringing out 40 people from the community to clean a one mile stretch, the most debris-strewn portion of which was along the parking lot. When they arrived to begin, the shopping carts had been removed from the deep gully wash; no Wal-Mart plastic bags were to be seen. Along a log-rail fence, Wal-Mart had put up a mesh fence, to catch debris blowing from the parking lot onto the trail. Further, about 10 ‘associates’ of Wal-Mart came to assist the clean-up, but all as volunteers on their own time. The store provided cold drinks and hot dogs for all and did pay the vendor her wages for the time. In responding to appreciation for the Wal-Mart effort, the manager replied, ‘It’s our neighborhood too.’ Such an attitude change resulted from adverse publicity and direct customer pressure.
It remains to be seen if Wal-Mart accepts full responsibility for keeping the trail clean — -Contributions to the local community: Is there a trade-off for cheaper goods?’s am Walton believed that each Wal-Mart store should reflect the values of its customers and support the vision they hold for their community.’ According to the Economic Impact Information FYE 1/31/99, Wal-Mart’s community involvement in Arizona was $1. 5 million. On a national level, Wal-Mart gave $61 million in contributions of community grants; $27 million for Children’s Miracle Network; $14. 5 million to United Way chapters; $8 million in scholarships; nearly $3 million in Economic Development Grants; $1.
5 million in environmental grants; and nearly $3. 4 million for all other types of donations. But what about the products sold in Wal-Mart stores and the money driving the success of Wal-Mart across the country? Wal-Mart’s total sales for fiscal year ending 1/31/00 was $165 billion. When considering contributions, it is interesting to note that the total amount contributed by associates and customers, and matched to a degree by Wal-Mart itself, is less than 10% of the total sales of one year for Wal-Mart. Wal-Mart claims that suburban shopping centers were draining the urban centers of a much needed tax base. Wal-Marts, on the other hand, move into the city limits or county limits and encourage residents to buy what Wal-Mart considers to be local goods at a cheaper price.
This provides the local government additional tax revenue. It is important to consider where Wal-Mart is now opening its superstores. Located off exit ramps on the outskirts of cities or in counties, these stores pull the local dollars out of the core of the city, and the vitality of the core with it. The result is many downtown areas are reduced to ghost towns, unable to compete with Wal-Mart’s cheap goods in bulk.
Another view of Wal-Mart comes from Fortune Magazine, which ranked Wal-Mart number seven of the most admired corporations, out of 333 global companies across 24 industries (1999).
According to the rating data, Wal-Mart performed well in overall management quality, product or service quality, innovative ness, value as a long-term investment, financial strength, commitment to community and to the environment, use of corporate assets, and global business acumen. 13. How much responsibility should Wal-Mart have in the community in which it is located? 14.
What effects might a store offering cheaper goods in bulk under one roof have on various community groups (the customers, local store owners, the local government)? 15. Do benefits to one group cause difficulties for another? 16. How would you measure the ‘local impacts’ of a Wal-Mart superstore in your town? Environmental issues Monocultural Capital Cultural homogenization can be understood as the domination of one worldview over another, as the monopolization of a certain product or company over its competition, or as the lack of opportunity within a certain region for individuals to explore moral, social, or cultural alternatives. Marlboro billboards, Levi’s jeans, and Michael Jackson CDs have re-packaged American culture for global consumption in many newly democratic post-communist countries, as well as in Third World nations, slick advertising and all.
‘[Wal-Mart] ignores a town’s capacity to absorb another retailer and instead aims to steal customers away from shops they frequent. Typically, Wal-Mart locates on the outskirts of town and sets prices below cost to draw customers away from the commercial center… From automotive supplies to clothing to pharmaceuticals to kitchenware, Wal-Mart moves sector by sector to undercut its competitors.’ This stage of development is not usually a profitable one for Wal-Mart. Due to its size, the Wal-Mart corporation can afford to lose money for long periods of time at any given location. By selling an assortment of products near or below cost, Wal-Mart successfully draws business away from any local business epicenter. After smaller businesses go under, small to medium size communities become dependent on the product offerings at Wal-Mart for their consumer needs.
Studies have shown that within a five year period after Wal-Mart sets up shop, ‘stores within a 20-mile radius suffer an average 19 percent loss in retail sales.’ This is more than enough to put most mom and pop stores out of business. Within a few years, studies estimate that at least twenty cents of every retail dollar spent in the United States will be spent at Wal-Mart. If we take into account the fact that Wal-Mart has become the sole retailer in many communities nationwide via its business tactics, Wal-Mart’s decisions to stock or not stock certain products limit the variety of goods available to consumers. Freedom of choice in selecting a laundry soap has environmental consequences. For example, environmentally conscientious shoppers routinely buy ‘low-suds’ detergents with low pollutant levels; if these consume.