Analyzation of Wal-Mart’s External and Internal Stakeholders
Who hasn’t heard of Wal-Mart. If you are traveling, almost each town you pass through has one. In our lifetime, their lighted sign has become as familiar as the McDonald’s golden arches. But unlike McDonald’s, there has never been such debate in each town when a new Wal-Mart opens whether it will bring greatness or will it bring wrath and death to the fragile balance of the town’s businesses and economy. This plight has now become known nationwide. It has become such a problem that movies have been made about it, books written about it, and debates held.
Does a new Wal-Mart opening in your town mean the death of the mom and pop businesses that cannot compete with the Giant. In this paper, I will analyze Wal-Mart to try to better understand them or their business reasoning. Mission Statement Wal-Mart’s mission statement was so simple it took me awhile to find it even though it was so blatantly displayed at the top of their corporate home page, it states (Home-walmartstore. com): “In everything we do, we’re driven by a common mission: Saving people money so they can live better. ” That sounds great to me.
Save me money. In reality, Wal-Mart does save their one set of their stakeholders, the consumers, money. They do have the competitive price advantage over most other retail store except their own sister store Sam’s Club which is owned by Wal-Mart. I feel though this savings comes at a cost. The average wage that a worker makes there is below the poverty level in the United States which makes it possible for them to receive such state assisted aid as food stamps, medical assistance, and other state and federal assistance which the tax payers are paying for.
Identify and analyze the main stakeholders As Professor Luca defines in her Organizational Stakeholders PowerPoint Presentation (Mod. 1 Background PPP Organizational Stakeholders), “Who are the organizational stakeholders? They are all the groups that have a “stake” in the welfare of the organization. They contribute to the organization and they benefit from it. ” When identifying stakeholders you have to first identify your internal and external stakeholders. Examples of internal stakeholders would be your stockholders, the CEO, executives, and the employees.
Examples of external stakeholders would be customers, communities/public, government and politicians, and lastly but not least suppliers. Internal Stakeholders For me analyzing internal stakeholders is easier then analyzing external stakeholders. It is usually someone that is connected within the organization or owns part of the organization and is dependant on them for financial means. Stockholders The stockholders have invested in Wal-Mart. They actually own a piece of Wal-Mart and own shares of it and expect to see returns on the money that they have invested into Wal-Mart.
They have a vested interest in Wal-Mart’s well being and its growing success. CEO and Executives The CEO, top executives also have a financial stake in Wal-Mart just as the stockholders do. The CEO and most of the top executives are given stock options in Wal-Mart as part of their salary. This is a great incentive to the CEO and executives to want to see Wal-Mart to do well and to give a 110% to their job. The better the company does, the more return they will see from their stock option. The Employees
You will find very few employees have a stock option in the company, so why have I included them in my internal stakeholders, because they depend on Wal-Mart as their source of income. They need Wal-Mart to do well and to stay in business so that they may pay the bills, buy groceries, and live. If Wal-Mart is forced to shut down or downsize they would lose their source of income. Wal-Mart at present employs more than 1. 9 million associates worldwide (Careers-walmart. com). That is a lot of people depending on Wal-Mart. External Stakeholders The external stakeholders for me were somewhat more difficult to identify.
The customer, community, and public were easy. Who else has a vested interest in Wal-Mart, well let’s put on my thinking cap. The government and politicians have their hand in ever facet of our life so of course them, the suppliers would be greatly impacted if something were to happen to Wal-Mart. The Customer Well now the customer, how do we have a vested interest in Wal-Mart. We are dependant on Wal-Mart to keep the prices of other stores down and to give us a competitive advantage in the marketplace. It saves us money in the end and with today’s economy we need that. To sum this up, Wal-Mart brought with it lower prices.
Either the other stores had to find a way to lower prices or find an edge that appealed to consumers or they would have to close down. Unfortunately, this is why some people hate Wal-Mart. The little stores cannot compete in the Wal-Mart world. Public/Community The public and community have a double edge sword when it comes to Wal-Mart. Some communities desperately want a Wal-Mart in its town because it knows that with a new store it will bring jobs, money into the community, and can save the people money that shop there. Other communities do not want a Wal-Mart in their town.
They feel that Wal-Mart will mean the death of their small stores. Their have been many books, documentaries, and even some movies done about this exact scenario. Being a little bit older than probably the average student at a college, I can remember life before Wal-Mart. I remember all the mom and pop stores, the penny candy, my parents gathering around our local neighborhood store (which since we lived in the boondocks was 8 miles away) gossiping with everyone and catching up on the “happenings” since you last had made a trip to the store. A trip to the store took a good half hour for milk.
Then Wal-Mart happened. Our neighborhood store slowly disappeared and then eventually had to close because it could not beat the prices of Wal-Mart. It was much cheaper for us to go to Wal-Mart even though it was an hour away to shop for the entire month. It was an adventure each month at first. Then it became a nightmare as reality set in. The employees who didn’t care who you were, the customer service that lets face it stinks, the item that you buy that usually breaks in a couple weeks but at least you can take it back as long as you have the receipt, identification, birth certificate, and sign in blood.
At Wal-Mart, “everyday low prices,” is more than a slogan; it is the fundamental tenant of a cult masquerading as a company (Business Week Oct. 6, 2003) Politicians Politician and government, does it really surprise you that they have an external stake in Wal-Mart? It did not surprise me. It would surprise if they did not have an external stake in something so big. Politicians have to be careful whether they support a Wal-Mart moving into their community or not as to not alienate voters or contributors to their campaigns.
“Wal-Mart gave a total of $326,875 in the 2000 election cycle, $431,017 in 2002, and $857,179 in 2004, according to research by The Institute on Money in State Politics, a nonpartisan, nonprofit research organization based in Helena, Mont. For the 2006 election cycle, the company has given $644,655 so far and seems to be on track to hit a record for political contributions (Political Contributions-wakeupwalmart. com). ” Wal-Mart poses a great external impact on politicians and government. Between political contributions, pleasing voters, and pleasing unions; politicians and the government have a delicate balancing act to perform. Suppliers
For some reason, I never thought about the suppliers that supply goods to Wal-Mart. I guess they are always there but we tend to forget about them in all the mass confusion that Wal-Mart tends to create. Wal-Mart sells thousands of different brand name items from jeans, groceries, make up, lawn supplies, books, just an overall vast array in one place. For some suppliers Wal-Mart is the main seller of their brand item. For instance if Wal-Mart went out of business it would affect the products for the Mary Kate and Ashley Olsen line of clothing, dvds, and whatever else they sell because Wal-Mart is the exclusive seller of these items.
I Final Analyzation The mission I cited above, “saving people money so they can live better (Home-walmartstore. com),” is their true mission statement even though at times I thought it was, “quality goods at low prices responsible manufacturing, and opportunities for growth. We’re dedicated to excellence in every part of our business (Our Company-www. walmartstores. com),” which I found on their Our Company web page. I do believe that Wal-Mart wants to save their customers, the internal stakeholder, money.
By saving their customer money, they are building a solid consumer base that will keep coming back to buy from them securing their profit base. This will guarantee their profit and their return to their stockholders, including the CEO and Executives with their stock option returns. This is called the trickle down effect. By pleasing the consumer with lower prices, you are producing a profit by consumer sales, in return you are able to pay your stockholders their profit shares, you are guaranteeing the employees their jobs, and the community/public their economy.
My Final Thought One final comment, I still would not mind paying one cent more for socks, if it meant a pay increase for an employee that would help that employee lead a better way of life. If one cent from one person could make a difference, I don’t think that is too much to ask. The website WakeUpWalMart. com has this very interesting fact, “Wal-Mart can cover the cost of a dollar an hour wage increase by raising prices a half penny per dollar.
For instance, a $2. 00 pair of socks would then cost $2.01. This minimal increase would annually add up to $1,800 for each employee (Facts-www. wakeupwalmart. com). ” “On average, Wal-Mart sales clerks — “associates” in company parlance — pulled in $8. 23 an hour, or $13,861 a year, in 2001, according to documents filed in a lawsuit pending against the company (Business Weekly Oct. 6, 2003). ” So if I paid one cent more for socks this persons wage would then be $9. 23 an hour. I would gladly do it. Sometimes saving money isn’t the bottom line.
