Walmart

It will describe Wal-Mart as a non-union employer, paying lower wages to heir employees than other retail and grocery stores. They do not offer benefits to all employees and most are unable to afford them. Between Wal-Mart’s business practices in increasing their profits and the need to recognize their social and ethical responsibilities, Wal-Mart needs to find a comfortable balance of profitability and responsibility in order to improve their reputation. During the process of writing this report, we found that there was much more Information to be discussed about Wal-Mart’s unethical business practice than what was reported.

We also wanted to point out that although all companies do everything ossible to lower their costs and maintain high production rates, Wal-Mart has crossed the line over the years by managing their profits In unethical ways compared to otner large corporatlons wno nave Deen etnlcally ana successTully managlng tnelr business practices. Information that can be found on Wal-Mart is changing everyday and it was sometimes difficult to keep up. EXECUTIVE SUMMARY Wal-Mart has been recognized as the leader in its industry and the largest company in the nation.

With its powerful profit making abilities, Wal-Mart has grown from a local corner store to the money making “monster” it is today. The company has amaged its reputation over the years due to unethical choices made by its top executives. As a result, its anti-union stance has been singled out on issues concerning benefits, wages, and overall business practices. When reviewing Wal- Mart’s financial statements, one would be overwhelmed to see such high performances; but when you are a Wal-Mart employee, it is no surprise why that is true.

Employees have been denied opportunities of advancement and pay raises. Lawsuits have been pending against the company with employees claiming they have been denied promotion opportunities in the company due to their gender, and some mployees have sued for being over-worked and under paid. Wal-Mart has become so big in its industry, that it has lowered the wages through out the country and has influenced economic change. Since most of Wal-Mart’s employees live below the poverty line, it is difficult for them to afford health insurance when deductions out of their paychecks are sometimes as high as 33%.

A Wal-Mart employee who obtains health insurance would have a very difficult time raising a family with this kind of premium. Wal-Mart employees are unable to receive healthcare benefits because the cost is too high and their wages are low. As a result, employees face a difficult time deciding whether to sacrifice such a large portion of their pay to obtain health insurance; in most cases Wal-Mart employees persist without health coverage. Deductions for health insurance are higher for Wal-Mart employees than other national retail employees.

A Wal-Mart employee pays about 25% more for health insurance than the average retail worker. Wal-Mart has also been opposed by its female employees, who make up two- thirds of its workforce. Women have been discriminated in wage and have been denied any advancement to upper managerial positions – dominated my men. Men ake approximately more than women and have a higher chance of advancing to a better position. Dukes vs. Wal-Mart, filed in 2001, was the largest lawsuit against a private employer in the nation and represented 1. million female employees who were discriminated based on their sex. From lawsults to employee complalnts, Wal-Mart nas Deen Tacea wltn a great deal 0T difficulties that have developed through their own unethical business practices. Although every company’s goal is to lower costs and produce large numbers, Wal- Mart has made sky-rocketing profits by unethically hurting its employees and cutting down their wages. Many question why Wal-Mart, the richest retailer in the world, chooses not to provide adequate wages or health benefits for its employees.

If Wal-Mart were to reform its health benefits program, raise their product prices by as little as a penny, and create a bias free working environment for women, Wal- Mart would be in better terms with its employees and improve the reputation it sacrificed from the start. NOT ON WAL-MART WAGES INTRODUCTION Background Wal-Mart, the large international discount chain was founded by Sam Walton. On May 5, 1950, Walton purchased a store in Bentonville, Arkansas, and opened Walton’s & 10.

Little did the small town residents know that they would later become the headquarters for the world’s largest retailer store in the U. S. Through his sa’. n. y, and sometimes unusual, business practices, he and his associates led the company forward for thirty years. As Wal-Mart grew into a global corporation it is today, it has dealt with a great deal of criticism by outsiders. Wal-Mart’s ethical citizenship has been questioned numerous times and researched by many. There have been many doubts about Wal- Mart’s business integrity and questions whether their practices are ethical or not.

Wal-Mart has faced, and is still facing, a significant amount of controversy over several different issues. Wal-Mart has been caught bribing its employees, discriminating against women, denying its employees of training or promotions, paying low wages, and providing high deductibles for health insurance. Wal-Mart is now paying the consequences and need to become socially responsible in order to maintain a better reputation with society. Although consumers are reeled in with the low prices Wal-Mart has to offer, others feel their ethical beliefs are more important than saving a quick buck.

Purpose Statement of The purpose of this report is to examine Wal-Mart’s unethical business practices with a focus on employee wages and high health care deductibles. The report will question Wal-Mart’s aptitude to sell products cheaper than any of its leading competitors and yet maintain making a substantial amount of profit. The report will analyze the unethical practices that have developed through Wal-Mart’s history as a result of focusing on high productivity and profit making strategies. cope The report will describe Wal-Mart’s unethical business practices that affect its employees. It will examine Wal-Mart’s unethical behavior in conducting business with n overall focus on employee wages. Limitations Time constraints have limited the extent of the research. There is a vast amount of information regarding this issue and we are unable to report it all. In addition, no funds are available to conduct primary research. Methods of Research The method of research for this paper was secondary research through databases, internet websites, and books.

The research databases of California State University, Los Angeles, will be used to locate articles in current and past publication. The databases used are Lexis/Nexis and Business Source Premiere. Also libraries, uch as the John F. Kennedy Memorial Library at California State University, Los Angeles and Los Angeles Public Library in Porter Ranch, California. The major findings of this study indicate that Wal-Mart being the world’s largest and richest retail chain is setting the standard on wages for retail workers and beyond.

Because Wal-Mart has become so big, it has dragged down wages throughout the country. Wal-Mart has become what it is today by selling products at low prices and paying their “associates” even lower wages. Unhappy Wal-Mart workers complain as much about being over-worked as underpaid. Wal-Mart has its own stated policies at its employees’ expense. Wal-Mart pays it’s “associates” below basic living wage standards and even below poverty lines. Overworked and Underpaid Employees H. Lee Scott Jr. is the chief executive of the powerful corporation we call Wal-Mart.

According to Mr. Scott, by selling vast quantities of goods at its trademark “Every Day Low Prices,” Wal-Mart has single-handedly raised America’s standard of living, saving consumers about $100 billion a year (Bianco 2). They feel that selling vast quantities of low price merchandise gives them the right to act as if they represent the American people. Scott states, “Wal-Mart also provides good Jobs for hundreds of thousands of equally deserving employees, offers even part-time workers generous health insurance and other benefits” (Bianco 2).

He accuses greedy labor unions, inefficient supermarket chains, and other Wal-Mart opponents of distorting “the facts” to suit their own purposes. Wal-Mart insists on describing themselves as “pro-associate, not anti-union,” but is quick to suppress any and all attempts to have unions organize in its stores. In his book The Bully of Bentonville, Anthony Bianco describes how Wal-Mart has ffected wages beyond their own company: Because Wal-Mart Is so Dig, It nas araggea clown wages tnrougnout the country.

Economists at the University of California at Berkeley found that Wal-Mart’s expansion during the 1990s cut the income of America’s retail employees by 1. 3 percent-or by $4. 7 billion in 2000 alone. What is more, the depressing effect of Wal-Mart’s expansion on payrolls extended well beyond retailing. According to a 2005 analysis by economists at the Public Policy Institute of California, take-home pay per person fell by 5 percent across the board following Wal-Mart’s entry into a country.

The evidence “strongly suggest(s) that Wal-Mart stores lead to wage declines, shifts to lower-paying Jobs (or less skilled workers), or increased use of part-time workers. (4) Today, Wal-Mart is surrounded by controversy, but the greatest is from within. Unhappy employees are quitting and dozens of class-action lawsuits are pending against the company. Managers have been known to force employees to work extra hours without pay; either by eliminating breaks or by having them clock out and keep working “off the clock”. This is Wal-Mart’s way of saving on costs at the price of its employees.

Store managers earn bonuses based on earnings. Since the corporation dictates the inventory and operating expenses, managers’ only control is labor costs. Joyce Moody, a former manager in Alabama and Mississippi, told the New York Times that Wal-Mart “threatened to write up managers if they didn’t bring the payroll in low enough”. Depositions in wage and hour lawsuits reveal that company headquarters leaned on management to keep their labor costs at 8 percent of sales or less, and managers in turn leaned on assistant managers to work their employee’s off-the-clock or simply delete time from employee time sheet (ufcw. g). In the late 1990’s Wal-Mart’s annual turnover rate was a remarkably high 70 percent, 40 percent higher than in previous years (Slater 120). Wal-Mart does not see this as being a problem. The constant turnover reduces employees eligible for raises, promotions, benefits, and holds the average wage down. Just another way to keep payroll costs at a minimum. Employee Wages Wal-Mart employs 1. 3 million workers in Just the U. S. and operates more than 3,400 stores throughout the United States. A full time employee working 28- 40 hours a week at Wal-Mart is paid on an average of $250 a week.

Besides having low wages, those workers who are interested or eligible in obtaining health insurance for themselves or for their family pay high premiums and frequently don’t get the coverage they expect. The majority of Wal-Mart employees live below the poverty line and after making deductions in taxes and insurance coverage, a Wal-Mart employee’s salary is not enough to provide them a standard way of living. “The 2003 poverty guideline for a family of four is $18,400, $4,256 more than the $14,144 in earnings a full-time Wal-Mart worker earns at $8 per hour…

A household of four with a gross ncome of $23,920 or less could be eligible for food stamps -$9,776 more than a full- time, $8-an-hour Wal-Mart worker would earn in a year. ” (www. aflcio. org) These numDers are even worst Tor part time workers. I oaay, one -tnlra 0T Wal-Marts employees are part-time workers. They are limited to less than 34 hours of work per week and are not eligible for benefits and must wait 1 year before they can enroll. Sex Discrimination in the Work Place In addition to Wal-Mart’s low wages, its female workers are more disadvantaged and discriminated against in wage than its male workers.

More than two thirds of Wal- Mart’s hourly employees are women and make up most of the lower wage positions which include: working the cash registers, stocking shelves and working the sales floor. Although men take responsibilities in these positions as well, the majority of men who work at Wal-Mart have positions as Management Associates or much higher ranked positions. Seventy-two percent of Wal-Mart employees are female and less than one-third of those women have management positions in the company.

With that in mind, the average male employee was paid about $5,000 more in 2001 per year than the average female full-time employee. As Wal-Mart’s own workforce data reveals, women in every major Job category at Wal-Mart have been paid less than men with the same seniority, in every year since 1997 even though the female employees on average have higher performance ratings and less turnover than men. (http://www. walmartclass. com). Dukes vs. Wal-Mart is said to be the largest and most famous gender discrimination lawsuit against a private employer and is the largest class-action suit in U.

S. history, representing 1. 6 million current and former female employees. Betty Dukes was the leading plaintiff in the case and sued Wal-Mart for ex discrimination; she was a fifty-four year old African-American woman who worked as a greeter for Wal-Mart. Factors such as seniority and performance were Wal-Mart’s main excuses and reasons that women earned from 5% to 15% less than men. It is disappointing to see that even the cashier positions, that are dominated by women, have men earning more than women.

Wal-Mart not only overworks, under pays and discriminates against women, but it also provides neither childcare for workers or affordable family health benefits. Unaffordable Healthcare Deductibles Wal-Mart employees are incapable of receiving healthcare benefits available for hem because of its high cost and their low wages. Since most of Wal-Mart’s employees are unable to afford these health benefits, most of these individuals either turn to government aided insurance such as Medicaid, depend on their spouse’s plans, or expect to see a doctor in rare and emergency cases with no insurance.

It is argued that uncovered Wal-Mart employees are not signing up for medical insurance and benefits because most of them exceed the income ceiling and are not eligible. Wal-Mart provides insurance for over 900,000 employees that are with and with out dependants. Employee premiums range between $143. 54 to $249. 71 per month for family coverage and $33. 04 to $72. 04 per month for single coverage. The National Average of workers covered by employer health insurance is 67 percent, and only 47 percent of Wal-Mart’s employees are covered by the company’s health care plan.

That is a huge gap when considering that each percent represents thousands of people. Most Wal-Mart employees have a difficult time aec101ng wnetner to attaln nealtn Insurance or stay unlnsurea Tor tne sake 0T saving money. ‘Cynthia Murray, who has worked at a Wal-Mart store in Laurel, Md. , or six years, suffers from asthma, but goes to see a doctor only when she suffers a bad attack. Murray is 50 years old, makes $9. 47 an hour, and says that the Wal-Mart plan that costs $23 a month has a $1,000 deductible, which makes it too expensive for her to use. Another plan subtracts $100 from her paycheck every two weeks. l don’t think anybody working at Wal-Mart has that kind of money,” says Murray. “All I’m asking from Wal-Mart is a fair share” (Gogol). Many Americans question why Wal- Mart, one of the richest companies in the United States, can’t offer affordable health insurance and pay a living wage. Comparing Wal-Mart’s employee health benefits and wages to Costco’s employee health benefits and wages, one will notice that Costco not only pays its employees higher than Wal-Mart but their deductions are far less. “The average wage at Costco is $17 an hour…. a full-time worker at Wal-Mart makes $7. 0 an hour on average. Costco workers pay Just 8% of their health premiums, whereas Wal-Mart workers pay 33% of theirs. Ninety-one percent of Costco’s employees are covered by retirement plans, with the company contributing an annual average of $1 ,330 per employee” (Cascio). Based on these facts, it is easy to ay that Wal-Mart employees are giving up a large portion of their paychecks to obtain health care. Wal-Mart employees who do have health insurance and receive coverage are paying more in premiums but receive less for their money; in large corporations this has become a trend.

New laws have been passed intended to force large corporations to control employee wages and reduce insurance deductibles. From law suits to employee complaints, Wal-Mart has recently thought of ways to reduce the cost of health benefits. The new plan would charge monthly premiums ranging from $25. 00 for individuals to $65. 0 for a family, making that 45-65% less than what employees contributed in the company’s existing plan. But it is not enough to reform the reputation Wal-Mart has lost or the vulnerable employees they let down. oncluslons High productivity and lowering costs is one of the top and most important objectives in business. Wal-Mart being the World’s largest retailer can afford to pay their “associates” more than what the minimum wage offers. They are in fact, the richest retailer in the world and yet neglect to provide their employees affordable health care with a livable wage. Even if Wal-Mart was to pass 100 percent of the wage ncrease on to consumers, the average impact on a Wal-Mart shopper would be quite small.

Wal-Mart’s choice of action toward employee wages, health benefits, and bias work environment have not only brought an enormous shadow over its employees’ lives but also over its own big business reputation. The injustice decisions made through out the history of Wal-Mart has changed many lives and has forever changed the American economy. In the business world, there is big, and then there is Wal-Mart. Recommendations Based on the conclusions presented above, the following actions are recommended: 1 . Retaining “associates” already on staff would be more cost affective then high employee turnover. 2.

Train employees. Give the opportunity to advance and have freedom to associate and organize. 12 3. Our analysis reveals that establishing a higher minimum wage for large retailers like Wal-Mart would have a significant impact on workers living in poverty or near- poverty. 4. In order to increase employee satisfaction, reforming the cost of health insurance would help keep Wal-Mart in good terms with their employees. 5. If Wal- Mart was to raise their prices by as little as a penny to the dollar it would afford them o pay the higher wages. Higher wages provide the employees opportunity to afford health coverage. . Implementing fair employment and labor practices.

Wall-Mart applies the compensation strategy of offering the workers the lower limit of wages allowed by the law, but misstating for the same through offering its employees with an insurance scheme (Wilkes, 2013). In this respect, while the employees may not be benefiting greatly in financial terms, the future of such employees is well covered, due to the fact that they have been provided with an insurance cover that addresses their needs beyond the monthly pay checks (Wilkes, 2013).

However, the Wall-Mart strategy has been termed as unsuitable both for the employees and the economy, since it is a strategy that seeks to categorize the workforce of the organization as an expense that needs to be minimized Wilkes, 2013). This concept is harmful both to the employee motivation and to the public perception, owing to the fact that treating the workforce as an expense that must be kept under control does not work well either with the employees or the public perception, which in turn adversely affects the sales of the organization directly (Atchison, Belcher & Thomson, 2013).

Thus, while the Wall-Mart compensation strategy has enabled it to keep its expenses low and thus maximize its profitability, it might have even been more damaging than already thought, if the strategy is analyzed from the employee nutrition and the customer perception point of view.

Further, the Wall- Mart compensation strategy has emerged to be damaging to the reputation and the goodwill of the company amongst the public and the customers, owing to the fact that it is perceived to transfer the burden of changing hard economic times directly to the employees, by causing them to suffer low wages, so that the company can maintain its profitability levels, as they were during the good economic times (Wilkes, 2013).

How Wall-Mart applies compensation practice to determine the positive or negative impact to the many and its stakeholders The effect of the negative perceptions of the customers and the general public is to make the organization owners and the top leadership and management to come out as greedy and unethical, which in turn is a turn off for many potential customers of the organization (Atchison, Belcher & Thomson, 2013).

Most importantly is the distinction between the concept of low wages and low labor costs. The fact that an organization offers low wages to Its workforce does not mean that such an organization will in turn incur low labor costs (Atchison, Belcher & Thomson, 013). This is because, while the low wages may be an alternative for reducing expenses, the costs associated with the labor turnover might exceed the benefit derived from offering low wages (Atchison, Belcher & Thomson, 2013).

Thus, Wall-Mart is an organization that is being faced by the challenge of high employee turn-over, owing to the fact that most of its employees are dissatisfied with the conditions of work and the low wages offered by the organization, such that they tend to quit the job at the rise of any other viable alternative, forcing the organization to engage in a continuous cycle of hiring and employment recruitment, which in turn drives the costs of labor higher (Wilkes, 2013).

A recent study has shown that while Wall-Mart offers low wages compared to Cost, Quick Trip and Trader Joey’s, the organization incurs an overall high cost of labor compared to these organizations, thus in turn earning low profitability margin (Alter, 2013). The study has indicated that the cost of labor turnover at Cost is 17%, compared to the cost of labor turnover at Wall-Mart, which stands at 44% (Atchison, Belcher & Thomson, 2013).

The overall effect of this study is to show that the compensation strategy for Wall- Mart might be considered to deliver positive results by lowering the expenses associated with the employee wages, but the overall effect is that the company continues to incur very high cost than it would be incurring, if it paid good wages for its employees (Alter, 2013). The other important aspect to consider in the Wall-Mart’s compensation strategy is its effect on the employees’ productivity.

A well paid employee is a productive employee, since such an employee is enthusiastic and motivated about his work, and thus applies extra effort to ensure that the employer will also benefit from the show of goodwill and appreciation of the employee services. In this respect, the study indicated that the productivity of the employees at Wall- Mart was much lower compared to that of Cost, owing to the fact that the profit per employee in Wall-Mart was $11 ,039 compared to that of Cost, which was $13, 647 per employee (Atchison, Belcher & Thomson, 2013).

Thus, the compensation strategy of Wall-Mart is wanting, and as a result needs to be changed so that it can enable both the organization and the workforce to reap higher benefits from their relationship. The ways in which laws, labor unions, and market factors impact the Wall-Mart compensation practices Wall-Mart compensation practices have been affected greatly by laws, labor unions and market factors, such that for example, in 2005, labor unions created organizations and launched internet and social media campaign to criticize Wall-Mart for its poor treatment of employees in wages and conditions of work (Atchison, Belcher & Thomson, 2013).

The law has also been on collision course in several occasions with Wall-Mart, where it has been investigated for possible prosecution for both monopolistic tendencies and unlawful treatment of its workforce (Green, 2003). The market forces have also been of great influence to the Wall-Mart business, through causing the organization to earn low profitability as a result of economic recession, thus in turn paying low wages for its workforce (Wilkes, 2013). The effectiveness of traditional bases for pay at the Wall-Mart The rotational bases for pay are still applicable for Wall-Mart, although selectively.

Organizational structure varies from one organization to another

Organizations with flat structure usually have a wide p of control; those with tall structure have narrow p of control. Organizations with strong or cohesive vertical type of authority structure are usually centralized; those with weak authority structure are decentralized. Although these are just hypotheses, there is a need to validate them. Hence, I have conducted an interview with a top manager in Wal-Mart to get a clear view of the organization’s structure.

Question 1

How would you characterize your relationship with the Board of Directors?

Answer: Since they are the policy makers, managers are expected to contribute little in policy-making.

Question 2

So, the relationship between the managers and the Board of Directors is direct and concrete? (vertical structure)

Answer: Yes, in terms of accountability. We are expected to integrate our operations with the policies the board create. (strong vertical authority relationship)

Question 3

How many departments Wal-Mart have? Answer: I’m not exactly sure how many. However, based on the company’s size, I bet the number is relatively large.

Question 4

What is the definition of the operations manager, its roles and responsibilities?

Answer: There is no clear cut definition of an operations manager. However, operations managers are tasked in shipping, utilizing, and scheduling operation-related activities.

Question 5

How does Wal-Mart serves the society and government?

Answer: First, Wal-Mart provides goods and services that are not usually abundant in the “common” market, that is, the company seeks to increase societal choices, and hence, happiness. Second, Wal-Mart is one of the top tax paying companies in the United States. Simply put, the taxes collected from Wal-Mart are converted to public services. The company also offers scholarship programs and research grants.

By choosing the correct projects to participate in, Target Corporation can continue their growth and competitiveness in the retail Indus try. Executive Summary Target was first founded in 1 962, opening their first store in Roseville, Imines tot. The store was designed to differentiate themselves from the existing upscale store sees in the area. The company’s idea flourished and by 2005, Target became a major retailing pop rouses, recording revenues of over $52 billion from stores located in 47 different states.

One of the main reasons Target was able to become as successful as they are, is the idea of focusing o the shopping experience as a whole, and not just focusing on lower prices compared to thee r competitors. By embracing this idea, Target has been able to successfully attract their target d anemographic, a medaled, collateralized female, with children. In today’s market, Target faces 2 main competitors: Walter and Cost. Wall Mart operates their stores similar to how Target’s stores are operated, and their SST ores are generally in competing areas of another.

Walter focuses on driving their prices as low a s possible, creating a very small profit margin on their items, but makes a large profit du to their large 1 amount of sales. Cost is a warehouse retailer that charges a membership f e in order to receive their discounted prices. The company relies heavily on these fees, as they ma eke up 72. 8% of operating income. Cost attracts many of the same customers Target attract s, but the companies are generally not in the same locations.

Targets Capital Expenditure Committee is made up of top executives who me et monthly to review all capital project requests costing more than $100,000. This commit tee could approve any and all projects, unless the projects were worth more than $50 million an in this case, the project would need approval from the board of directors. If the project involve sees openings new location, a real estate manager, located in that specific geographic area, was r expansible for the proposal and presentation Of the proposal. The committee uses different fact Ores when analyzing the capital project requests.

The factors are: NP and AIR, the size and cost of the project, the effect this project has on other Target store’s sales, store sensitivities, variance e to prototype, customer demographics, and the impact it has on the Target brand. By care Ely analyzing each of these factors and locations, we were able to come up with a decision for EAI chi location. Analysis and Recommendations The first project we will discuss is the Gopher Place location. The proposal is f or $23 million to build a POP Target Store. This location has a very strong NP and IR R in terms to the expense of the project.

With the prototype NP achievable with sales of 5. 3% below R & P forecast, we would expect this store to be financially stable. The size of the pr Eject is reasonable, and with the strong NP and AIR the cost should be redeemed. The biggest factor against this location is the centralization of sales from preexisting Target stop rest. In this location, there are five Target stores already established and plans of two Inc miming Walter 2 Superstores. 19% of our sales are expected to come from existing Target stop rest in the area, not benefiting the corporation.

This location has a relatively small population, thou ugh they have been experiencing the largest population growth of the five projects. Only 12 % of the population fits our target demographic of adults with 4+ years of college education. The median salary is also on the higher end of the remaining projects and does not fit our target d anemographic. This location doesn’t bring any new brand awareness to the Target brand and is go inning into a very crowded area of competition. The Whalen Court project is by far the most expensive project, costing $1 19. Million to build a unique, one floor Target store. This project has a project NP of $25. 9 million and an AIR of 9. 8%. With the large amount of investment, the NP and AIR figures AR .NET necessarily that strong but are still positive and could see growth. This is by far the large SST size project, with the largest expense by far. The expense alone makes us worried about the pr Eject. There are currently 45 other stores in the area, but this store would be the only one in a n urban center off major metropolitan area.

This location would not have a major impact on Sal sees from other Target stores, but could take away customers from competitors that are cure .NET in the Metropolitan area. The population of 632,000 is by far the largest population and 45% of them fit our demographic of collateralized adults. This location also brings a nun queue branding and advertising advantage and the expense could be balanced against the brand wariness. The Barn is a proposal for a POP store costing $13 million and can reach its NP V with sales 18. 1% below the projected. The small investment allows for a large return run, even if sales fall below the projected.

There are no other Target stores in the area and the strong population of 3 151 ,OHO people fits our target median income. This project should have been passed already if it weren’t for a disagreement with the developer. Soldiers Square is a project for a Supermarket costing $23. 9 million. In order t o achieve the forecasted NP and AIR of $300,000 and 8. 1 % respectively, sales would en d to be at 45. 1% above the forecasted sales level. The area is largely populated with other rate leers and currently 12 Target stores, with plans of building another 12.

Back in 1962 Sam Walton, the founder and director of Wal-Mart Corporation, opened his first store thus making a start for tremendous chain of supermarkets through the world. From humble, hard-working roots, Sam Walton built Wal-Mart Stores, Inc. into the largest, fastest-growing, and most profitable retailer in the world. In 1950, he relocated to Bentonville, Arkansas and opened a Walton 5&10. Over the next 12 years they built up and grew to 15 Ben Franklin Stores under the name of Walton 5&10.

Sam had plenty of new ideas. He liked to deal with the suppliers directly so he could pass the savings on to the customers. He later brought a new idea to Ben Franklin management that they should open discount stores in small towns. They rejected his idea. Sam and his brother James (Bud) opened their first Wal-Mart Discount City store in Rogers, Arkansas in 1962. Walton and his wife Helen had to put up everything they had, including their house and property to finance the first 18,000 square-foot store.

With gradual growth over the next eight years, they went public in 1970 with only 18 stores and sales of $44 million. Today, Wal-Mart has over 728,000 Associates worldwide with 3,500 stores, sales of over $104 billion, is in operation in all 50 states and it’s still growing. In an average week, approximately 60,000,000 customers will shop at Wal-Mart throughout the world. In his autobiography “Sam Walton: Made in America: My Story,” Sam shares with us, “If you believe in your dreams, there’s no limit to what you can do.

” In 1992, American legend, Sam Walton left us with these words, “I would like to be remembered as a good friend to most everyone whose life I’ve touched; as someone who has maybe meant something to them and helped them some way. ” While Walton’s management techniques over the years were hardly the stuff of an MBA program, it represents the kind of grassroots common sense that many entrepreneurs readily acknowledge-but too seldom heed. (People have a knack for making business more complicated than it needs to be.)

What Walton showed the world, but especially the retailing world, was that success was rooted in a mindfulness of a few basic principles. These principles consisted of constantly being mindful of; customer service and satisfaction, always take advantage of the competitions ideas, diversify, employee satisfaction, and give back to the community. Couple this with a relentless drive to put these principles into practice. Sam Walton understood better, it seems, than anyone else that no business can exist without customers. He lived by the creed of, make the customer the centerpiece of all your efforts.

In addition, in the process of serving Wal-Mart’s customers he served Wal-Mart associates, shareholders, and communities. He accomplished this almost without parallel in American business. Walton knew what the customer wanted. The customer wanted everything: a large assortment of quality merchandise; low prices; satisfaction guaranteed; friendly service; convenient hours; free parking; a pleasant shopping experience. His motto was, “always exceed the customers’ expectations”. Sam made a point to be in the store as much as he could, unlike many managers of today.

The reason for this was to allow his associates to really feel important with the president of the company coming to visit them. Few could argue with Adam Smith’s statement that “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. ” Those businesses that refuse to look after their own self-interests will not be businesses long enough to have any impact. At the same time, however, there can certainly be regard for a larger purpose.

Introduction

Background Information

         The commentary is on the responses of Wal-Mart to different ethical issues that have crept up its door in the previous yours. The ethical issues carry significance because these have overshadowed the low-cost value offered by Wal-Mart to its customers. A striking ethical issue that Wal-Mart continues to face is allegations of its involvement in unfair labor practices, particularly child labor in developing countries such as China, India, and Bangladesh among others. A decade ago, Wal-Mart positioned itself in the U.S and global market as a leader in retail by capitalizing on its low cost strategy. Now, child labor, among other ethical issues, offsets the value creating power of the low cost of labor by outsourcing production in developing countries.

         The initial reaction of Wal-Mart to allegations of child labor by its suppliers was to issue press statements denying the allegations and reaffirming its commitment to fair labor practices and respect for human rights. However, the mounting evidence shown to the public by labor activists through the media and the filing of human rights and other cases, led Wal-Mart to take a more offensive stance on the issue by inspecting and auditing its suppliers and renewing supplier agreements.

          I got wind of the Wal-Mart’s furtherance of active response against child labor by condemning the employment of children in the factories in Uzbekistan in late 2008 by renewing the terms of its supplier agreements.

Procedure

My commendatory on the responses of Wal-Mart to its involvement in child labor find support from the following supporting sources:

1. Wal-Mart press release – Wal-Mart Stores, Inc. Releases 2006 Ethical Sourcing Report
2. Wal-Mart press release – Wal-Mart Takes Action to End Forced Child Labor in Uzbekistan
3.  The New York Times – Wal-Mart to Toughen Standards
4. International Herald Tribune – Despite a decade of criticism, worker abuse persists in China
5. UNI Global Union – Wal-Mart caught once again for misusing young workers

SWOT Analysis

A SWOT analysis[1] provides a better appreciation of the perspectives over the response of Wal-Mart, particularly the renewal of supplier contracts, to the ethical issue of child labor.

Strengths

• Solidifies compliance with ethical standards
• Creates value for consumers
•  Changes public perception of the company
  Weaknesses
• Artificial or superficial
• Inconsistencies or non-uniform renewal of suppliers contracts
• Insufficient response

Opportunities

1. Establish long-term and standard compliant agreements
2. Establish the corporate social responsibility of the company

Threats

1. Non-fulfillment by suppliers
2. Decline of competitive advantage

Renewing supplier contracts as response to the ethical issue of child labor comprise an active or offensive response by Wal-Mart thus far. This constitutes a more compelling response than merely relying on press releases denying allegations of its involvement in child labor. However, the effectiveness of this response comes to question with new allegations of child labor emerging after the company has reported audit of its suppliers and renewal of supplier contracts. This caused skepticism over the sincerity of Wal-Mart in its stand against child labor. This ethical issue has strong impact on the brand equity[2] of Wal-Mart and it needs consistency between corporate communications and strategic response to turnaround its situation.

If Wal-Mart can solidify the renewal of supplier contracts as a response to the ethical issue of child labor, it can develop long-term relations with suppliers through agreements compliant with regulatory labor standards and human rights. It can also establish its corporate social responsibility[3] and create links with local communities comprising its labor pool and consumers. Otherwise, it could face added negative publicity and court cases. These could increase cost to a value greater than the cost involved in auditing suppliers and renewing contracts with compliance suppliers leading to a decline in its competitive advantage through cost leadership.

While the response of Wal-Mart may be a positive development when compared to its previous response, it arrived at this response after failing in its previous responses and there remains a wide room for improvement.

Force Field Analysis

Decision-making at the top executive level determines the long-term success of the supplier contract renewal, as the response of Wal-Mart on the issue of child labor. Employing the force field analysis[4] classified the perspectives over this response under either driving or restraining forces to determine the viability of the response.

Driving Forces

1. Customers demand value-added products
2. Turnaround the declining brand equity of the Wal-Mart
3. Enhance its domestic and global competitive competition
4. Ensure sustainable growth

Renewal of Supplier Contracts

Restraining Forces

1. Increase in cost
2.  Loss of business networks

There is greater benefit in improving the use of renewal of supplier contracts as response to the ethical issue of child labor. The apparent hesitance of Wal-Mart in solidifying this response by selecting suppliers and renewing supplier contracts for all its retail products has a long-term impact on the competitiveness and growth of the company in the global market.

The downside is the likely increase in cost with the decision-makers at Wal-Mart hesitant to give-up cost advantages derived from existing partners, also covered in the allegations of child labor. The response would also likely lead to the loss of existing business networks.

Wal-Mart needs to focus on the identification of its stakeholders and target groups[5] for its response to enhance the forces supporting the response and allaying the forces against the solidification of the response. Wal-Mart has two primary stakeholders relative to the child labor issue and these are suppliers and customers with competing interests. The effective solution to the ethical issue involves change in supplier agreements because Wal-Mart can influence the change in labor practices by having the advantage of alternatives of suppliers. It has to improve corporate communications for its press releases to target customers by using a wide range of media to communicate its active response to the issue of child labor.

Critical Success Factors

Wal-Mart can identify and understand the aspects of its response to the ethical issue of child labor by determining the critical success factors of this strategic move. These are necessary to ensure the actualization of all the essential areas for performance to achieve the objectives of the response.

One critical success factor is securing compliance of all its suppliers with standards of labor and human rights. As of 2008, Wal-Mart still received allegations of involvement in child labor in Eastern Europe. This reflects the failure of the company to renew supply agreement terms with all its suppliers. Another critical success factor is cost management. An increase in cost is inevitable but by effectively managing costs and developing contingency plans, the company can continue with its cost leadership competitive strategy.  The last critical success factor is accurate and effective communications targeting its stakeholders. The company needs to focus on two lines of corporation communication, towards customers and suppliers. These stakeholders carry different interests and require different messages and media of communication. This is an area where Wal-Mart has failed in the past by merely issuing press releases without considering differences in the interests of customers and supporters, which the company needs to consider. Suppliers need reassurance of equitable terms in the renewed agreement. Customers require reports of positive actions against child labor.

By determining and understanding these critical success factors, Wal-Mart can optimize the benefit of renewing supplier contracts as response to the issue of child labor and minimize the downsides of this action. Knowing these essential areas would also speed-up the response of Wal-Mart to developments in the ethical issues it faces.

Conclusion

In conclusion, Wal-Mart has devised a viable response to the ethical issue of child labor. This response emerged from a trial-and-error process by implementing alternative responses to learn which of the options work and which do not work. Wal-Mart started with the issuance of press releases as a response and failing to substantiate its press releases before moving on the renewal of supplier but only after mounting allegations of its involvement in child labor. Due to Wal-Mart’s manner of responding to ethical issues, there remain areas for improvement in its response, which are:

• including ensuring uniform compliance of suppliers in labor laws and human rights,
• identification of stakeholders to develop precise or targeted corporation communications, and
• fulfillment of the critical success factors.

By addressing the identified areas for improvement, Wal-Mart can enhance its competencies in responding to ethical issues and speed-up responsiveness.

Bibliography

General Texts:

1. Bradford, Robert, Peter Duncan, and Brian Tarcy. Simplified Strategic           Planning: A No-Nonsense Guide for Busy People Who Want Results  Fast!. Worcester, MA:Chandler House Press, 2000.
2. David, Fred. Concept of Strategic Management. 7th ed. New York: Prentice     Hall, 2008.
3. Schwering, Randolph “Focusing leadership through force field analysis: new variations on a venerable planning tool.” Leadership and Organization Development Journal 24.7 (2003): 361-370.
4. Supporting Documents:
5. Barboza, David. “Despite a decade of criticism, worker abuse persists in China.” International Herald Tribune 4 Jan. 2008. 1 February 2009 <http://www.iht.com/articles/2008/01/04/business/sweatshop.php>
6. Rosenbloom, Stephanie. “Wal-Mart to Toughen Standards.” The New York Times 22 Oct. 2008. 1 February 2009 <http://www.nytimes.com/2008/10/22/business/22walmart.html>
7. Uni Global Union. Wal-Mart caught once again for misusing young workers. 14 August 2007. 1 February 2009 <http://www.union-network.org/unisite/sectors/commerce/Multinationals/Wal-Mart_Mexico_misuses_young_workers.htm>
8. Wal-Mart. “Wal-Mart Stores, Inc. Releases 2006 Ethical Sourcing Report.” 15 August 2007. 1 February 2009
9. < http://walmartstores.com/FactsNews/NewsRoom/6665.aspx>
10. Wal-Mart. “Wal-Mart Takes Action to End Forced Child Labor in Uzbekistan.” 30 September 2008. 1 February 2009 <http://walmartstores.com/FactsNews/NewsRoom/8637.aspx>

Appendix

1. Wal-Mart Stores, Inc. Releases 2006 Ethical Sourcing Report

Wal-Mart’s Ethical Standards program audited more factories than any company in the world; high-risk factory violations decreased more than 23 percent; program scope increased to include environmental criteria

Wal-Mart Stores, Inc. has announced the release of its 2006 Ethical Sourcing report, providing information on the company’s Ethical Standards Program, its impact on factory working conditions and the lives of factory workers. The report details results of more than 16,000 audits of supplier factories, as well as enhancements to the program during the past year, such as strengthened environmental criteria and increased program scope. The report can be viewed at www.walmartstores.com/ethicalstandards.

The report shows that in 2006, Wal-Mart conducted more factory audits than any other company in the world, at 8,873 factories producing goods for Wal-Mart, 15 percent more than in 2005. Unannounced audits made up 26 percent of the audits undertaken, a six percent increase over 2005. High risk violations of the Wal-Mart Standards for Suppliers code decreased 23.5 percent in 2006, mainly due to educational outreach.

“The Wal-Mart Ethical Standards program is in place to do what is right for factory workers and the environment,” said Rajan Kamalanathan, vice president of Ethical Standards for Wal-Mart Stores, Inc. “The only way to achieve our objective is by moving beyond monitoring factories to working in collaboration with stakeholders. In this manner, we not only bring sustainable and positive change to working conditions in factories, we also to help build ladders to a better life in the countries where we’re sourcing.”

Program enhancements detailed in the 2006 report include the expansion of environmental elements into supplier factory audits to include waste identification, waste handling and disposal, wastewater treatment and discharge, and air emissions. Auditors now discuss environmental findings with factory management as part of the audit closing meetings to educate them on the new criteria and on environmental sustainability. In addition, Wal-Mart now includes environmental training in group training sessions for new and existing suppliers.

“Factories that are disapproved may close, and the impact on the factory workers can be devastating. To prevent this, we identify at-risk factories and invite factory management, along with the suppliers they do business with, to meet with members of the Wal-Mart Ethical Standards Team,” Kamalanathan said. “We facilitate dialogue on issues of concern and serve as a resource to factory management in a collaborative way. For example, in the Europe Middle East, and Africa region, meetings were held with eight targeted suppliers and factory management, and at the end of 2006, all eight showed substantial improvement, with six achieving our highest audit rating.”

In 2006, over 200 Ethical Standards associates were located in five regions around the globe: Southeast Asia; the Indian subcontinent; the Far East; the Americas; and the Middle East, Africa and Europe. The Ethical Standards team monitors supplier factories, engages with stakeholders, manages risk, and works to educate factories and suppliers to help prevent violations of Wal-Mart’s Standards for Suppliers code. The team is entrusted with verifying that suppliers comply with Wal-Mart’s Standards for Suppliers code of conduct and working to improve factory working conditions throughout the industry.

Established in 1992, Wal-Mart’s Standards for Suppliers code details the company’s expectations for labor practices in the production of merchandise for sale by Wal-Mart. Every supplier must sign an agreement that they, their contractors, and subcontractors will abide by the Standards for Suppliers code. As part of Wal-Mart’s agreement with suppliers, a poster of the Standards code, signed by factory management, must be displayed in a location visible to all employees at all facilities that manufacture merchandise for sale by Wal-Mart. A local helpline number and e-mail address is located on the poster for workers to contact Wal-Mart with any concerns they may have.

2. Wal-Mart Takes Action to End Forced Child Labor in Uzbekistan

Wal-Mart Stores, Inc. has instructed its global supply base to cease sourcing cotton and cotton materials from Uzbekistan in an effort to persuade the Uzbek government to end the use of forced child labor in cotton harvesting. This action follows months of work with industry trade associations, government agencies, non-governmental organizations and socially responsible investment groups to form a common position in condemning the Uzbek government’s practices.

“We have formed an unprecedented coalition, representing 90 percent of the U.S. purchases of cotton and cotton-based merchandise, to bring these appalling child labor conditions to an end,” said Rajan Kamalanathan, vice president of ethical standards. “There is no tolerance for forced child labor in the Wal-Mart supply chain.”

With Wal-Mart’s active participation, four industry trade groups, the American Association of Footwear and Apparel, Retail Industry Leaders Association, National Retail Federation, and the United States Association of Importers of Textiles and Apparel sent a joint letter to the Embassy of Uzbekistan on Aug. 18, 2008, demanding an immediate end to the use of forced child labor in cotton harvesting. In response, the Uzbek government issued on Sept. 12, 2008 a National Action Plan which details steps to eradicate the use of child labor. Once these steps can be independently verified, Wal-Mart will modify the direction to its suppliers.

3. Wal-Mart to Toughen Standards

Wal-Mart plans to announce Wednesday in Beijing that it will require manufacturers supplying goods for its stores to adhere to stricter ethical and environmental standards, the latest effort by the big retailer to answer criticism of its business practices.

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Wal-Mart plans to announce in Beijing that after January the retailer will impose stricter labor standards and audits for its suppliers. Above, shoppers at a Wal-Mart store in Beijing.

At a gathering of more than 1,000 suppliers, Chinese officials and advocacy groups, Wal-Mart executives plan to reveal a new supplier agreement that will require manufacturers to allow outside audits and to adhere to specific social and environmental criteria. The agreement will be phased in beginning in January.

The changes signal a move on the part of Wal-Mart, the world’s largest retailer, away from intermittent transactions with many suppliers toward longer-term arrangements with a smaller group of manufacturers. Wal-Mart is betting that using its buying power this way can help keep prices low even as it keeps a closer eye on its suppliers.

Wal-Mart, long criticized for its treatment of workers in the United States and its ostensible willingness to overlook violations abroad, has in recent years offered a series of environmental and labor initiatives. A Beijing meeting now under way is the company’s first “sustainability summit.”

By next year, Wal-Mart will start keeping close track of the factories from which its products originate, even if they pass through many hands. By 2012, Wal-Mart will require suppliers to source 95 percent of their production from factories that receive the highest ratings in audits of environmental and social practices.

The agreement includes a ban on child and forced labor and pay below the local minimum wage.

“Meeting social and environmental standards is not optional,” Lee Scott, Wal-Mart’s chief executive, plans to say at the Beijing summit, according to his prepared remarks. “I firmly believe that a company that cheats on overtime and on the age of its labor, that dumps its scraps and its chemicals in our rivers, that does not pay its taxes or honor its contracts, will ultimately cheat on the quality of its products. And cheating on the quality of products is the same as cheating on customers.”

To ensure suppliers are making changes, Wal-Mart said it would require three levels of audits: from the vendors themselves, from an outside party and from Wal-Mart, which will initiate more of its own random, unannounced audits.

Wal-Mart said the audits would assess factory working conditions as well as compliance by manufacturers with standards regarding air pollution, wastewater discharge, management of toxic substances and disposal of hazardous waste.

Environmental and labor groups that follow Wal-Mart said the retailer had a mixed history when it came to the environment and labor practices — and that sometimes the company’s goals were lofty, while the measurable outcomes were less so. Through the years, Wal-Mart has been accused of various abuses.

In the 1990s it came to light that workers at factories producing Kathie Lee Gifford clothing for Wal-Mart were subjected to inhumane conditions. Last year two nongovernmental organizations said abuse and labor violations (including child labor) occurred at 15 factories that produce or supply goods for Wal-Mart and other retailers. In June the United States government and the state of Oklahoma filed a complaint in federal court claiming that Wal-Mart and other companies dumped hazardous waste in Oklahoma City. In Bangladesh, it was charged that factory workers were made to work 19-hour shifts, with some bringing home just $20 a month.

Michael Green, executive director of the Center for Environmental Health, a watchdog group in Oakland, Calif., said he believed Wal-Mart’s effort to improve suppliers’ practices began as a program to counter public-relations damage. “I think what happened along the way is some people there actually got convinced,” he said. “It became more than a sophisticated P.R. stunt, but something they believed in.”

However, without knowing the specifics of Wal-Mart’s new plan, Mr. Green said it would not be easy sledding. Suppliers under pressure to offer the company the lowest prices are likely to have an incentive to cheat, he noted, and outside auditors may not want to report violations for fear of losing a lucrative Wal-Mart contract. Additionally, tracing the origins of all the working parts that go into a single toy, for instance, is difficult because it involves multiple factories.

Still, groups that have criticized Wal-Mart are attending the Beijing summit to hear the company’s plans.

In a telephone interview from Beijing Tuesday night, Mr. Scott said Wal-Mart may offer longer-term agreements to suppliers willing to make the big investments needed to live up to its environmental demands.

The company said that within China, a nation with major environmental problems, Wal-Mart would aim by 2010 to cut water use in half in all stores, design and open a prototype store that used 40 percent less energy, and reduce energy use in existing stores by 30 percent. “People will judge us,” Mr. Scott said, “based on the results.”

4. Despite a decade of criticism, worker abuse persists in China

GUANGZHOU, China:

Nearly a decade after some of the most powerful companies in the world — often under considerable criticism and consumer pressure — began an effort to eliminate sweatshop labor conditions in Asia, worker abuse is still commonplace in many of the Chinese factories that supply Western companies, according to labor rights groups.

The groups say some Chinese companies routinely shortchange their employees on wages, withhold health benefits and expose their workers to dangerous machinery and harmful chemicals, like lead, cadmium and mercury.

“If these things are so dangerous for the consumer, then how about the workers?” said Anita Chan, a labor rights advocate who teaches at the Australian National University. “We may be dealing with these things for a short time, but they deal with them every day.”

And so while American and European consumers worry about exposing their children to Chinese-made toys coated in lead, Chinese workers, often as young as 16, face far more serious hazards. Here in the Pearl River Delta region near Hong Kong, for example, factory workers lose or break about 40,000 fingers on the job every year, according to a study published a few years ago by the Shanghai Academy of Social Sciences.

Pushing to keep big corporations honest, labor groups regularly smuggle photographs, videos, pay stubs, shipping records and other evidence out of factories that they say violate local law and international worker standards.

In 2007, factories that supplied more than a dozen corporations, including Wal-Mart, Disney and Dell, were accused of unfair labor practices, including using child labor, forcing employees to work 16-hour days on fast-moving assembly lines, and paying workers less than minimum wage. (Minimum wage in this part of China is about 55 cents an hour.)

In recent weeks, a flood of reports detailing labor abuse have been released, at a time when China is still coping with last year’s wave of made-in-China product safety recalls, and as it tries to change workplace rules with a new labor law that took effect on Jan. 1.

No company has come under as harsh a spotlight as Wal-Mart, the world’s biggest retailer, which sourced about $9 billion in goods from China in 2006, everything from hammers and toys to high-definition televisions.

In December, two nongovernmental organizations, or NGO’s, documented what they said were abuse and labor violations at 15 factories that produce or supply goods for Wal-Mart — including the use of child labor at Huanya Gifts, a factory here in Guangzhou that makes Christmas tree ornaments.

Wal-Mart officials say they are investigating the allegations, which were in a report issued three weeks ago by the National Labor Committee, a New York-based NGO.

Guangzhou labor bureau officials say they recently fined Huanya for wage violations, but officials say they found no evidence of child labor.

A spokesman for Huanya, which employs 8,000 workers, denied that the company broke any labor laws.

But two workers interviewed outside Huanya’s huge complex in late December said that they were forced to work long hours to meet production quotas in harsh conditions.

“I work on the plastic molding machine from 6 in the morning to 6 at night,” said Xu Wenquan, a tiny, baby-faced 16-year-old whose hands were covered with blisters. Asked what had happened to his hands, he replied, the machines are “quite hot, so I’ve burned my hands.”

His brother, Xu Wenjie, 18, said the two young men left their small village in impoverished Guizhou Province four months ago and traveled more than 500 miles to find work at Huanya.

The brothers said they worked 12 hours a day, six days a week, for $120 to $200 a month, far less than they are required to be paid by law.

When government inspectors visit the factory, the young brothers are given the day off, they said.

A former Huanya employee who was reached by telephone gave a similar account of working conditions, saying many workers suffered from skin rashes after working with gold powders and that others were forced to sign papers “volunteering” to work overtime.

“It’s quite noisy, and you stand up all day, 12 hours, and there’s no air-conditioning,” he said. “We get paid by the piece we make but they never told us how much. Sometimes I got $110, sometimes I got $150 a month.”

In its 58-page report, the National Labor Committee scolded Wal-Mart for not doing more to protect workers. The group charged that last July, Huanya recruited about 500 16-year-old high school students to work seven days a week, often 15 hours a day, during peak production months for holiday merchandise.

5.  Mexican teenagers work without wages:
Wal-Mart caught once again for misusing young workers

Wal-Mart is doing well in Mexico, at least if one is to believe the company itself. But once again, reality is catching up with the US retail giant. According to Newsweek magazine, the Bentonville-based multinational employs thousands of young people to pack its customers’ bags. But the 4,300 young teenagers don’t receive any pay from Wal-Mart.

So, Wal-Mart succeeds to defend its position as the undisputed leader of the pack when it comes to violating fundamental workers’ rights. To make use of the enormous social problems in Mexico by taking on impoverished children to do the work, but making them rely only on tips from customers, is immoral. This behaviour should send yet another signal that Wal-Mart and walmartization must be stopped.

For those who may have thought that Wal-Mart’s social dumping and denying its workers a decent income and social benefits is a US problem, this exploitation of Mexican youngsters should be an eye-opener. Walmartization is a disease that spreads easily, as also Europeans have seen in the cases of Lidl, Schlecker and other employers. And in Korea today, we see a really grotesque example in the bitter fight that E.Land’s workers have to engage themselves in to protect their jobs.

Competitor benchmarking is used for the determination of a company’s position versus its competitors. This is done by comparing the cost of goods, operating costs, and returns on assets and capital against the industry’s best companies. Benchmarking helps strategists to identify areas of potential improvement for the company which is being analyzed. This helps the strategists because it help in getting an out-of-the-box perspective of a particular situation, and an opportunity to see how a particular aspect is handled successfully in probably a completely different way.

Wal-Mart it is the major industry leader in its segment, with no competitor coming even close to its scale and profits. However, the company’s love-hate relationship with people within the community it operates, and the large number of detractors it has is a troubling issue, which will be handled in this section. The report first gives the back ground of the company as well as its supply chain management practices, which is forms the core of its success.

In the next section the company’s strategic analysis will be done according to the frameworks given above. This will give clear picture of the company’s position in the industry. After this analysis, the final section will recommend alternative strategies or some strategic changes which the company might look into in order to achieve a better competitor stand and secure its future market position. Company and Supply Chain Background The Wal-Mart store began its operations in the year 1962 by a single store in Rogers, Arkansas.

In fact the same year three other popular discount stores also emerged namely: K-Mart, Target and Woolco. However, Wal-Mart, under the superior vision and management skills of founder Sam Walton, surpassed these stores by a wide margin very soon, and is now the largest retailer in the world. The core concept of the retail chain was to open store in small towns and sell a wide variety of products at much lower prices than the retail prices (Blevins, 2002, p. 215).

In 1979 the company first crossed the billion dollar annual sales mark, and showed an unprecedented growth rate as compared with any other retail chains due to the growth in customer demand in small towns, where most of the business was located. The company continued to show impressive growth rates even after the death of Sam Walton in 1992, by which time Wal-Mart had over 700 domestic stores and expanded into international market starting with Mexico. Wal-Mart soon expanded in Canada, and in addition extended its operations to Europe and Asia.

In 2002, the company became the largest company in the world in terms of revenues, and presently it is one of the top 10 fortune 500 companies (Chandran, 2003, p. 3). Wal-Mart’s success to a large extent is dependent upon its customer focus and excellent supply chain management practices. This enables the company to deliver a wide range of products to its customers at the lowest prices, and also in the minimum amount of time. Also, the company unlike other retailer chains does not focus on the purchase behavior of individual buyers, and maintains no records related to this beyond the single day of purchase.

Wal-Mart instead concentrates on the cumulative needs of a store located in an area, and caters to this need. The cost and time for fast moving goods in a particular community are hence reduced by aggressive price cutting techniques, and many times has ended up setting prices for goods in a certain area (Turow, 2006, p. 131). The backbone of the company’s supply chain management system is its computerized inventory system, which not only speeds up the transaction but also creates useful data in terms of periodic usage.

The distribution centers are also automated which facilitates faster operation for the stores. In addition to this, the company also saves on cost and time by buying directly from manufacturers rather than distributors, and has partnerships with key suppliers like Procter & Gamble, to replenish inventory automatically (Cohen, Roussel, 2004, p. 10). In addition the supply chain is organized such that the products, which yield more profits, could be identified and focused upon.