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Wal-Mart: The Future is Sustainability
Transcript of Wal-Mart: The Future is Sustainability
SUSTAINABILITY Effects On Competitor Stakeholders Ethical Issues Involving History: The Growth
of Wal-Mart *Possibly the greatest complaint against Wal-Mart is that it puts other companies out of business.
*Wal-Mart counters by defending its pricing, asserting that its purpose is to provide quality, low-cost product to the average consumer.
*In order to compete against the retail giant, other stores must reduce wages. Relationships With Supplier Stakeholders *Wal-Mart focuses on keeping costs low to achieve its "everyday low prices" by streamlining its company.
*In 2008, Wal-Mart introduced its "Global Responsible Sourcing Initiative"
*Wal-Mart's power centers around its size and the volume of products needed. Many Companies depend on Wal-Mart for the bulk of their business.
*The constant drive by Wal-Mart for lower prices can have a negative effect on suppliers.
Employee Stakeholders *Wal-mart began in 1962, founded by Sam Walton.
First Wal-Mart discount store in Rogers, Arkansas.
*Company grew fromsmall chain to more than 7,000 facilities in 13 Countries.
*Sam Walton convinced to abide the "10 foot rule"
and his mantra "Sundown Rule".
*In 2002 Wal-Mart officially became the largest grocery chain, topping the fortune 500 (a position it held seven times between 2002 and 2009). Employee Benefits *Although Wal-Mart is the largest retail employer in the world, it has been highly criticized for its low wages and benefits.
*Wal-Mart has been accused of failing to provide health insurance to more than 60 percent of its employees.
*Many part-timers are not eligible, although efforts have been made to increase the coverage of part-time workers.
*Wal-Mart’s Susan Chambers, executive vp for benefits, encouraged the hiring of more part-time workers while also encouraging the hiring of healthier, more productive employees.
*Wal-Mart’s stock decreased 27 percent between 2000 and 2005.
*Because of the deluge of bad press, Wal-Mart has taken action to improve relations with its employee stakeholders.
*Raised pay tied to performance in one-third of its stores and improved its health benefits package
*90 percent of their employees are currently insured and they are taking steps to increase that number. Wal-Mart’s Stance on Union *Unions have been discouraged since Wal-Mart foundation.
*Sam Walton believed that unions were a divisive force and might render the company uncompetitive.
*Wal-Mart is not against the unions, but it sees no need for unions to come between workers and managers.
*Company supports “open-door policy”.
*Although the company officially states that it is not opposed to unions, Wal-Mart often seems to fight against them.
*Top dogs in Bentonville are called into instantly thwart union movement when union surfaces at a Wal-Mart location. Wal-Mart’s Stance on Union *In 2000 Wal-Mart butchers in Jacksonville, Texas voted to join the United Food Workers Union. Wal-Mart responded by announcing it would only sell precut meat and get rid of its meat-cutting department.
*For Wal-Mart to grow in China, it appeared necessary to accept a union.
*In 2004, the Chinese Labor Federation pushed Wal-Mart to allow the formation of unions.
*In 2006, employees announced the first formation of a Wal-Mart union, and other four more branches. Wal-Mart reacted by stating it would not renew the contracts of unionized workers.
*However Wal-Mart signed a memorandum with the ACFTU allowing unions in stores. Chinese Wal-Marts are now some of the few worldwide Wal-Marts that have unionized workers. Workplace Conditions and Discriminations *In December 2005, Wal-Mart was ordered to pay $172 million to more than 100,000 California employees in a lawsuit claiming that Wal-Mart routinely denied meal breaks.
*Wal-Mart denied accusations and filed appeal in 2007 but in 2008 they agreed to pay up to $640 million to settle 63 lawsuits.
*Wal-Mart insist it trains and promotes women fairly, but in 2001 an internal study showed that the company paid female store managers less than males in the same positions. Workplace Conditions and Discriminations *Wal-Mart earned a lawsuit for sex-discrimination involving 1.6 million current and former Wal-Mart employees.
*Wal-Mart argued and claim that promotions were made on an individual basis by each store. So far, the company has not been able to appeal the case.
*Between 2007 and 2009, the National Association for Female Executives recognized the company three years in a row as a “Top Company for Executive Women.” Illegal Immigrants *In October 2003, a series of raids by U.S. Immigration and Cotums Enforcement officials revealed that 250 illegal immigrants were working on cleaning crews at 61 Wla-Mart stores in 21 states. Several Wal-Mart contractors had hired the undocumented workers from Mexico , Eastern Europe, and other countries. In March 2005, this investigation ended in a landmark $11 Million civil settlement.
*According to Wall Street Journal article,three top Wal-Mart executives knew the company’s cleaning contractors used illegal immigrants yet did nothing to stop the practice. The immigrants worked as many as seven days a week for less than minimum wage. Wal-Mart answered these charges with an unusual response. Illegal Immigrants
*It admitted that it knew about the illegal immigrants because it had been cooperating with the federal government for 3 years prior to the raids. Wal-Mart also remarked that the reason why the did not do so. Sweatshop Workers *Wal-Mart has taken measures to show that it is agaist sweatshop labor. In 2003, it hired an anti-sweatshop lexpert to expand its global insoection program. The following year, Wal-Mart teamed up with the non profit Business for Social Responsibility to reinforce its global monitoring programs.
*However, in December 2007, Wal-Mart fell prey to criticism after Senator Byron Dorgan accused the company of selling christmas decorations made in Chinese sweatshops. The information came from a National Labor Committee study indicating that workers as young as 12 were working 15-hour days for as little 26cents and hour.
*In response, Wal-Mart stated that it was investigating the allegations and emphasized its code against such practices Ethical Leadership Issues *Thomas Coughlin
-Former board vice chair
-Protégé and hunting body of Sam Walton
-Second highest ranking Wal-Mart executive
-January 2006 Problem With Environmental Stakeholders *The EPA or Environmental Protection Agency
*Violating storm water regulations and Air quality restrictions.
*Increasing number of abandoned stores Sustainability 360 Goals
*Reducing greenhouse gases at existing stores, clubs, and distribution center bases around the world by 20 percent by 2012.
*Designing new prototypes to be 25 to 30 percent more efficient by the end of 2009.
*Developing and implementing innovative energy-efficient technology into existing and new stores.
*Reducing the amount of packaging in the supply chain by 5 percent by 2013 Sustainability Leadership -VP Kim Saylors-Laster said that one step in Wal-Mart’s plan of being was supplied by 100% renewable energy.
-They opened two environmentally friendly stores in McKinney, Texas and Aurora, Colorado.*
-The stores get electricity from solar panels and wind turbines.*
-* First, most new stores include a “day lighting” feature enabling stores to dim or turn off lights as daylight increases and enters through skylights, thereby reducing demand for electricity during peak hours.
-Second, it manages energy consumption by centrally controlling the heating and cooling of U.S. Wal-Mart stores. Sustainability Leadership *They also attempting to reduce fossil fuel use and to sell more “green” products.
*They announced a goal to reduce phosphates, a water pollutant that encourages the growth of oxygen-depleting algae and can kill fish and other wildlife, in laundry and dish detergents by 70% by 2011.
*Wal-Mart associates throughout the United States have participated in the Personal Sustainability Project (PSP)
*In 2007, Wal-Mart launched the Wal-Mart Sustainability Live Better Index. It allows Wal-Mart to track consumers’ demand for low-cost products, health and welfare products, and green products. Savings: Is Going Green Cost-Effective? Wal-Mart’s initiatives have racked up the following savings:
-$25 million/year in savings from auxiliary power systems on trucks to run the air conditioning when trucks are stopped.
-$7 million/year in savings from replacing all incandescent bulbs in store display ceiling fans with compact fluorescent bulbs. WHAT IS WAL-MART DOING TO IMPROVE
ETHICS AND SOCIAL RESPONSIBILITY? *Wal-Mart has been working to improve its ethical reputation along with its reputation for sustainability and corporate governance. In 2004, Wal-Mart formed the Global Ethics Office and released a revised Global Statement of Ethics.
*the Global Ethics office provides guidance on ethical decision making based on the Global Statement of Ethics and an ethics helpline.
*Wal-Mart has an ethical Standards Team that consists of 200 associates.
*In 2005, they introduced a full-page newspaper ad that promoted the company’s concern with ethics and its stakeholders.
*Wal-mart also contributed significantly to disaster management projects.
*Despite its efforts, Wal-Mart’s reputation was significantly tarnished again with the coughlin scandal. They therefore eager to reestablish its credibility.
Lee Scott, CEO of Wal-Mart from January 2002 to January 2009. He was given one of the top spots in the 100 most influential people in business ethics in 2008. WAL-MART’S RESPONSE TO THE FINANCIAL CRISIS *The financial meltdown of 2008-2009 may have enhanced Wal-Mart’s reputation.
*Wal-Mart has launched new initiatives targeting families facing financial dilemmas.
*The Wal-Mart foundation has partnered with United Way and One Economy Corporation to provide free filing and tax services for low-income consumers. THE FUTURE OF WAL-MART The company has continued to improve stakeholder relationships and made efforts to exhibit itself as an ethically responsible company. It has increasingly demonstrated concern to its stakeholders.
Its goals to decrease its waste and carbon emissions extend to all its facets of its operations, including its suppliers.
Wal-Mart’s creations of an ethics and compliance program shows it has come a long way since its beginning when formal ethics programs were deemed unnecessary.