Introduction
Wal-Mart, world’s largest retailer, has been the critics’ favourite for many reasons. The company has constantly been under scrutiny due to its operational and marketing practices. However, the company continued to grow, and with growth increased the clash with its various stakeholders such as the shareholders, employees, trade unions, NGOs, governments, etc. (Camillus, 2008). All these stakeholders have the capacity in varying degrees, to influence the choices and results of the company (Camillus, 2008).
There has been long standing debate regarding the operational strategy employed by Wal-Mart and its pay-off to the society as a whole. Questions like ethical sourcing and human rights have always rung with the name Wal-Mart. However, with the dawn of the new century, Wal-Mart has tried to re-create its image of a ruthless retailer engulfing all that comes in its way to growth to a more socially responsible organization.
And many believe that the company has done a commendable job in revamping its public image and CSR policy: “when American firms get serious about CSR—Wal-Mart on sustainability, for example—the execution is generally impressive” (The Economist, 2008). This report presents an analysis of the effect of adopting a socially responsive stand towards the company’s core activities and operations. In this relation, the report seeks to answer the following questions:
- How and what has CSR contributed to change the company’s core activities?
- How is CSR offering new ways of engaging with people/employees/consumers?
- How does the company include stakeholder input?
- Where and how does the company position itself with regards to their future business?
- Do company disclosures contribute to their beneficial perception in society at large?
CSR and Wal-Mart’s core activities
According to many analysts, the CSR pursued by Wal-Mart is integral to its business strategy (India Infoline, 2010). CSR in any company must be integrated with the business strategy and core activities in order to make them sustainable (India Infoline, 2010; The Economist, 2007). The company adopted CSR practices and moved towards a 100 percent renewable energy basis, and zero waste policy. This huge shift from non-tolerance of social responsibilities, and innumerable unethical accusations, this is a huge shift.
A company that succeeded in its core strategy of price leadership and achieving this through connections of its global supply chain, has actually made it mandatory for all the suppliers to follow CSR norms, and those that are non-compliant of the norms are “dumped” (Clark, 2008). Therefore the main target of the company is to achieve compliance with local laws and regulations, energy efficiency of the suppliers, transparent supply chain, and greater environmentally and socially sustainable products from 95% of its suppliers.
The core activity of Wal-Mart has been sourcing and marketing. The company prided in its strategy of sourcing the branded products and others at lowest possible prices, and selling them at lowest possible prices, thus, adopting a low price strategy. Therefore, CSR has been imbibed in the core activity of Wal-Mart.
How Wal-Mart uses CSR
CSR is used as a method to increase accountability of the company. Therefore this is used as a PR strategy to improve the previously tarnished image of the company. In this effort, the company has deliberately looked into the areas for which it had previously been criticised like labour issues in China and other nations, sweatshops, low wages, human rights violations, energy consumption etc.
CSR is used by the company as a tool to improve the image of the company to the stakeholders, and reduce stakeholder conflict. Wal-Mart has been criticised for driving away social capital (Carden et al., 2009).
Through the present CSR Wal-Mart appeals to the customers that the company provides a “better living” for them by providing products that are more affordable and less costly, thus defining their mission “Saving people money so they can live better” (Wal-Mart, 2010; Wal-Mart, 2010; Garcia et al., 2008).
The company has started to engage employees and provide them with better employment opportunities and benefits in order to increase retention, and make them a good employer (Garcia et al., 2008). The company provides health and medical benefit to the employees and their dependents thus, doing away with previous charges of being unfair to the employees.
Further, the company has adopted a diversity program in order to make the company’s employees diversified: “The retailer has steadily emerged as a corporate leader in social diversity” (Pmto, 2010, p.15). Wal-Mart has effectively used CSR as a means to capture hidden and untapped opportunities. This is made clear from the following example: “Wal-Mart will help small farmers around the world by selling $ I billion in food sourced from one million small and medium farmers by end of 2015” (India Infoline, 2010).
Further, other initiatives in emerging market show how Wal-Mart has used CSR to unearth hidden opportunities: “In emerging markets, Wal-Mart will help many small- and mid-sized farmers through training, by gaining access to markets and by increasing their income through sourcing.” (India Infoline, 2010) Therefore, Wal-Mart has successfully utilized the CSR policies in order to remake their image.
CSR and Employees, Consumers, and People
Wal-Mart has used CSR to attract and retain employees (Bhattacharya et al., 2008). A company that was responsible for rampant labour law violation (Goldenberg & Teather, 2003) has turned into a model for ethical practices through its CSR initiative. This is so because CSR activities inculcate the good values within the company and help in spreading its effect on the others like the consumers, people, and employees.
The reason for this is that employees’ daily job, when connected through CSR, feel empowered and engaged in greater good. This therefore, helps in retaining and attracting new talent. Consumers and people definitively benefit from CSR activities as the companies directly engage in philanthropy, or discounts, or ethical sourcing that helps the customers who are becoming more aware of unethical sourcing practices (Wal-Mart, 2011).
Inclusion of Stakeholder Input
The stakeholder inputs have categorically been included in the CSR policies by Wal-Mart. The main reason for inclusion is that the CSR activities initiated by the company were perpetrated to pacify the growing objections among its stakeholders regarding the unethical practices of the company. For instance, the company has often been criticised for its not providing any health benefits to the employees (part-time or full-time).
In the 2010 CSR report, Wal-Mart includes medical and health benefits to the employees (be it part-time or full-time) and also to their dependents (Wal-Mart, 2010). As CSR reports are believed to engage external and internal stakeholders, Wal-Mart too employed various sustainability policy and strategy to cater to the stakeholder demands like better wages and benefits to the employees, ethical and supply chain for NGOs and governments, low prices for the customers, etc.
Future Positioning
The company has increased its focus on environmental and social issues thus reflecting its future strategy towards a more ‘green” company. Therefore, the company aims to become a “green” marketer and provide greater environmentally sustainable products. Concerns like global warming through emission of green house gas (GHG) and carbon dioxide emission have become the foremost concern for the company.
Therefore, this shows that in future the company intends to make the environment a better place to live in and prevent rampant pollution from destroying the earth. Therefore the future strategy is to enter into green marketing and sell products that are healthy and good for the customers, and therefore to people at large.
Image Makeover
The aim of adopting a CSR for Wal-Mart was primarily an image makeover. The company has been debated and criticized for its unethical supply chain practices and violation of human rights. Therefore, adoption of CSR practices helped the company to remake its image to a more responsible company that operated to benefit the people. The CSR did not detach the company from its core activity or mission, rather increased its orientation in becoming the price leader, but through a more responsible and sustainable manner.
Therefore, the company embarked on remaking its image through donations during the storm Katrina, and other citizenship measures and underwent a nationwide advertisement campaign to publicize its efforts to become socially responsible (Bloomberg Businessweek, 2005). Further, the company has undertaken proactive measure to become environmentally friendly in order to curve waste and carbon and GHG emission (Bloomberg Businessweek, 2005).
Further it has spin its image from a company the discriminated on basis of sex and colour to a socially diversified company (Hays, 2004). Further, Wal-Mart transformed itself from a company that had faced series of lawsuits by employees for its inhuman treatment to employees to a model employer (Bloomberg Businessweek, 2005). Therefore it has become a model for other retailers in driving the agenda for business ethics (PR.com, 2007).
Conclusion
Wal-Mart has turned its image from a socially unethical company to a responsible company that follows ethical trade conduct and CSR. Its citizenship activities has made the company gain clean image and helped it to improve its performance.
The company has successfully combined its CSR policy with the overall strategy of the company and therefore has made the CSR policies an integral part of the business rather than just a model report. Wal-Mart has aligned the social responsibilities of the company with the company strategy and helped the company gain a cleaner image.
References
Bhattacharya, C. B., Sen, S. & Korschun, D., 2008. Using Corporate Social Responsibility to Win the War for Talent. MIT Sloan management review, 49(2), pp.37-44.
Bloomberg Businessweek, 2005. Can Wal-Mart Fit Into A White Hat? Web.
Camillus, J. C., 2008. Strategy as a Wicked Problem. Harvard Business Review, pp.99-106.
Carden, A., Courtemanche, C. & Meiners, J., 2009. Does Wal-Mart reduce social capital? Public Choice, 138, p.109–136.
Clark, R., 2008. Wal-Mart to dumo suDoliers who fail CSR standards. Web.
Garcia, D., Rovenpor, J. & Osland, A., 2008. Wal-Mart’s New Challenge: Reaching Out To Socially Responsible Investors. The Society for Case Research .
Goldenberg, S. & Teather, D., 2003. Wal-Mart wakes up to gay rights. Web.
Hays, C. L., 2004. Social Issues Tug Wal-Mart In Differing Directions. Web.
India Infoline, 2010. CSR integral to business strategy to succeed: Walmart Asia. Web.
Pmto, D., 2010. A Game-Changer for Walmart. MMR, 19 April. p.15.
PR.com, 2007. Marks & Spencer and Wal-Mart Drive the Retail Industry’s Eco-Agenda – Covalence Retail Industry Report 2007. Web.
The Economist, 2007. In search of the good company. Web.
The Economist, 2008. Going global: A survey of corporate social responsibility. Web.
Wal-Mart, 2010. Annual Report. Web.
Wal-Mart, 2010. Global Sustainability Report. Web.
Wal-Mart, 2011. Walmart Corporate. Web.