Always Low Prices, Always: Marketing Origins of Wal-Mart's Dubious Csr Performance.

Topics: Business ethics, Corporate social responsibility, Illegal immigration Pages: 9 (3495 words) Published: May 24, 2008
Wal-Mart, the world largest and most successful corporation, also has the unflattering reputation of being so uncaring that it now symbolizes corporate social irresponsibility in the eyes of many Americans. How did the most powerful company become admired as well as feared and despised? Using the company's marketing strategy as a basis for analysis, the current study argues that Wal-Mart's problems with its own employees are not just perceptual but fundamentally due to the company's targeting and positioning choice: the delivery of always low prices to customers has meant that such stakeholder groups as employees have had to be squeezed. 1. INTRODUCTION

From its humble beginnings in the 1960's Wal-Mart has emerged as not just the most powerful global retailer of all times, but also the world largest company, with annual sales of more than 250 billion. In a short time Wal-Mart has become the largest and the most successful retailer, by a fanatical pursuit of the lowest prices for its customers. Along the way, however, the company has acquired the unsavory reputation of ruthlessness with its supply chain, competitors and employees alike. Few companies have achieved the mixed reputation of being admired, beloved, for their business success and yet despised and feared at the same time for their labor and competitive practices as Wal-Mart. Wal-Mart is the company people love to hate; with intense emotion. More "anti" websites are devoted to Wal-Mart than to any other company. The company is dissected and studied for its marketing triumphs as much as it is for its labor relations failures. Many studies document Wal-Mart success and ascend to global power (cite). An even larger number discuss its rise from folk hero to corporate monster (cite). The current article examines the origins of Wal-Mart's CSR performance shortcomings, from a marketing perspective. How did a company heralded as a hero as recently as in 2000 become a corporate monster only a few years later? Is the company's current predicament an aberration to be blamed on rapid growth, or was it predictable? The article argues that the company's current predicament was not only foreseeable, but a logical consequence of its strategic choices, through its unbalanced approach to stakeholder commitment. 2. STAKEHOLDER THEORY

Stakeholder theory (1984) may be offered as a contrarian proposition to generally accepted neoclassical dogmas on the role of the firm as essentially economic. The theory posits that businesses must balance the interests of all parties with a stake (stakeholders) in the firm. Stakeholder theorists (Freeman, 1984) identify a number of groups that have a "stake" in the corporation either because they are directly (or indirectly) affected by corporate decisions & actions, or because they have an explicit contractual relationship with the firm. Such groups (stakeholders) typically include: shareholders, employees, customers, suppliers, the environment, and communities. Within this tradition, stakeholder mapping appears as a tool to unmask potential disfunctions (especially from a communication standpoint) between an organizations and its stakeholders. In essence, stakeholder maps are visual representations of a company's stakeholders properly categorized along a power/interest grid. The Map is a strategic planning tool that displays stakeholder inter-relationships, and suggests paths the company can follow to achieve its business objectives while avoiding alienation of its stakeholders. Based on the company's 2003 social report, a stakeholder Map was constructed (see Figure 1). From this document on company policies and actions, it is clear that Wal-Mart views its shareholders, consumers, and the community as their most important group of stakeholders, while employees are its second most important one. In this representation, suppliers and the environment rank the lowest in the company's power/interest grid. [FIGURE 1 OMITTED]

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