The following case will analyze the Wal-Mart China’s Sustainability efforts. Wal-Mart China is in the begging stages of becoming sustainable, in an ecological sense, and faces some key issues. First the case will provide background information on Wal-Mart Global and Wal-Mart China to ensure the reader is aware of the circumstances. Then the case will analyze Wal-Mart China based on the 4Rs, recycling, resource, regulations, and reputation, described in Operations Management by Heizer, and how their efforts correlate with them. The case will then address key issues, such as questionable logistics practices, and price sensitive customers, and weary stakeholders.
Sam Walton “our customers are the reason we’re in business, so we should treat them that way. We offer quality merchandise at the lowest prices, and we do it with the best customer service possible. We look for every opportunity where we can exceed our customers’ expectations. That’s when we’re at our very best” (2011, Wal-Mart Culture). Sam Walton opened his doors in 1962, Arkansas, with the promise of offering the highest quality merchandise for the lowest prices while maintaining the best customer service. The company then sprinted to the top becoming a Fortune 500 and one of the largest retail companies in only four decades. Wal-Mart soon took on public scrutiny for being too powerful and with that came the realization of how much power Wal-Mart used. It was in 2005 when CEO Scott decided to change Wal-Marts image to one that was ecofriendly, and would show Wal-Mart in a positive light. Scott announced in November of 2005 that Wal-Mart would invest $500 million towards sustainability projects and set three goals; to be supplied 100 percent by renewable energy, to create zero waste, and to see products that sustains the world’s resources and the environment. Wal-Mart in China
In 1996 Wal-Mart opened its doors in Shenzhen and climbed its way to 189 stores and 3 distribution centers across China. Once established in China, Wal-Mart began to realize significant differences in culture and government regulation. Governmental policies restricted Wal-Mart on the number of stores they could open in a given area and where they could open. These restrictions led to smaller stores and smaller distribution centers with less saturation. With less saturation it would be harder for Wal-Mart to maintain their low cost strategy they had succeeded with in the states. Wal-Mart’s other concern in China was the cultural differences and the impact it would have on their sales. In China, the people are extremely loyal customers and very price sensitive. It is said that they will often shop around to find the lowest prices and when they do make purchases they are very small. In order for Wal-Mart to succeed in this environment they decided to work with domestic suppliers. The sustainability efforts in China did not start to take off until 2008 when they held a Sustainability Summit in Beijing. Leading the summit was the new senior director for sustainability Wal-Mart China and Global Procurement, Fertsch. Fertsch was given the responsibility to ensure that Wal-Mart China would implement a strategy that cut cost and improved sustainability. Fertsch felt confident that the initiative of sustainability was “implanting something green into (Wal-Mart’s) DNA” (Hopwood, 2009, pg. 10). Introduction
“In an OM context, sustainability means ecological stability” (Heizer, 2012, Chapter 5, para.1) In 2005, Scott, CEO, decided to implement sustainability into Wal-Marts operations. Scott’s decision can be seen as a process redesign, “the fundamental rethinking of business processes to bring about dramatic improvements in performance” (Heizer, 2012, Chapter 7, para.10). When Wal-Mart made the decision to become a sustainable operation they started with full force; in order to ensure they covered every aspect of...