Case Study - Wal Mart: the Main Street Merchant of Doom (Corporate Social Responsibility Case Study)

Topics: Ethics, Social responsibility, Corporate social responsibility Pages: 9 (2735 words) Published: October 30, 2006

Since its establishment in 1962, Wal-Mart has grown to be one of the biggest conglomerates in the world. Inevitably, with the expansion of the company, the weight and number of social and ethical issues facing the company has increased.

The key issues discussed in this particular case are:
•Wal-Mart's and America community – Small merchants and the community's environment •Barriers to domestic expansion – Wal-Mart and its Opponents •Wal-Mart's Corporate Social Responsibility (CSR) programmes: Merely gimmicks? •The company's responsibility to employees who lose their jobs and loyal customers when Wal-Mart pulls out of a community •International expansion of the company – cultural sensitivity

Overview: Wal-Mart and CSR

Analyzing the company's CSR situation using the 4-part CSR model:

Economic Responsibilities: This has been amply fulfilled. The company is obviously profitable - net sales totalled $256.3 billion in 2004. Thus, the foundation for all other aspects of CSR has been set very well.

Legal Responsibilities: Wal-Mart has a rather poor showing in this area, being considered "the most sued company in America". It is embroiled in hundreds upon thousands of lawsuits, and has questionable labour practices. It is reputed for low wages and discrimination (based on gender etc). However, it must be noted that it is inevitable for such a large company to get sued by many parties, sometimes with no grounds at all.

Ethical Responsibilities: This responsibility has only been partially met. Wal-Mart's "Buy American" and "Environmental Awareness" plans are good examples of the company's attempt at ethical responsibility. Furthermore, Sam Walton offered his employees stock options and profit sharing to enable them to share in the company's wealth. However, it has neglected to fulfil its responsibility toward the small merchants it puts out of business when it enters a town. Moreover, the "Buy American" plan has been de-emphasized, and these programmes could be publicity stunts.

Philanthropic Responsibilities: In this area, Wal-Mart has fared well. The company has numerous corporate citizenship initiatives – college scholarships, fund-raisers and even a hefty $50 million donation to the business school at the University of Arkansas. They have even established the Walton Family Charitable Support Foundation to facilitate their corporate philanthropy.

Conclusion: Wal-Mart is an extremely profitable company and a noted philanthropist. However, there is significant room for improvement in the areas of legal and ethical responsibility if Wal-Mart is to work towards better CSR. In this case study, ethical responsibility is of particular importance. The lack of responsibility in this area has given rise to barriers to both domestic and international expansion. For example, places like Iowa City are blocking Wal-Mart's entry in fear of its negative impact on the city's small merchants. The abovementioned key issues primarily concern this area and need to be addressed if Wal-Mart is to continue thriving in America and beyond.

1.Wal-Mart & American Community

A Wal-Mart entry can be detrimental to a community's environment and people – causing sprawl, traffic congestion, unwelcome changes to the landscape and putting small merchants out of business.

Small Merchants

Some of the strongest opposition against Wal-Mart stems from the concern of what their presence would do to existing businesses. Before the advent of the superstore, small merchants served America. Due to their small size, it was impossible for them to buy goods as cheaply as a superstore, and this necessitated higher pricing. With the entry of Wal-Mart and their low prices into these underserved American communities, residents began to buy from Wal-Mart instead of these small merchants, forcing many of them to close.

Undoubtedly, this has been beneficial for consumers in that they can purchase their goods for more...
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