Sam Walton founded Wal-Mart in the year 1962. He started as a small store, which served cheap products to the local people. (Hamilton, 1976) Gradually Wal-Mart became big in America and soon due to globalization the Wal-Mart expanded to many countries now. They give importance to the price strategies. They follow the concept called “Everyday Low Pricing”. (Richards & Hamilton, 2006) This is the reason for their success as world’s number one retailer. It employees around 2.2 million people around the globe and it’s the highest private employer in the world. (Ungar 2012) And its revenue for the year 2012 was US$ 447 billion. This shows the power and dominance of Wal-Mart.
Major two strategic factors focused by Wal-Mart: -
1. Social factors
2. Environmental factors
Social factors: -
Wal-Mart though being the global giant in retailing business it faces so many social issues through out, such as poor wages to its employees, from a report its proved that it gives 20% less wages to employees when compared to its competitors. Employees are made to work overtime without extra wages. (Micklethwait, 2004) Practices of gender discrimination like women were paid less when compared to male employees. The women get promoted after the average period of 4.38 years where as the male get promoted after 2.86 years. (Lorenzsonn, 2012) Wal-Mart didn’t allow employees to form a union this also caused so many issues. As they provide products as the cheaper rates the small mom and popshops are being affected in the particular area. Many merchants close down their shops, as they cannot run their business. (Barrison, 2011) This is the reason why merchants in India tried very hard to avoid its entry into India. But as they have huge power they had collaborated with Bharti Airtel and opened stores in India. Environmental factors: -
Wal-Mart has more than 6000 stores spread across the globe. So all the agricultural land are being affected by changing into concrete and pavement. In 2005 Wal-Mart was sued for improper storage of pesticides and toxins in the store. (Kurtzleben, 2012) Wal-Mart faces many environmental problems such as the violations of the clean water in Georgia, polluting the air in eleven states of USA.
Increase in the discharge of carbon di oxide as many people drive to Wal-Mart daily. It only produces 2% of its energy trough its air and solar energy. Wal-Mart greenhouses gases are growing. (Tortorello, 2012) Wal-Mart provides cheap products so the consumers in America replace the goods frequently, so the rate of trash doubled when compared twenty years back.
Corporate governance in Wal-Mart: -
Wal-Mart was built on foundation of integrity. The board members and company leaders provide vales to serve customers and shareholders. (Duke, 2012) They believe in operating the business with high ethical standards. Top management works towards achieving sustainability.
In order to reduce social issues Wal-Mart had excellent corporate governance practices such as giving employment opportunities to the people around the store. Procuring directly from local farmers and increasing there revenue. (Duke, 2012) Giving back to the poor people in that society. Providing quality products at cheaper rate. Training facilities to the suppliers. Improving women enforcement. Wal-Mart works hard to protect the planet like using 100% renewable energy, avoiding wastage, following the strategy of going green in order to create sustainability in the minds of customers. (Duke, 2012) (Appendix A) The corporate governance and corporate social responsibility are always interlinked. Wal-Mart being the global player has to follow those to have good image in the society. The components of corporate social responsibility in Wal-Mart: -
1) Economic responsibility: -
Wal-Mart is a profitable organization as it earned the revenue was US$ 447 billion in 2012. (Duke, 2012) From this we can say that they are more...
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