Probably everyone has been to Wal-Mart Store, which is the most known retailer in the world. All the amount of items to buy, an immense choice of products, approachability of stores, attractive prices, sales and discounts and things for free – that is all about the well-known department store chain Wal-Mart. The question arises if all that glitters is gold. Some people could not help but wonder about the integrity of Wal-Mart business practice, some social issues and the corporate culture of the large retailer, which has managed to dominate in the market, and about how it affects lives of many people. `Save money. Live better` is the company`s slogan. However, it is quite contradicting that it truly makes everyone’s lives better. Mass protests of Wal-Mart`s employees, legal cases of female employees’ discrimination and racism, of the usage of children`s labor, bribery, sweatshops, low wages paid to their workers, environmental pollution etc. Wal-Mart has been involved in, must prove the opposite.
First of all, the human resources policy of the company has some issues to discover. It is not a secret that Wal-Mart pays extremely low wages to its employees; however, the real figures can be notorious. According to Freeman, Ticknor (2003), grocery workers at Wal-Mart earn about 23% less than people on similar positions at unionized stores. The most people who work for Wal-Mart live below the poverty line (Freeman, Ticknor, 2003). The corporate culture of Wal-Mart does not seem to be well established; there is a number of complaints from company`s employees, and especially, from those who were forced to quit or were fired for no reason, about not being treated accordingly by their managers (Murphy, 2008), not earning enough and having hard times working there (Ehrenreich, 2001). There are some statistics which light up cases of discrimination at Wal-Mart. Over one million of employees have been suing Wal-Mart in cases of sexual discrimination since 2000 (Ryan, 2010). Among managers at Wal-Mart, there are only from 14 to 32 percent of women, whilst the main part of women work at the lowest positions, such as cashiers, sales associates etc. (Ryan, 2010)
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Placing production facilities overseas is another factor against Wal-Mart. Outsourcing allows setting lower prices for items produced abroad by workers who are paid next to nothing. Wal-Mart produces more than 85% of items abroad, especially in poor countries with a great access to cheap labor, where the company does not care much about working conditions, remuneration package and other issues of their business practices (Miller, 2006). In addition, Wal-Mart was reducing the amount of production in the USA, therefore, a lot of people were losing jobs because the company`s policy was to “close plants in the U.S. to favor the outsourcing of products from overseas” (Martínez, 2005,23). That was the matter of the expense, everything needed to be as cheap as possible for the company. However, clearly, it did not contribute to the American employment market.
There were a couple of cases with Wal-Mart’s using children’s labor. The Daewoosa Factory, a slave-labor camp based in American Samoa which was producing clothes for Wal-Mart, can be used as one of numerous examples (Freeman, Ticknor, 2003). Workers (mostly young women) were “cheated of their meager wages, beaten, starved, sexually harassed, and threatened with deportation” (Freeman, Ticknor, 2003).
Even in the USA, where Wal-Mart claims that all the company`s goods are produced in America by launching the `Made in the USA` campaign, it is not actually right, since the main part of workers on Wal-Mart factories in the USA are foreigners, some of them do not even have any legal work permitions. In addition, Wal-Mart was caught in paying bribes to local officials when setting another store in Mexico (Clifford, Greenhouse, 2012). All mentioned ideas show the Wal-Mart`s way of business, which seems not to have any boundaries.
Policy of pushing smaller competitors
Furthermore, the Wal-Mart policy is aimed for pushing smaller competitors` businesses out of the market (Murphy, 2008). Small companies simply cannot compete with Wal-Mart in the range of products they offer, in the availability of getting to stores, but the most important – in prices. That makes small retailers suffer, lose their fortune and, as a result, leave the market. Wal-Mart as an absolute leader, can set rules in the market which other companies cannot help following. The billions-dollars-worth yearly income and the enormous size of the company chain gives it the opportunity to eliminate the distributor link as their distribution channel, which means they are getting products directly from manufacturers. It made it possible for Wal-Mart to get all items at much lower prices; therefore, they are still making an enormous profit selling their goods quite cheaply. It was estimated in some researches that prices in Wal-Mart are 8-39% lower that prices of the rest of companies in the USA (Furman, 2006). It is evident that customers cannot complain about low prices, until they get to know about the way Wal-Mart uses to keep its prices down.
Similarly, suppliers also do not have much choice, and they are strongly convinced to work with Wal-Mart and to follow its rules. Fishman (2003) came to the following conclusion: “For many suppliers, the only thing worse than doing business with Wal-Mart may be not doing business with Wal-Mart” (p.68). Not only does it help suppliers to earn a reasonable amount of money, but also provides them with regular essential orders. They would not survive in the market, if they kept working with other retailers whose business was reducing when Wal-Mart came to the area. On the other hand, the policy of Wal-Mart foresees the drop in payments to suppliers with every following year (Fishman, 2003). The company keeps its suppliers under pressure, since there is always an alternative way to buy from cheaper suppliers (Fishman, 2003).
Influence of Wal-Mart on the ecology
Moreover, it is necessary to consider the Wal-Mart`s influence on the ecology and contribution to the greenhouse effect. For a gigantic company with such global mass production it is impossible not to leave a significant footprint on the environment. Transporting goods from the manufacturer to stores and exploiting facilities (water, energy and infrastructure) at the high rate cause harm to the biosphere, and pollute the environment with carbon dioxide emissions.
Additionally, ‘Walmartisation’ of American and other countries’ markets can lead to the overall standardization and increased globalization. Having a store in every city and attracting more customers each year means that products are represented and promoted by Wal-Mart will be the same everywhere. The future scenario is that the entire world will be consuming identical food, wearing similar clothes, playing games bought from the same store etc. This would lead to the bankruptcy of unique little shops with different products and family businesses with their peculiar ways of working, because they will not be able to compete in the market.
However, it is impossible to resist the factor of convenience, which people can experience when shopping in Wal-Mart. Customers can save some money and time when buying things there, since an enormous amount of products can be found on shelves of Wal-Mart, and the idea that people can get almost everything in one place without the need to spend hours going from one place to another is quite attractive for many people. Also, the company contributes to the society by offering employment for a large amount of people. CNN’s annual rating GLOBAL 500 reported that Wal-Mart is one of the most influential private employers in the whole world which has provided more than 2.1 million of work places (2011). Overall, Wal-Mart has an enormous economic impact on the American and World economies. Moreover, Wal-Mart is one of the institutions because of which the inflation rate has been kept on the low level for many years (Martínez, 2005, 24). It was estimated by some researchers that Wal-Mart`s part in raising the U.S. economy`s productivity is approximately 12% (Martínez, 2005, 24).
Thereby, summarizing reasons for and against Wal-Mart, it is quite obvious that the popularity of Wal-Mart has risen because of the unawareness of customers. There are a lot of arguments against Wal-Mart, the largest American multinational retailer. Being customer-oriented, Wal-Mart can be quite different for its employees. Saving money on the price difference at Wal-Mart comparatively to other department stores is not that convincing anymore, when it comes to realizing the real problem. Some people were mistreated, underpaid and exploited when producing products for which one paid less. In addition, there are other parties suffering – small competitors, who cannot cope with the level of prices offered by Wal-Mart, because of getting items directly from foreign manufacturers. Also, the strong impact of Wal-Mart on the ecology of the planet cannot be underestimated, since the ecological system is getting worse every day with the help of such large businesses, as Wal-Mart.