Reference no: EM13706070

Walmart: Angel or Demon? You Decide...

For better or for worse, Walmart dominates the retail industry. With annual revenue of more than $379 billion, Walmart ranked number one in 2008 on the Fortune 500 list of the largest U.S. corporations. Walmart is also the largest corporate employer in the nation, with more than two million people on its payroll (only the federal government employs more people). On the global front, Walmart operates nearly 3,600 international stores and generates nearly 25%% of its sales from abroad. Given Walmart's aggressive expansion plans, those numbers are only likely to grow.

But beyond these basic facts, general agreement about Walmart ends. Supporters portray Walmart as a solid corporate citizen that fuels economic growth, while detractors criticize every dimension of Walmart operations. The key arguments:

Walmart Supporters:

Walmart boosts the standard of living for its customers by offering a plethora of quality products at the lowest possible prices. And by forcing its suppliers to become more efficient, Walmart drives greater productivity and competitiveness throughout the economy.

Walmart boosts employment in every community where it operates, offering excellent opportunities from the entry level through management. Demonstrating the appeal of its jobs, a Walmart that recently opened near Chicago received more than 25,000 applications for 325 positions.

Walmart revitalizes communities by building stores in economically depressed areas. In an interview with PBS, Walmart VP Bob McAdam cites the example of Panorama City, CA: "When we came into that location, the mall that we're associated with there was basically boarded up and closed. Every storefront is full today with little businesses that are adjacent to the Walmart store."

Walmart has made an impressive commitment to the environment by slashing energy use in its stores and trucking fleet, eliminating waste in operations and product packaging, and promoting environmentally friendly products . . . even when they're less profitable.

Walmart contributes more than $170 million to the community each year, which translates to $18,000 an hour, or $5 a second. Walmart was especially visible in the wake of Hurricane Katrina, prompting an official to comment on Meet the Press that if "the American government would have responded like Walmart, we wouldn't be in this crisis."

Walmart Detractors

Walmart has destroyed both the livelihood and the unique flavor of local communities by wiping out small local businesses that just can't compete. Richard Moe, president of the National Trust for Historic Preservation, says, "We know the effects that these superstores have. They tend to suck the economic and social life out of these downtowns, many of which wither and die as a result."

Walmart offers low prices in part because of huge tax savings and government subsidies. Across the United States, Walmart has received more than $1 billion in development aid from local governments. Both the subsidies and the tax breaks come from the pockets of local consumers, so in a certain sense, the dollars have simply shifted-the customers indirectly pay Walmart for those low prices.

Walmart has highly questionable labor practices. The giant retailer has been accused of cheating workers of overtime pay, fined for child labor violations, charged with sex discrimination in a class action lawsuit, criticized for buying goods from foreign sweatshops, charged with hiring undocumented cleaning workers, and accused of closing stores whose workers voted for unionization.

Walmart does not provide its workers with adequate healthcare. The company healthcare plan covers less than 55% of its employees. Walmart does offer insurance, but requires its employees to cover a big chunk of the cost-too much for many low-wage workers to afford. Not only that, full-time workers must wait 6 months for healthcare eligibility and part time workers must wait 1 year. . . tough given the high employee turnover. A number of critics have accused Walmart of encouraging their employees to turn to federal and state assistance programs, such as Medicaid, to cover their healthcare needs.

Answer the following questions:

Question 1:

After reading the arguments of Walmart supporters and detractors, which do you find more compelling? Why?

Question 2:

Walmart has attracted far more criticism than competitors with similar records, such as Target. Why? Can you think of other industry leaders who have been magnets for criticism while their competitors operate unscathed?

Question 3:

Do you think Walmart is responding effectively to the barrage of criticism? What other strategies would you recommend? Consider the upside and downside of at least two different approaches.