Stakeholder Analysis of Walmart
1) Walmart has different groups of stakeholders. These groups are not unique; they are common for such large corporations. Various stakeholders have different interests and stakes in the company. In this essay, stakeholders, their attributes, interests, and relations with Walmart will be studied.
The first large group includes internal stakeholders. They are shareholders, employees, management, and suppliers. Shareholders play an important role for any listed company including Walmart. It is accountable to them. Shareholders’ main interests include interest in profit generation and dividends they receive periodically (Plante, 2008).
Employees form a large group of internal stakeholders as well. Their main interest are their wages. As main strategy of Walmart is making prices as low as possible, the wages are relatively low as well. Many workers do not have alternatives, because Walmart requires minimum education to work. As a result, interests and stakes of employees are not completely satisfied by the company. It has caused many legal problems and confrontations with employees (Plante, 2008).
Management is a part of employee group. However, managers can have their own interest and stakes, which differ from the interests of common workers. Managers’ interests mostly include wages and growing profits (Plante, 2008).
Suppliers are often considered external stakeholders. However, Walmart’s relations with its suppliers are very close. It is a retailer, and it cannot operate without permanent supply of goods for sale. The main interest of suppliers is the margin that they are paid in exchange for their goods. Walmart usually offers very low margins. As a result, it purchases a large part of its products in China, where labor costs are very low (Plante, 2008).
The second large group of stakeholders includes external stakeholders. They are customers and the community together with unions and NGOs. Customers and the community have different stakes and interests. Suppliers and customers are both product market stakeholders. The Walmart sight is aimed at customers. They are considered the most important stakeholders. Their interests include prices and the choice of goods. Walmart offers low prices; therefore, more customers are attracted, especially during economic downturns. Community has its interests as well. Walmart opens throughout the USA, its stores are large and prices are low. As a result, community, especially local competitors, can suffer. Competitors’ interests include successful competition. However, sometimes Walmart helps small businesses and retail chains (Plante, 2008).
Unions and NGOs have their own stakes and interests. Their interests are connected mostly with legal issues concerning Walmart. Some issues included use of child labor, lowering prices, and low salaries of workers (Plante, 2008).
2) Stakeholders have legitimacy and power. They can influence the company’s management and decisions. Walmart always reports its shareholders about its donations. The company informs shareholders about the volume and destination of donations. Employees have legitimacy and urgency. They can struggle for their rights and higher wages. Walmart has already had many issues with the rights of employees. Managers’ attribute is power. They manage the company and influence operational decisions. “It is this group’s responsibility to turn the core strategies into practice while at the same time balancing stakeholder interests” (Plante, 2008). Suppliers have legitimacy and power. However, Walmart often rules the process of purchasing goods. It offers low prices, and most suppliers have to accept them, because Walmart can be their only customer. In addition, Walmart mostly chooses low-price suppliers, for example, Chinese firms. Therefore, they do not seem to have much power. Their legitimacy influences the rules of trade with Walmart (Plante, 2008).
Customers and community have legitimacy and power. The relations with them are regulated by laws. Consumers can struggle for their rights if they buy products of inappropriate quality, for example. Customers of Walmart have a great power as well. They influence the company’s decisions and trade. They demand specific goods, and Walmart sells those goods to them. The power of community is weaker. Very often, local stores cannot compete with Walmart because of its wide choice and low prices. However, they cannot influence its performance and decisions (Plante, 2008).
Unions and NGOs have legitimacy and urgency to influence Walmart. For example, they can criticize the company. Walmart was already criticized for using child labor and paying low salaries. Sometimes, they can influence Walmart’s policy and decisions. “The priorities of unions are sometimes conflicting. If Wal-Mart fires employees and closes a store it will result in un-employment and loss of benefits. However if they insist on higher wages and better benefits, the result will be unprofitability, causing the store to close” (Plante, 2008).
3) Walmart has many responsibilities to its stakeholders. They are often legal, because relations between corporations and stakeholders are regulated by laws. For example, Walmart has a legal responsibility to publish annual reports, to control the quality of goods sold in stores, and so on.
Walmart pays much attention to the responsibilities and communication with different stakeholders. In order to be successful, the company needs to communicate with its stakeholders and study their interests. It is responsible for that. The company pays attention to customers, associates, faith groups, NGOs, non-profit groups, etc. Walmart pays attention to its critique and tries to solve problems (Walmart, 2009).
“One of the ways we are working to engage our stakeholders in our journey to run a more sustainable business is through Sustainable Value Networks (SVNs). SVNs provide a forum for Associates, suppliers, NGOs, thought leaders and academic experts to collaboratively explore challenges and develop solutions that benefit the business and our local and global communities” (Walmart, 2009). SVNs focus mostly on the environmental impact. In addition, their sphere is expected to become wider. Sustainability and responsibilities to stakeholders are important to Walmart’s management (Walmart, 2009).
Stakeholder engagement is important for Walmart. It uses different ways to maintain it. “We are committed to engaging all of our stakeholders, both internally and externally, to become the most sustainable, responsible company we can. By listening to, partnering with and considering the perspectives of our associates, customers, shareholders, academic leaders, government, nongovernmental organizations (NGOs) and even our competitors, we are truly saving our customers money so they can live better” (Walmart, 2012). Engagement is different for different stakeholder groups. Its ways and methods are developing constantly. Many formal channels have been created for communication with stakeholders, they can provide their thoughts and propositions there (Walmart, 2012).
Associates are communicated regularly. They can be engaged through special site mywalmart.com, monthly associate magazine, Associate Opinion Surveys, and the open door. Each associate also receives a performance evaluation annually. Walmart is responsible for all those channels of communication and reports (Walmart, 2012).
Customers are communicated through stores and clubs. They can also use special social media outlets. NGOs are important for Walmart as well. It is responsible to them, because NGOs have a power and legal rights to criticize Walmart or to demand some changes. Walmart makes regular meetings with NGOs. Shareholders are among the most important and powerful stakeholders. “Quarterly and annual financial reporting, annual meeting of shareholders, periodic individualized mailings and conference calls between senior management, investors and/or analysts and rating firms. In addition, we hold three full-day interactive meetings with the investment community each year to discuss company strategies” (Walmart, 2012). Stakeholder forum includes Sustainable Value Networks (SVN), Live Greener Working Group (LGWG), and My Sustainability Plan (MSP) (Walmart, 2012).
4) In 2006, Walmart did not use stakeholder engagement in a proper way. It did not answer to critique in a proper way either. Walmart leaders thought that even if they damage market competition, Walmart should exist and continue working, because people buy goods there (Freeman, 2006). However, now Walmart tries to change its relations with stakeholders. Workers struggled for more hours and better wages. In addition, workers’ schedules often change. Walmart was blamed for importing too many goods from China and other countries. It responded by opening new product lines, which offered more expensive goods produced in the USA (Berfield, 2013).
I think that Walmart should collaborate and defend itself in order to improve relations with stakeholders and protect their interests. It can be recommended to change its social responsibility model. Like many companies, Walmart donates much in order to prove that it takes care not only of its profits, but also of the society. It can improve social welfare by offering new products or new prices, not donating. Many companies are changing their social responsibility now (Karnani, 2010). Walmart can sell and popularize healthy food, for instance. It will defend customers and improve social health and welfare. It can also sell more goods produced in the USA, even if they are relatively expensive. It will help to defend and develop national economy.
Walmart can collaborate with its employees more, because they are faced with many problems. It can offer better schedules and more work hours. In addition, Walmart can increase their wages due to higher prices of goods produced in the USA.
Berfield, S. (2013). Wal-Mart Tries to Improve Its Battered Image. Businessweek. Retrieved from February 25, 2014, from: http://www.businessweek.com/articles/2013-01-15/wal-mart-tries-to-improve-its-battered-image
Freeman, E. (2006). The Wal-Mart Effect and Business, Ethics, and Society. Academy of Management Perspectives, Vol. 20, No. 3 (Aug, 2006), pp. 38-40.
Karnani, A. (2010). The Case against Corporate Social Responsibility. The Wall Street Journal. Retrieved February 25, 2014, from: http://online.wsj.com/news/articles/SB10001424052748703338004575230112664504890?mod=WSJ_hpp_RIGHTTopCarousel_2&mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052748703338004575230112664504890.html%3Fmod%3DWSJ_hpp_RIGHTTopCarousel_2
Plante, E. W. (2008). Stakeholders and Wal-Mart, an Analysis. Blogspot. Retrieved February 25, 2014, from: http://singapoera.blogspot.com/2008/06/stakeholders-and-wal-mart-analysis.html
Walmart. (2009). Our Stakeholders. WalMart. Retrieved February 25, 2014, from: http://www.walmartstores.com/sites/sustainabilityreport/2007/companyStakeholders.html
Walmart. (2012). Stakeholder Engagement. Walmart. Retrieved February 25, 2014, from: http://www.walmartstores.com/sites/responsibility-report/2012/stakeholderEngagement.aspx