Walmart Juggles Risk and Rewards

Introduction

Walmart Stores, Inc., is an icon of American business. With net sales of over $485 billion and more than 2.3 million employees, the world’s largest retailer and one of its largest public corporations must carefully manage many stakeholder relationships. Its stated mission is to help people save money and live better. Despite past controversies, Walmart has attempted to restore its image with an emphasis on diversity, charitable giving, support for nutrition, and sustainability. In fiscal year 2016, the company, along with its Walmart Foundation, donated $1.4 billion in cash and in-kind contributions. Walmart often tops the list of U.S. donors to charities. However, more recent issues such as bribery accusations and employee treatment have created significant ethics and compliance challenges that Walmart is addressing in its quest to become a socially responsible retailer.

This analysis begins by briefly examining the growth of Walmart. Next, it discusses the company’s various relationships with stakeholders, including competitors, suppliers, and employees. The ethical issues concerning these stakeholders include accusations of discrimination, leadership misconduct, bribery, and unsafe working conditions. We discuss how Walmart has dealt with these concerns, as well as some of its recent endeavors in sustainability and social responsibility. The analysis concludes by examining what Walmart is currently doing to increase its competitive advantage and repair its reputation

History: The Growth of Walmart

In 2002 Walmart officially became the largest grocery chain, topping the Fortune 500 list for that year. Fortune magazine named Walmart the “most admired company in America” in 2003 and 2004. Although it has slipped since then, it remains within the top 50. In 2015 Fortune ranked Walmart the 42nd most admired company in the world.

Effects on Competitive Stakeholders

Possibly the greatest complaint against Walmart is it puts other companies out of business. With its low prices, Walmart makes it harder for local stores to compete. Walmart is often accused of being responsible for the downward pressure on wages and benefits in towns where the company locates. Some businesses have filed lawsuits against Walmart, claiming the company uses unfair predatory pricing to put competing stores out of business. Walmart countered by defending its pricing, asserting that it is competing fairly and its purpose is to provide quality, low-cost products to the average consumer. Yet although Walmart has saved consumers millions of dollars and is a popular shopping spot for many, there is no denying that many competing stores go out of business once Walmart comes to town.

In order to compete against the retail giant, other stores must reduce wages. Studies show that overall payroll wages, including Walmart wages, decline by 5 percent after Walmart enters a new market. As a result, some activist groups and citizens have refused to allow Walmart to take up residence in their areas. This in turn brings up another social responsibility issue: What methods of protest may stakeholders reasonably use, and how should Walmart respond to such actions? When Walmart announced plans to open stores in Washington D.C., for instance, a chairman of the D.C. City Council introduced a law that required non-unionized retail companies with over $1 billion in total sales and stores that occupy more than 75,000 square feet to pay their employees a minimum of $12.50 per hour—in contrast to the city’s minimum wage of $8.25 an hour. The terms of the law made it essentially apply only to Walmart and a few other large chains such as Home Depot and Costco. Critics believed that the proposal gave employees at large retailers an unjustified benefit over those working comparable jobs at small retailers. The D.C. City Council eventually passed the law, but it was vetoed by the city mayor, and there are now several Walmart stores in D.C. As with most issues, determining the most socially responsible decision that benefits the most stakeholders is a complex issue not easily resolved.

Relationships with Supplier Stakeholders

Walmart achieves its “everyday low prices” (EDLPs) by streamlining the company. Well known for operational excellence in its ability to handle, move, and track merchandise, Walmart expects its suppliers to continually improve their systems as well. Walmart typically works with suppliers to reduce packaging and shipping costs, which lowers prices for consumers. Since 2009, the company has worked with The Sustainability Consortium, an association of businesses that helps its members achieve sustainability goals, to develop a measurement and reporting system known as the Walmart Sustainability Index (discussed in further detail later in this case). Among its many goals, Walmart desires to use the Sustainability Index to increase the sustainability of its products and create a more efficient, sustainable supply chain. Approximately 1,300 Walmart suppliers currently use its green index. Walmart hopes its green index will increase consumer trust in its products by providing them with a transparent way to determine the sustainability of its products.

Walmart’s power over its suppliers stems from its size and the volume of products it requires. Many companies depend on Walmart for much of their business. This type of relationship allows Walmart to significantly influence terms with its vendors. For example, Walmart generally refuses to sign long-term supply contracts, giving it the power to easily and quickly change suppliers at its discretion. Despite this, suppliers will invest significantly into long-term strategic and business commitments to meet Walmart demands, even without any guarantee that Walmart will continue to buy from them. There are corresponding benefits to being a Walmart supplier; by having to become more efficient and streamlined for Walmart, companies develop competitive advantages and are able to serve their other customers better as well. Numerous companies believe supplying Walmart has been the best thing that has ever happened to their businesses. However, many others find the amount of power Walmart wields to be disconcerting.

The constant drive by Walmart for lower prices can negatively affect suppliers. Many have been forced to move production from the United States to less-expensive locations in Asia. In fact, Walmart is considered to have been one of the major driving forces behind the “offshoring” trend of the past several decades. Companies such as Master Lock, Fruit of the Loom, and Levi’s, as well as many other Walmart suppliers, moved production overseas at the expense of U.S. jobs. Some experts now estimate as much as 80 percent of Walmart’s global suppliers are stationed in China. The challenges and ethical issues associated with managing a vast network of overseas suppliers will be discussed later in this case.

This offshoring trend was not the original intention of founder Sam Walton. In the 1980s, after learning his stores were putting other American companies out of business, Walton started his “Buy American” campaign. More recently, Walmart has reaffirmed its commitment to American manufacturing. The firm has pledged to purchase an additional $250 billion in products sourced, grown, or assembled in the United States by 2023. Critics argue Walmart is merely putting a public relations spin on the fact that rising wages in Asian countries and other international economic changes have actually made local production more cost-efficient than outsourcing for many industries. Still, the symbolic effect of Walmart throwing its considerable influence behind American manufacturing is likely to spur many suppliers to freshly consider or speed up plans to bring production back to the United States.

Employee Benefits

Much of the Walmart controversy over the years has focused on the way the company treats its employees, or “associates” as Walmart refers to them. Although Walmart is the largest retail employer in the world, it has been roundly criticized for paying low wages and offering minimal benefits. In a memo sent to the board of directors by Susan Chambers, Walmart’s former executive vice president for benefits, she suggested Walmart could slow the rise of benefits costs by hiring “healthier, more productive employees,” as well as more part-time workers (who are less likely to be eligible for health care benefits). After this bad publicity, between 2000 and 2005 Walmart’s stock decreased 27 percent.

Despite these improvements, a Walmart policy eliminated health care coverage for new hires working less than 30 hours a week. Walmart also stated that it reserves the right to cut health care coverage of workers whose work week falls below 30 hours. Some analysts claim that Walmart might be attempting to shift the burden of health care coverage onto the federal government, as some employees make so little that they qualify for Medicaid under the Affordable Care Act. It is important to note that Walmart is not alone in this practice; many firms are moving more of their workforces to part time, and cutting benefits to part-time workers, to avoid having to pay health care costs. However, as such a large employer, Walmart’s actions are expected to have more of a ripple effect on the economy.

Another criticism levied against Walmart was that it decreased its workforce at the same time it expanded. At one point, Walmart decreased its workforce by 1.4 percent while increasing its number of retail stores by 13 percent. Employee dissatisfaction often translates to customer dissatisfaction. With fewer employees it was harder to provide quality customer service. This led some customers to complain of longer lines and fewer items on shelves. In the 2015 American Customer Satisfaction Index, Walmart experienced its lowest score in customer satisfaction.

In response to the bad publicity, Walmart announced it was raising its employee minimum wage rate across the United States to $9 an hour in 2015 and $10 an hour in 2016. The wage hike has already had a noticeable effect on employee and customer satisfaction and is likely to impact the industry as a whole. Some analysts believe the wage increase may be simply a profit-maximizing response to the realities of a changing labor market (necessary to continue hiring and retaining good employees) rather than an employee-oriented or socially responsible decision. Walmart’s competitors are also watching closely; considering Walmart’s dominance and influence in the sector, other retailers may have to follow suit to remain competitive. Home Depot, T.J. Maxx, Marshalls, and several other companies also announced raises to their lowest-paid workers.

Walmart’s Stance on Unions

Some critics believe Walmart workers’ benefits could improve if they unionized. Unions have been discouraged since Walmart’s foundation; Sam Walton believed they were a divisive force and might render the company uncompetitive. Walmart maintains that it is not against unions in general, but it sees no need for unions to come between workers and managers. The company says it supports an “open-door policy” in which associates can bring problems to managers without resorting to third parties. Walmart associates have at times voted against unions in the past.

Although the company’s official position is that it is not opposed to unions, Walmart often seems to fight against them. Critics claim that when the word “union” surfaces at a Walmart location, the top dogs in Bentonville are called in. In 2000 seven Walmart butchers in Jacksonville, Texas, voted to join the United Food Workers Union. Walmart responded by announcing it would only sell precut meat in its supercenters, getting rid of its meat-cutting departments entirely. In 2004 employees at a Canada Walmart location voted to unionize; six months later, Walmart closed the store. In 2014 two internal Walmart PowerPoint presentations were leaked that provided reasons for why unions would negatively impact associates and directing managers to call the “Labor Relations Hotline” if they spot “warning signs” of union activity. Although Walmart offers justifications for actions such as this, many see the company as aggressively working to prevent unionization in its stores, and the U.S. National Labor Relations Board (NLRB) has cited Walmart on multiple occasions for violating labor laws.

Workplace Conditions and Discrimination

Despite accusations of low employee benefits and a strong stance against unions, Walmart remains the largest nongovernment employer in the United States, Mexico, and Canada. It provides jobs to millions of people and has been a mainstay of Fortune magazine’s “Most Admired Companies” list since the start of the twenty-first century. However, in December 2005, Walmart was ordered to pay $172 million to more than 100,000 California employees in a class-action lawsuit claiming that Walmart routinely denied meal breaks. The California employees also alleged they were denied rest breaks and Walmart managers deliberately altered time cards to prevent overtime. Similar accusations began to pop up in other states as well. Walmart denied the allegations and filed an appeal in 2007. In 2008 Walmart agreed to pay up to $640 million to settle 63 such lawsuits. This is only one example of the many lawsuits filed against Walmart; in 2005, it was estimated that the company was sued at least 5,000 times per year.

In 2010 dissatisfied Walmart employees started the Organization United for Respect at Walmart, or OUR Walmart. Although not a labor union, OUR Walmart received much of its funding from the United Food and Commercial Workers International Union (UFCW), which has been trying to unionize U.S. Walmart employees for years. Eventually realizing it needed a different approach, UFCW backed the idea of a non-union advocacy group and hired a market research company to develop OUR Walmart’s brand message and activism strategy. OUR Walmart’s demands include lowering the number of hours needed for part-time workers to qualify for benefits, removing caps on the wages of some long-term workers, and ending the practice of using work-scheduling systems to decrease hours for employees so they will not qualify for benefits. In 2011 100 OUR Walmart members traveled to Walmart’s headquarters and presented a 12-point declaration of their demands to the company’s senior vice president for global labor relations. Since then, OUR Walmart has arranged a variety of protests and pickets.

Walmart’s position is that OUR Walmart is a small, fringe movement that does not represent the views of the average associate. The company has repeatedly complained to the National Labor Relations Board, claiming, among other things, that OUR Walmart used illegal methods and that it is actually a union in disguise. Walmart has also accused the UFCW of anti-labor practices and filed at least one lawsuit against the UFCW and others who protested around its stores for illegal trespassing and disrupting customers. In 2015 the UFCW discontinued the funding for OUR Walmart. Without union dues to support the group, OUR Walmart has had to find alternative ways to obtain funding.

Although the UFCW’s decision to stop funding reduced OUR Walmart’s immediate power, low employee satisfaction continued to harm Walmart in significant ways. Customer satisfaction had fallen, and complaints were rising about the sub-par service in Walmart stores. With sales continuing to decrease, Walmart knew it had to make changes in how it treated its employees.

Aside from Sam Walton, other distinguished people have been associated with Walmart. One of them is Hillary Clinton, who served on Walmart’s board for six years before her husband assumed the presidency. However, the company has not been immune from scandal at the top. In March 2005 board vice chair Thomas Coughlin was forced to resign because he stole as much as $500,000 from Walmart in the form of bogus expenses, reimbursements, and the unauthorized use of gift cards. Coughlin, a protégé and hunting buddy of Sam Walton, was a legend at Walmart. He often spent time on the road with Walton expanding the Sam’s Club aspect of the business. At one time, he was the second highest-ranking Walmart executive and a candidate for CEO.

In January 2006, Coughlin agreed to plead guilty to federal wire-fraud and tax-evasion charges. Although he took home millions of dollars in authorized compensation, Coughlin secretly used Walmart funds to pay for a range of personal expenses including hunting vacations, a $2,590 dog enclosure at his home, and a pair of handmade alligator boots. Coughlin’s deceit was discovered when he asked a subordinate to approve $2,000 in expense payments without receipts. Walmart rescinded Coughlin’s retirement agreement, worth more than $10 million. For his crimes, he was sentenced to 27 months of home confinement, $440,000 in fines, and 1,500 hours of community service.

The biggest blow to Walmart’s reputation in recent years has been the uncovering of a global bribery scandal. Executives at Walmart’s Mexican arm, Walmex, allegedly paid millions in bribes to obtain licensing and zoning permits for store locations. The Mexican approval process for zoning licenses often takes longer than in the United States; therefore, paying bribes to speed up the process is advantageous for Walmart but places competing retailers who do not offer bribes at a disadvantage. Walmex supposedly used bribes to have zoning maps changed or certain areas re-zoned in order to build stores in more ideal locations. According to accusations, the Walmex executives covered their tracks with fraudulent reporting methods.

In recent years, bribery has become a hot button issue for the U.S. government, which has levied its largest fines and penalties ever against firms found guilty of bribery. It is not unusual for large firms with operations in many countries to face bribery allegations at some point considering the size of their operations and the diversity of cultures they do business with. However, an investigation by The New York Times indicated that top leaders at Walmart had been alerted to the possibility of bribery in Mexico as early as 2005 but did not report the suspected bribery to the U.S. Justice Department until 2011—after The New York Times began conducting the investigation.

According to The New York Times investigation, Walmart received an email in 2005 from a former Walmex executive describing the bribery. Walmart sent investigators to Mexico City, who corroborated much of the informant’s allegations and discovered evidence that approximately $24 million in bribes had been paid to public officials to get necessary building permits. Walmex’s top executives, including the subsidiary’s CEO and general counsel, were implicated in the scheme. However, when investigators allegedly reported their preliminary findings to Walmart’s top executives, the executives were reluctant to report the bribery. Instead, the investigation was turned over to the Walmex general counsel, even though the preliminary report found he had approved of and been involved in the scheme. This move was against the advice of one of Walmart’s top lawyers, who recommended an independent third-party investigator. The Walmex general counsel’s final report found no evidence of bribery or wrongdoing by Walmex executives. The investigation was closed without anyone being disciplined.

After a three-year investigation, the Justice Department’s probe revealed that the bribery in Mexico was not as extensive as anticipated. Yet Walmart’s bribery troubles were far from over. Its own internal probe revealed the likelihood of bribery going on in other countries. The company therefore expanded the investigation to include its operations in China, Brazil, and India. Although the Justice Department found little evidence of bribery in China, the three-year investigation uncovered evidence of widespread bribery in India. Its probe indicated that Walmart paid lower-level officials in India for real estate permits and to expedite goods through customs. Although most payments were under $200, the total amount of payments is estimated to be in the millions of dollars—a clear violation of the FCPA.

To settle the bribery investigations, the Justice Department and Securities & Exchange Commission proposed a $600 million settlement with Walmart. Walmart refused. The refusal prompted the government to reexamine the claims of bribery in Mexico. The government also considered filing criminal charges against Walmart. However, such a settlement would compromise Walmart’s ability to participate in the government’s food stamp program. Walmart gets $13 billion from customers using food stamps, demonstrating that many lower-income consumers depend on Walmart for their shopping. The two sides continued to work on a settlement so that Walmart would not be disqualified from participating in the Supplemental Nutrition Assistance Program. Eventually, they agreed on a $300 million settlement.

In the wake of the bribery scandal, many Walmart shareholders demanded, among other things, disciplinary action and compensation cuts against those involved. Shareholders are also demanding that the leaders of Walmart continue to improve transparency and compliance standards. As part of its compliance overhaul, Walmart announced it would begin tying some executive compensation to compliance efforts.

Using overseas suppliers has also caused trouble for Walmart. Many of its suppliers, both inside the United States and in other countries, employ subcontractors to manufacture certain products. This makes the supply chain complex, and retailers like Walmart are forced to exert more oversight to ensure its suppliers meet compliance standards. Citing safety concerns or telling a supplier not to work with a certain subcontractor is not enough without enforcement. Walmart learned this the hard way after a Bangladeshi factory fire killed 112 workers.

The factory, Tazreen Fashions Ltd., had several assembly lines devoted to Walmart apparel because at least one of Walmart’s suppliers used the factory to subcontract work for Walmart. However, Walmart claims the supplier was unauthorized to do so as Walmart had removed Tazreen Fashions from its list of approved factories months before the incident. Walmart subsequently terminated its relationship with that supplier. Previous inspections at Tazreen showed many fire dangers, including blocked stairwells and a lack of firefighting equipment. The fire burned down the building and killed 112 employees, some of whom jumped to their deaths.

Walmart has also faced criticism on its home front. Workers at warehouses in the United States that do business with Walmart have complained about harsh working conditions and violations of labor laws. Safety violations are also a common complaint. For example, in 2012 a group of delivery packing workers at a warehouse in Mira Loma, California, went on strike and walked for six days to Los Angeles to draw attention to allegedly miserable and unsafe working conditions and to deliver a petition to the Los Angeles Walmart office. The situation is complex because such warehouse workers are hired and employed by staffing agencies or third-party contractors, making it harder for Walmart to assess working conditions. Walmart has argued that these third-party contractors are responsible for working conditions.

The Bangladeshi fire and ongoing worker complaints have increased the pressure on Walmart to improve its oversight and auditing mechanisms. Previously, Walmart employed a three-strike policy for suppliers and subcontractors who violated its ethical standards. However, after the Bangladeshi fire Walmart changed its policy to adopt a zero-tolerance approach. Whereas before, suppliers that violated sourcing policies had three chances to rectify problems, now Walmart exerts the right to terminate relationships with suppliers immediately after discovering a violation. Walmart also requires all suppliers to have an independent agency assess the electrical and building safety conditions of their factories. To address domestic complaints, Walmart applies the same monitoring system to U.S. suppliers. Walmart furthermore stated it has begun making unannounced visits to U.S. third-party operated warehouses by independent auditors to check whether they adhere to the firm’s ethical standards. Walmart hopes these stricter measures improve compliance by its suppliers as well as reiterate the company’s commitment to ethical sourcing practices.

The controversy of worker safety in Bangladesh intensified after yet another factory collapsed in 2013, killing 1,127 workers. The tragedy caused Walmart and other retailers to consider new safety plans. A group of European retailers, worker safety groups, and labor unions came together to develop and sign a five-year legally binding workplace safety agreement that improved worker safety in Bangladesh by requiring retailers to pay suppliers more so factories could afford to make safety improvements, as well as through the development of a standardized worker complaint and risk reporting process. Walmart declined to sign the agreement, however, and instead devised its own safety plan. Its plan primarily involved hiring an independent auditor to inspect all of its Bangladeshi factories that produced goods for Walmart and publishing the results publicly, including which factories failed the audit and were no longer allowed to produce for Walmart, as well as requiring factories that did not fail but still had some unsafe conditions to improve safety standards. Walmart also joined the Alliance for Bangladesh Worker Safety. Critics argue that Walmart’s independent plan is insufficient and much less ambitious than the workplace safety agreement it declined to join.

At a pep rally, Mike Duke emphasized integrity in operations and employee behavior at all levels and rewarded 11 employees for “leading with integrity.” In highlighting the actions of these select employees, he reiterated the firm’s ethics hotline and open-door policy. Mike Duke acknowledged that there were ethical issues in some Walmart stores and stated that he planned to slow expansion so the company could focus on improving these issues.

As a form of damage control, Walmart ran an advertising campaign to frame the company as an “American success story.” Additionally, after market research revealed Walmart’s brand image had lost traction among college-educated adults, Walmart developed a multi-million dollar advertising campaign called “The Real Walmart.” The advertisements featured customers, truck drivers, and employees sharing their happy experiences with the company. Walmart particularly wanted to target opinion leaders who could then convince others of the company’s value and positive brand image. The ads were first released during the Kentucky Derby and were also featured on Sunday news shows. These advertising campaigns were similar to those released by other companies attempting to restore their image, such as Toyota during its recall crisis and BP after the Deepwater Horizon disaster.

Among Walmart’s long-term sustainability goals are its intentions to be supplied entirely by renewable energy, create no waste, and sell products that sustain people and the environment. In order to achieve these ambitious goals, Walmart has built relationships with influential people in supplier companies, government, NGOs, and academia. This approach has served it well. Walmart is currently 25 percent powered by renewable resources and wants to increase this to 50 percent by 2025. Walmart has invested in several renewable energy projects, including making an agreement to purchase 58 percent of electricity generated by a Texas wind farm for the next 10 years.

To reduce energy consumption, Walmart facilities conserve energy in two major ways. For instance, Walmart efficiently manages heating and cooling energy consumption by centrally controlling the temperature of Walmart stores worldwide from its Bentonville headquarters. The company is also opening new stores and retrofitting existing ones with high-efficiency LED and low-mercury fluorescent lighting and is in the process of replacing open freezers with secondary loop refrigeration systems.

Walmart is furthermore attempting to reduce fossil fuel use and invest in more renewable energy alternatives. By taking steps to increase the fuel efficiency of its fleet, Walmart was able to reduce carbon emissions by 650,000 metric tons within one year. Walmart also intends to work with its suppliers to reduce carbon emissions. These improvements will help the company toward its goal of reducing carbon emissions 18 percent by 2025. In 2015 Walmart signed an environmental pledge agreeing to reduce carbon emissions and invest in more clean energy.

The retailer has also begun selling more products made from sustainable or recycled materials. In the next nine years, it plans to have 100 percent recyclable packaging for its private-label brand merchandise. Walmart started a program to sell more local produce (defined as produce grown and sold in the same state). It hopes to double the sales of local produce by 2025. Walmart is also investing in medium- and smaller-sized farms, particularly in emerging economies. Walmart estimates that 55 percent of its global customers are willing to pay more for green products.

One of the most unique and well-regarded of Walmart’s sustainability efforts is its Sustainability Index, which it developed with the help of a nonprofit coalition known as The Sustainability Consortium. The Sustainability Index is essentially an attempt to rate and categorize all of Walmart’s products and suppliers on a variety of sustainability-related issues. Between 2009 and 2012, Walmart worked with researchers to develop the basic categories and determine what information would be required for the Index to work. Then, starting in 2012, it began sending out requests for this information to its suppliers. For example, suppliers of products that contain wheat, such as cakes, cookies, and bread, were asked to provide detailed information about the sourcing of that wheat, from fertilizer use tracking to soil fertility monitoring to biodiversity management. Computer and jewelry suppliers were asked about the mining practices used to extract their materials; toy makers about the chemicals used in their manufacturing processes; and so on. Walmart uses this information to rank its suppliers from best to worst on the Sustainability Index and then gives that information to those in charge of making Walmart purchasing decisions to use in determining which suppliers to buy from. Presumably, the end result is that more sustainable products end up on Walmart shelves, and suppliers are incentivized to improve their practices to better compete with others on the Index.

The initiative is exciting because Walmart’s industry power is so great that a successful implementation could truly drive change throughout entire supplier industries and chains. As actual implementation of the Index is still in progress, details on its workings and effectiveness are still scarce, but industry onlookers and sustainability advocates are watching closely to see what effect it will have on Walmart and its supplier network.

Although Walmart’s environmental overhaul is a step in the right direction, some are skeptical as to whether it can accomplish its goals. Many claim that Walmart’s apparent sustainability gains are overstated, lacking in critical information, or downright misleading; in other words, “greenwashing” advertising rather than actual change. Some suppliers are worried about the Sustainability Index, including the amount of increased time and expense it will take to provide the required information and the business implications of products that receive higher “sustainability” rankings being given preferential treatment. Also, the concept of “being green” is subjective, since not everyone agrees on how it is defined or whether one environmentally friendly practice is necessarily more beneficial than another. Despite these obstacles, Walmart seems to have achieved substantial successes in this area through its dedication to its goals and the strength of its partnerships.

In response to the bribery scandal, Walmart completely overhauled its global compliance program. In 2014 it released its first Global Compliance Program Report detailing the changes it has made. The report categorized the changes into three broad areas: people, policies and processes, and systems. The changes include a completely new corporate division that combines ethics, compliance, investigations, and legal matters into a unified organization all reporting to an Executive Vice President of Global Governance. The company also hired “Subject Matter Leaders” and “Subject Matter Experts” to provide expertise and advice in 14 areas of concern, such as anti-corruption and responsible sourcing. Other highlights are a multi-year compliance training plan, improvements to reporting and collaboration communications channels, establishment of multiple compliance and ethics committees, and a commitment to being completely bribery-free, regardless of the culture Walmart is operating in. In 2017 the company announced it would consider becoming certified under an international program run by the International Organization for Standardization. Under this program, Walmart would adopt anti-corruption compliance standards to help protect it against further global misconduct. Analysts have stated that, at least on paper, Walmart’s initiatives are extremely thorough and innovative and deserve close watch to see how they work in practice.

Walmart has contributed significantly to disaster management projects and economic empowerment for women. The company partnered with other firms to donate bottled water to the Flint, Michigan, community after it was discovered the city’s drinking water was contaminated with lead. In 2001 Walmart established The Associates in Critical Need Trust, which provides grants to associates who have experienced unexpected emergencies such as natural disasters or death of a spouse. In fiscal year 2016, approximately $8 million was donated to associates as part of the trust. In terms of increasing opportunities for women, Walmart made a commitment to partnering with factories to teach women valuable skills and help them escape poverty. Through this program, Walmart has provided funding for 762,000 women. It has also collaborated with the Women’s Business Enterprise National Council to add a unique “Women Owned” logo to products from women-owned businesses so customers can easily identify and support them if desired.

Walmart remains the preferred shopping destination for many consumers, particularly after the financial meltdown of 2008–2009. Although Walmart prospered during the recession while other retailers suffered, the company’s sales in many of its established markets have begun to stagnate or even decline. Several initiatives, such as Walmart’s adoption of organic food and trendy clothes, did not achieve much success with discount shoppers. Walmart also underwent a renovation effort that cut certain products, such as fishing tackle, from its stores. These actions alienated Walmart’s original customer base. Households earning less than $70,000 annually defected to discounters like Dollar Tree and Family Dollar. Analysts believe Walmart’s mistake was trying to be everything to everyone, along with copying its more “chic” rivals like Target. Walmart’s response was to bring back some of the merchandise it had removed. It also invested significantly into e-commerce as an untapped area of growth in the hopes of competing more directly with Amazon and other e-commerce retailers that have drawn away some of its customer base.

Walmart decided to increase wages and training for its employees. It started paying entry-level employees who complete its training program $10 per hour. It also agreed to enforce more predictable scheduling. New hires are enrolled in Walmart’s training program, which teaches basic economic principles and specialized knowledge depending upon the employee’s role in the company. After completing the training modules, employee supervisors observe their performance on the floor. Those that pass are upgraded to a minimum of $10 an hour. Walmart also offers more advanced training programs for those employees who want to take on more managerial roles. The firm is recognizing the importance of employee retention and loyalty. With these programs, the company hopes that employees will begin to see working at Walmart more as a career and less as the job of last resort.

Not everyone is happy about Walmart’s changes. Employees who have been with Walmart for years claim that it is unfair that new hires get the chance to earn wages it took them years to obtain. Some critics believe the wage increase is not enough, while others point out that workers will only get paid after they complete a time-consuming six-month training program. Additionally, the rising labor costs have impacted Walmart’s profits—these changes in wages and training will cost the firm $2.7 billion. On the other hand, customer satisfaction has steadily risen since the changes were announced, which seems to give some indication that employees are becoming more satisfied with the company. Although the investment might be costly to the firm in the short term, its long-term future appears more positive.

Walmart is also looking toward more global expansion. After years of struggling in the Japanese market, for example, Walmart began turning a profit in 2008 through its acquisition of Japanese retailer Seiyu Ltd. It is continually focused on further developing its presence in China. Although only 3 percent of its sales currently come from China, the wide-scale growth in the grocery market is encouraging further investment in the country. To court Chinese consumers, Walmart had to change some of its tactics. For instance, Chinese consumers like to purchase live fish and are more distrustful of prices that are too low. In response, Walmart continues to offer its low prices but changed its slogan in China from “Low Prices” to “Worry Free.” To gain consumer trust, Walmart offers discounts that last a longer time than in other markets, often from four weeks to six months. Walmart is learning that it must change to accommodate sociocultural, legal, economic, and political differences as it expands to different countries. Though the company will likely experience several bumps in the road, many of its international markets appear to offer strong growth potential. If it is successful in adapting to the different cultural conditions of the markets in which it operates, Walmart is likely to see its global influence expand significantly.

Walmart can be viewed through two very different lenses. Some think the company represents all that is wrong with America, while others love it. In response to criticism, and in an attempt to initiate goodwill with consumers, the company has continued to improve stakeholder relationships and make efforts to demonstrate it is an ethically responsible company. Although it has faced controversy regarding competition, suppliers, employees, and global corruption, among other things, it has also demonstrated concern for sustainability initiatives and social responsibility. Its goals of decreasing its waste and carbon emissions and its new Sustainability Index extend to all facets of its operations, including suppliers. These efforts demonstrate Walmart’s desire (whether through genuine concern for the environment or for its own bottom-line profits) to become a more sustainable company.