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al-Mart Stores Inc.-the world'slargest retailer-is possibly the most Controversial businessin America. With salesover $312,000 billion in 2006 and approximately 1.7 million employees worldwide (of these, 1.3 million are U .S. employees), managing stakeholder relationships is a major challenge. The WalMart that saves the average family an estimated $2329 per year has its critics. There are concerns about Wal-Mart's treatment ofemployees,suppliers,the environment, and the overall economic impact on communities. Feminists, human rights activists, amisprawl activists,and labor unions believe that Wal-Mart has engaged in misconduct to provide low prices to consumers. The company that banishes magazines with racy covers and CD's with edgy lyricsis seen as attempting to dictate its vision of American culture. Wal-Mart daimsthat it is committed to improving the standard ofliving for their customers throughout the world. The key strategy is a broad assortment of quality merchandise and servicesat everydaylow prices (EDLP) while fostering a culture that daims to reward and embrace mutual respect, integrity, and diversity.Wal-Mart has three basic beliefs: respect for the individual, service to their customers, and strivingfor excellence. How well the firm implements these beliefs is the foens of this case. Wal-Mart, one of the most amazing success stories in the history of American business, has also shaped debate over the relationships between corporations and their stakeholders. Wal-Mart has excelled at market orientation, which is focusing on consumers, defeating competitors, and increasing shareholder value.Only recently has shareholder value lagged behind the major stock market-index performance. Other stakeholders such as employees, suppliers, and communities have been viewed as secondary to low prices for consumers. For example, the Fortune 100 best companies to work for does not indude Wal-Mart. Number one in 2005 and number two in 2006 on the Fortune list was Wegmans Food Markets, with the veryunusual motto of em-
This case was prepared by Melanie Drever, University ofWyoming, under the direction ofO. C. Fenell, for classroom discussion rather than tú illustrate either effective of ineffective handling of an administrative, ethical, or legal decision by management. AlI sources used for this case were obtained through publicly available materialand the Wal-Mart website.
CASE 1 .
WAL-MART: THECHALLENGE F MANAGINGELATIONSHIPS O R WITH STAKEHOLDERS
ployees first and customers second. Starbucks with its generous employee benefits, even for part timers, was number two in 2005 but drapped to twenty-ninth in 2006. The story ofWal-Mart and its low prices shows both good and badoutcomes for society.The company has grawn fram a small chain to over five thousand stores in ten countries, making its early investors and some employees financiallysuccessful. It has been estimated that Wal-Mart saves consumers $100,000 billion ayear. Wal-Mart's entrance into some markets lowers food prices 25 percent, including savings from competitors' price cuts. As competing supermarketsclose,their umon employeessometimes lose their jobs. One study found that total payroll wages per person declined by almost 5 percent where Wal-Mart stores are located due to Wal-Mart driving down wages. In 2005 an internal document made public by Wal-Mart Watch showed that 46 percent ofWal-Mart employees' children were on Medicaid or uninsured. Michael Hicks, an economist at the Air Force Institute...