Explorative Research on Walmart
In the United States, the largest retail chain is Walmart with a market share of 24.5% in the sale of groceries in 2014. The dominance of the company is perhaps best represented in its market capitalization of 218.21 billion dollars. To put this into perspective, the retail chain posted profits of 14.70 billion dollars in the year 2016 and an equally high revenue of more than 480 billion dollars. In the US, the company has the largest employee base with workers amounting to approximately 2.2 million. In recent years, the company’s dominance has extended overseas into new markets such as China, Mexico, Canada and even Africa. In 2015, the total number of stores that Walmart operates had surpassed the 6300 mark all over the world. Despite the huge figures reported, Walmart is facing challenges from its competitors in terms of its sales. In addition, the dominance in the international market has been stalled by unfavorable policies and legislations.
Despite the seemingly healthy state that the company is in, it continues to face price pressures from its competitors. Many new stores are now offering lower prices; an assertion that the company’s CEO recently admitted. The challenge of prices is particularly overwhelming since Walmart has succeeded on the centerpiece of lower prices. To wade off the competition, Walmart has had to focus on reducing the prices of most of its products. The price cuts are effective as research has proved. Interviews conducted in ten Walmart stores showed that most of the products at Walmart are 18 percent cheaper than in most of the other stores. In 2016, Amazon was found to be 7 percent more expensive than the price at Walmart and even 16 percent more in some products. The incorporation of Wal-Mart’s saving catcher is also important in attracting customers to its stores. The online platform allows shoppers to compare the prices of products at Walmart with that of the same products in other stores. Interestingly, the company refunds the extra amount of money if a product is found to be cheaper ion another store. However, the lowering of prices is not to be seen as strength but a source of weakness for the company. Price cuts have the potential of hurting sales and revenue and may be disastrous for the company’s growth.
Walmart further faces the challenge of changes in shopping habits. The company has the largest number of stores across the country spread out over different states. This strategy was very effective in the 1990s when shoppers went to the stores physically. However, over time, shoppers have changed in their shopping habits and prefer to shop online and pick the products. The scenario has rendered most of its supercenters and physical stores useless since most shoppers prefer the products to be delivered at their locations of residence. With more than 4000 stores in the US, it means that most of the space in the stores is underutilized. In recent months, however, the retail chain has embarked on opening up smaller outlets that meet the needs of the online shoppers. Accordingly, the new CEO has earmarked the opening up of about 300 small stores in 2016, a figure which is double the initial forecast. In addition, the company has increased its online presence by banking on online sales. Last year, the company sold more than 5 million products in the United States through the online platforms. This figure is a 30 percent increase from the number of products sold through the same platform in the preceding year. This year, the company boasts of sales of more than 7 million through the same platform.
The public image of the company is dwindling due to the number and magnitude of bribery claims that plague it. The largest of these claims and the most implicating is the Mexico bribery claim in which the Mexican subsidiary was involved in widespread corruption schemes. The New York Times reported that the company paid more than 24 million dollars in bribes to government officials as bait for favorable rulings. In particular, the company was exchanging the money to override environmental legislations as well as buy construction permits. These assertions have never been denied by the main United States headquarters. Interestingly is the fact that the company has incurred much more than the money lost initially in trying to investigate the orchestrators of the malicious crime. It is reported that the company spent a whooping 650 million dollars in internal investigations, an amount that is more than thirty times the money that is alleged to have been exchanged in bribes. The history of bribery claims against the company does not however stop there as it is notorious for receiving huge fines for the same crimes. In a case against Siemens, the company was fined more than 1.6 billion dollars by US and German enforcement agencies. The outcome of such among other cases has helped the company to appreciate the need to have compliant programs.
In addition, the company has an unfavorable employment policy that has continually dented its image in the public eye. The company has been at loggerheads with workers unions over claims of poor employment practices and the mistreatment of its employees (Massengill, 2013). In most instances, the company has been accused of exploitation, failure to protect the safety, violating the minimum wage requirement as well as provision of poor working conditions for its employees. Surprisingly, the company has remained adamant and continues to orchestrate the malpractices even in the wake of unending lawsuits filed by or on behalf of employees. Last year, the company was accused of dismissing workers unfairly by employing them as temporary workers in a bid to avoid paying their full benefits.
The transfer of most of the company’s production to overseas countries such as China is seen as an attempt to reduce the labor costs incurred. However, the same is effected at the expense of the already existing workers in the United States who face premature dismissals. The search for low priced supplies has led to the violation of codes of conducts on the part of the suppliers. This scenario is occasioned by the company’s regular bargaining of the prices of supplies to levels that suppliers cannot meet without violating the set codes of conducts. For instance, the lowering of prices by suppliers could mean that their workers are paid abnormally low wages in the respective countries. In one instance, a worker in a production store in Bangladesh lamented of having to work for more than fourteen hours for a continuous six months.
The use of temporary employment terms for its employees is an attempt to reduce the medical and insurance benefits accorded to the employees. Walmart is one of the leading companies in notoriously practicing the habit of employing workers on a temporary basis. In addition, the company is notorious for maintaining the weekly working hours of employees below the required threshold that would qualify them for certain benefits. While the company continues to profit from these malpractices, the workers face the brunt of these practices. It is no doubt that most of the workers live below the poverty level.
Massengill, R. P. (2013). Wal-Mart wars: Moral populism in the twenty-first century.
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