Wal-Mart's Sustainability Initiatives

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Case Details:

Case Code : BECG074
Case Length : 17 Pages
Period : 2005-2007
Organization : Wal-Mart Stores Inc.
Pub Date : 2007
Teaching Note :Not Available
Countries : USA
Industry : Retailing

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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The Bentonville Giant Goes Green Contd...

It planned to use the successful technologies at its other stores as well. The company also engaged two government-sponsored laboratories to study and monitor the working of these experimental stores. However, some critics saw Wal-Mart's newfound concern for the environment more as an investment in its reputation rather than sustainability. They felt that by initiating the sustainability measures, the company was trying to divert market attention from the criticisms it was facing on issues such as violation of environmental laws, predatory business strategies, negligence of employee welfare, harsh working hours, low pay and health benefits to employees, sex discrimination at the work place, etc.

Critics opined that in the past, Wal-Mart had paid little attention to these charges as its business was doing well.

But with its declining image and almost stagnant sales and stock price, the company could no longer afford to ignore these criticisms (Refer to Exhibit I for the movement in Wal-Mart's share price). Many environmentalists were, however, happy that a big company like Wal-Mart had decided to take up the sustainability plank. They felt that even if Wal-Mart's sustainability initiatives were meant to improve its reputation, it would make a huge difference to the environment because of its sheer scale of operations and influence over a large number of suppliers, customers, and employees. But analysts said that Wal-Mart still had a long way to go in its sustainability efforts.

It had to stick to the sustainability cause in the long run and show results on the ground in order to prove its commitment. The company also needed to address the concerns of its employees and communities close to its stores in addition to continuing with its sustainability initiatives if it wanted to improve its image.

Background Note

Wal-Mart was founded by Samuel Moore Walton (Sam Walton), who had the experience of operating retail stores even before he set up his own discount stores. In 1945, he purchased a Ben Franklin⁸ variety store in Newport, Arkansas. He named it 'Walton's 5-10'and operated it as a Ben Franklin franchise.⁹ Sam Walton continuously assessed competitor stores to learn about their strategies so that he could maintain his store's competitive advantage. He also started negotiating directly with suppliers instead of following the existing price structures of Ben Franklin. By 1962, he became the largest Ben Franklin franchise owner in the US.¹⁰..

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8] Ben Franklin Stores are a chain of discount stores found in small towns throughout the US. They are organized using a franchise system, with individual stores owned by independent proprietors. They were named after Benjamin Franklin, by the owners, Butler Brothers.

9] “The Rise of Wal-Mart,” www.pbs.org.

10] www.walmartstores.com