Reference no: EM13104475

1. Why do you think that Wal-Mart had so many events that caused its image to be tarnished?
2. If Wal-Mart saves families thousands of dollars a year, why should it be responsible to other stakeholders?
3. Assess Wal-Marts attempt to restore its public image.

Wal-Mart's Public Image Campaign Wal-Mart Stores, Inc. the world's largest corporation is possibly the most controversial business in America. With sales over $300,000 billion in 2006 and approximately 1.7 million employee's worldwide managing stakeholder relationships is a major challenge. The Wal-Mart that saves the average family an estimated $2,329 per year has its critics. There are concerns about Wal-Marts treatment of employees, suppliers, the environment and the overall economic impact on communities. Feminists, human rights activists, antisprawl 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 lyrics is seen as attempting to dictate its vision of American culture.
Wal-Mart, while 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 a focus 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.
The story of Wal-Mart and its low prices shows both good and bad outcomes for society. The company has grown from a small chain to over 5,000 stores in 10 countries making its early investors and some employees financially successful. It has been estimated that Wal-Mart saves consumers 100,000 billion dollars a year. Wal-Marts entrance into some markets lowers food prices 25 percent including savings from competitors' price cuts. As competing supermarkets close, their union employees sometimes 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 of Wal-Mart employee's children were on Medicaid or uninsured. Michael Hicks, an economist at the Air Force Institute of Technology found that Wal-Mart increased Medicaid costs an average of $1,898 per worker.
Over 138 million people visit Wal-Mart every week and 84 percent of Americans have shopped at Wal-Mart in the past year. People living in households with incomes of less than $30,000 a year give Wal-Mart its highest marks, proving that those who value Wal-Mart most need Wal-Marts low prices the most. Wal-Mart has faced tough criticism both abroad and at home, in numerous discrimination cases (including the largest class action lawsuit that may include up to 1.6 million current and former Wal-Mart employees) unpaid overtime lawsuits, concerns over the benefits it provides (or does not provide) to its employees, sweatshop allegations, legal proceedings with the Environmental Protection Agency, and even its own suppliers say the giant forces them to cut costs and move factories overseas. Over the past five years the Wal-Mart stock dropped 30 percent after soaring 700 percent in the previous five. Groups such as Wake-Up Wal-Mart have attempted to make people aware of the concerns and to force the retail giant to take action. Wal-Mart is trying to change its image. In January 2005 Wal-Mart introduced a website to counter claims made by its critics www.walmartfacts.com. Wal-Mart also launched a full-page ad in more than 100 newspapers across the country. The ad was a direct letter from Wal-Mart CEO H. Lee Scott, which said it was time for the public to hear the "unfiltered truth" about Wal-Mart, and time for the company to stand up on behalf of a workforce that includes 1.2 million Americans. The CEO of Wal-Mart Lee Scott called for congress to increase minimum wage. Wal-Mart also engaged a public relations firm Hill and Knowlton as well as dozens of communications specialists to help it improve its overall image. This was combined with an aggressive advertising campaign publicizing the millions of dollars Wal-Mart contributes to local community organizations, as well as focusing on other key concerns such as how Wal-Mart treats its employees and the diversity it has among employees.
In what was seen by many as a turning point for Wal-Mart, its response to hurricane Katrina was fast efficient and significant. Wal-Mart contributed $17 million in cash to the hurricane relief effort, and more than $3 million in merchandise. $15 million was donated to the Bush-Clinton Katrina Fund, $1 million to the Salvation Army and $1 million to the American Red Cross. Wal-Mart also provided more than $8.5 million in cash assistance to impacted associates through Wal-Mart's Associate Disaster Relief Fund. They gave $20,000 in cash donations to assist various animal shelters and organizations taking in lost animals in hurricane impacted areas. In addition they also dispatched 2,450 Wal-Mart truck loads, donated 70 pallets of clothes to help evacuees, set up donation centers in various shelters to help arriving evacuees needing personal health and beauty products, clothing, as well as food and water all donated by Wal-Mart. For example at the Houston Astrodome Wal-Mart provided 5 trucks of relief supplies, 45 associate volunteers, donated a computer, fax machine, TV, VCR and children's movies.Wal-Mart opened two environmentally friendly stores; one in McKinney Texas and the other in Aurora, Colorado. The two locations were chosen as they have different weather and climate considerations. The stores should provide examples of the way building owners, scientists, engineers, architects, contractors, and landscape designers can work together to create stores that save energy, conserve natural resources, and reduce pollution. The stores are living laboratories, testing experimental technologies and products. Wal-Mart hopes to take what is learnt at these two stores and use that at the new stores it opens. The new stores include pervious pavement, experimental urban forest, water conservation, wildflower meadows, wind turbines, solar energy, recycling efforts, climate control, a xeriscape, bioswale, internal lighting and internal building experiments. Wal-Mart is also expanding its environmental programs which now include energy conservation measures, a kids recycling challenge, an effort to recycle plastic bags and in 2005 it won the Waste News Environmental Award. These measures have attempted to stem the tide of negative publicity the company has been the focus of. Although it has tried to address all the major concerns of its various stakeholders only time will tell whether these measures prove effective and if Wal-Mart can overcome the negative publicity. Groups such as Wake-Up Wal-Mart will continue their campaigns to ensure that Wal-Mart continues to change for good, even if it has begun to change already.