Essay on "Walmart: Visionary Company"

Essay 3 pages (1103 words) Sources: 3

[EXCERPT] . . . .

Wal-Mart's mission and vision take the needs and concerns of most of its major stakeholders into account, but fails to meet the needs of many other stakeholders. While the company will always have its critics as the result of its size, its mission is straightforward and has proven valuable to the majority of its stakeholders. The mission is encapsulated on the Wal-Mart website as "saving people money so they can live better" (WalMartStores.com, 2010).

The Wal-Mart mission derives from a core philosophy of Sam Walton, that lowering the cost of living for customers will allow people to save more and live a better life. This comment highlights the way in which Wal-Mart intends to meet a key perceived need of one of its major stakeholders, the customers. Much of the rest of Wal-Mart's strategy flows from this. If the needs of the customers are met, then the company will be able to meet the needs of several other key stakeholders as well. Shareholders will benefit as revenues and profits increase. This success will fuel growth that will create job opportunities, so that employees will also see benefits of Wal-Mart's philosophy.

However, shareholders can only benefit if Wal-Mart shares continue to appreciate or if the company moves into a more mature business model of focuses on driving dividends higher. The company's stock has flatlined in recent years, a function of it no longer being able to drive growth the way it has in the past. The company is also facing increasing competition and dominates some markets to such a level that it has little room for further growth (Bianco, 2007). The company has, however, increased its dividend steadily over the past five years, from $0.60 in 2006 to $1.09 in 2010. This dividend, however, offers a fairly low yield. Therefore, despite the best intentions of the company to deliver shareholder value, it is largely failed to do so in the past five years.

Although there is some controversy about the claim, it can be argued that Wal-Mart is also beneficial for its suppliers as well, as increased volume allows the suppliers to increase their size as well. Suppliers, however, must run a low-cost, high volume strategy in order to meet Wal-Mart's price demands and this sometimes causes difficulties. For firms such as Rubbermaid (Hopkins, 2003) or Vlasic (Fishman, 2003), Wal-Mart's price discounts devalued their brands and forced them to dramatically alter all aspects of their supply chains, to their great detriment. Other firms, however, are perfectly happy dealing with Wal-Mart and have adapted their supply chains to meet the company's needs.

A broader stakeholder group is the United States. While Sam Walton's credo emphasizes improving lives, one impact of Wal-Mart's size is that the company has forced its suppliers to move overseas in order to continue to deliver goods at low prices. This practice is not a direct impact of Wal-Mart but it is a powerful indirect impact. Offshoring has cost thousands of American jobs, to the detriment of the nation's manufacturing base. The company imported $12 billion worth of Chinese goods in 2002 and this figure has increased since then (Bianco & Zellner, 2003). This has economic costs as it represents a transfer of wealth from the United States to China. Walton's consumers pocketed or invested their savings but most Americans… READ MORE

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