Few companies create as much controversy as Walmart has done with its approach to maintaining high profits with low costs. Individuals either love or hate Walmart. There are consumers who like the low prices and convenience of shopping at Walmart. Supporters of Walmart also laud the fact that the company creates multiple jobs for not just the individuals who are employed within the stores but also those who create the products that are sold in the stores. Critics of Walmart have issues with the treatment of those individuals who work at Walmart. These critics also demonstrate that Walmart causes the demise of small businesses in the towns where it opens stores. Whether Walmart is beneficial for its stakeholders and the economy is the driving question behind these arguments for and against the company.
The question of whether Walmart is beneficial to its stakeholders depends on who is defined as a stakeholder of Walmart. If the stakeholders are seen as solely those who own Walmart stock then it can be determined that the company has been beneficial. Walmart is a successful company financially. “Walmart operates over 10,000 units in 27 countries under 69 different banners and serves more than 200 million customers per week. Walmart recorded $419 billion in annual net sales in fiscal year 2011” (Walmart). However, the social responsibility of a company broadens the definition of a stakeholder who can be seen as being the associates who work for the company and also those in the community who are affected by the company’s decisions. With this definition, it can be determined that Walmart is not beneficial to its stakeholders. The company pays low wages to its associates with minimal to no benefits. Mobility within the company is limited and many unions have gone on strike against Walmart's unfair labor practices. Local communities who can be seen as stakeholders in the company also are not in Walmart’s best interest as multiple communities have fought against the presence of Walmart in their towns.
While stakeholders may not be benefited the local economy may appear to benefit from Walmart however this is not the case. The business practices of Walmart have driven many small businesses out of business. (Mitchell.) Walmart also has had an impact on manufacturing jobs all over the United States as their methods of driving down the prices have led to manufacturers incapable of being able to compete with Walmart. The company’s reliance on overseas manufacturing in the form of China has also had an impact on the United States economy and jobs. While Walmart may argue that the company creates jobs, these jobs do not serve to improve the economy as they are low paying and do not improve the economic conditions of the Walmart employees. Walmart has also had an impact on the local economy of the town that it inhabits as the city has to devote resources such as police and funding towards Walmart (Mitchell). The money that has to be redirected towards Walmart from these local governments is rarely seen returned as the profits of the company remain within the company itself.
The immediate impact of Walmart may be positive as people become employed and consumers are able to buy products at a low price. However, the long term impact of Walmart demonstrates that the company does not have a positive impact. The employees that are hired have to work at low pay with no benefits which serve to keep them from upward mobility. The communities in which Walmarts are located also suffer as their local businesses go under and the company takes their resources. The business practices of the company can be seen as at fault rather than the company itself. If changes are made to the business model, profits may suffer however the social responsibility of the company would thrive.
Mitchell, Stacy. "Key Studies on Big Box Retail and Independent Business." Institute for Local Self Reliance, 2011. Web. Accessed 10 Feb. 2013.
Walmart. "Welcome to Wal-Mart China!" Welcome to Wal-Mart China! Walmart Global Information. Web. Accessed 10 Feb. 2013.