(A)DISCUSSION CASE: Wal-Mart

Ques.1:-How would you describe the managerial philosophy of Wal-Mart? What

principles are involved? What are the overriding aims, values, and goals of Wal-Mart?

Answer: - The managerial philosophy of Wal-Mart was to emphasize on low prices and

this strategy continues today as reflected in its marketing campaign of "Everyday low

prices."

The goal of Walmart is to achieve low retail prices by leveraging its buying power as the

world's largest, retailer and by controlling labour costs.

Wal-Mart cites several values that it promotes in its own self-description. Wal-Mart

describes itself as a business that "was built upon a foundation of honesty, respect,

fairness and integrity." The principles that are followed by Walmart are: respect for

individuals, service to customers, and striving for excellence. These are also called as

“basic beliefs” attributed to founder Sam Walton.

Principles involved

Honesty

Respect

Fairness and integrity

Aims, Values and goals of Wal-Mart

Respect for Individuals

Service to consumers

Striving for excellence

Ques.2:-Evaluate the management philosophy of Wal-Mart from the point of view of

stockholders, employees, customers, the local community, and suppliers.

Answer:-At first glance, there are many values promoted by Wal-Mart's success.

Stockholders have received significant financial benefits from Wal-Mart. Consumers

also receive financial benefits in the form of low prices, employees benefit from having

jobs, many businesses benefit from supplying Wal-Mart with goods and services, and

communities benefit from tax-paying corporate citizens.

For example

(i) Some critics charge that Wal-Mart's low-priced goods, and even their

placement within stores, are a ploy to entice customers to purchase more and

higher-priced goods.

(ii) Walmart is criticized for paying its workers poverty level wages.

(iii) Suppliers had to enter into a bid so that Walmart will carry their product in its

stores. This is harm for suppliers both nationally and internationally.

(iv) Critics point out that when the largest national employer establishes low

workplace standards for wages, benefits, and labour practices, other

employers have both the incentive and opportunity to follow. As the

competing janitorial service companies learned, competing fairly and legally

can result in the loss of business.

(v) Many local communities also criticize Wal-Mart as a major factor in the de-

mise of small towns and local businesses. Small retail businesses find it diffi-

cult to compete with Wal-Mart's pricing and marketing strategies and local

communities suffer when Wal-Mart builds giant stores in suburban and rural

locations. This not only encourages sprawl and places additional burdens on

roads and transportation, it can undermine the local tax base.

All these examples portray a negative managerial philosophy of Walmart from the point

of view of major constituencies.

Ques.3:-Should business management always seek the lowest prices for its customers

and the highest rate of return on investment? What reasons might there be for seeking

something less for customers and stockholders?

Answer: Business management should always seek reasonable prices which would

justify product or service worth. Highest rate of return attracts more investors, but it may

be at the cost of high risk.

Reasons for seeking something less for customers and stockholders

For taking competitive advantage

Attain profit maximization and long term survival

Attain customer and brand loyalty

If only customers and stockholders are given priority over others, this will result in:

(i) Disrespect towards the organization by other groups.

(ii) They try to shift to other business houses.

(iii) Market image of the company will be in danger.

(iv) Business will incur losses and in turn customers and stockholders get

affected.

Ques.4:-Economists define costs in terms of opportunities forgone. What opportunities

are forgone by Wal-Mart's "everyday low price" marketing strategy? Who pays the costs

of Wal-Mart's low prices?

Answer: - 'Ethical criticisms have been raised against Wal-Mart on behalf of every

major constituency—customers, employees, suppliers, competitors, communities—with

whom Wal-Mart interacts.

By controlling labor costs through wages, minimum work hours, and high productivity,

and by keeping unions away, Wal-Mart is able to offer consumers the lowest everyday

prices. Among the criticisms of Wal-Mart's labor practices are claims that Wal-Mart pays

its workers poverty-level wages.

Wal-Mart offers health care benefits to full-time workers, but/relative to other employers,

Wal-Mart employees pay a disproportionately high percentage of the costs. According

to critics, these low wages and benefits result in many Wal-Mart employees qualifying

for government assistance programs such as food stamps and health care, effectively

creating a government subsidy for Wal-Mart's low wages. Wal-Mart has also been

accused of illegally requiring employees to work overtime without pay and to work off-

the-clock.

Wal-Mart has also been accused of obstructing employees' attempt to organize unions.

The National Labor Relations Board filed suit against Wal-Mart stores in Pennsylvania

and Texas charging illegal antiunion activities. Wal-Mart alleging sex discrimination

against women employees.

Employees of Walmart and Government pay the costs of Walmart’s low prices. Wal-

Mart offers health care benefits to full-time workers, but/relative to other employers,

Wal-Mart employees pay a disproportionately high percentage of the costs. According

to critics, these low wages and benefits result in many Wal-Mart employees qualifying

for government assistance programs such as food stamps and health care, effectively

creating a government subsidy for Wal-Mart's low wages.

Ques.5:-Wal-Mart's wages are above the legally required minimum wage, and health

benefits are not legally mandated. Are there reasons for a business to take actions not

required by law but which might reduce profits?

Answer: - Wal-Mart's wages are above the legally required minimum wage, and health

benefits are not legally mandated. These are the reasons for a business to take actions

not required by law but which might reduce profits. As employees are assets for any

company, it is required to take care of them for smooth functioning of company.

According to critics, these low wages and benefits result in many Wal-Mart employees

qualifying for government assistance programs such as food stamps and health care,

effectively creating a government subsidy for Wal-Mart's low wages.

Wal-Mart has also been accused of illegally requiring employees to work

overtime without pay and to work off-the-clock. A law suit was filed on behalf of several

of these workers claiming that Wal-Mart knowingly employed illegal workers as part of a

scheme to pay below minimum wages, deny overtime pay, and otherwise exploit their

illegal status. This reflects over company’s brand image, profitability and ROI of

stockholders, in the form of their share value.

Ques.6:-Does Wal-Mart have any responsibilities to its suppliers other than those

specified in their contracts?

Answer: - Wal-Mart have following responsibilities to its suppliers other than those

specified in their contracts.

Wal-Mart’s pursuit of profits does not lead to the greatest collective good for society

because many small business owners and Wal-Mart employees have to declare

bankruptcy. This occurs because customers prefer the lower prices offered at Wal-Mart

to smaller convenience stores. According to utilitarian theory and Corporate Social

Responsibility Wal-Mart should create the greatest possible good for the entire society.

Requiring Wal-Mart to satisfy the stockholders and the stakeholders- suppliers,

shareholders, employees, customers, and managers. Through the help of multiple

partners Wal-Mart can grow as a corporation and return the profits earned to the

stakeholders.

Many local communities also criticize Wal-Mart as a major factor in the demise of small

towns and local businesses. Small retail businesses find it difficult to compete with Wal-

Mart's pricing and marketing strategies and local communities suffer when Wal-Mart

builds giant stores in suburban and rural locations. This not only encourages sprawl and

places additional burdens on roads and transportation, it can undermine the local tax

base. Further, the loss of local business has a trickle-down effect when local suppliers

and professionals, such as accountants, lawyers, and banks; suffer the loss of local

business to Wal-Mart's national and international suppliers.

Wal-Mart's aggressive strategy to lower costs also is criticized for the harms it can

cause suppliers both nationally and internationally. Wal-Mart has been known to force

suppliers to bid against each other in a type of "reverse auction" in which suppliers

compete to see who can offer their products at the lowest costs. Because Wal-Mart

controls such a large market segment, many suppliers cannot survive if Wal-Mart

declines to carry their product. This practice has caused some businesses to go out of

business, and many others to find ways to send production off-shore. One result is that

Wal-Mart, which promoted a "Buy American" marketing campaign is responsible for the

loss of uncounted American jobs as American businesses have been forced to

outsource their production as the only means available to meet Wal-Mart's price targets.

Wal-Mart have responsibilities to remove the same and ethically running its business

B Discuss the current CSR Practices of any one firm in India.

Larsen & Toubro Limited (L&T) is a technology, engineering, construction and

manufacturing company. It is one of the largest and most respected companies in

India's private sector.

L&T has an international presence, with a global spread of offices. A thrust on

international business has seen overseas earnings grow significantly. It continues to

grow its global footprint, with offices and manufacturing facilities in multiple countries.

The company's businesses are supported by a wide marketing and distribution network,

and have established a reputation for strong customer support.

L&T believes that progress must be achieved in harmony with the environment. A

commitment to community welfare and environmental protection are an integral part of

the corporate vision.

In response to changing market dynamics, L&T has gone through a phased process of

redefining its organisation model that facilitates growth through greater levels of

empowerment. The new structure is built around multiple businesses designated

‘Independent Companies’ or ‘ICs’. 

The Company's philosophy on Corporate Governance is built on a rich legacy of fair and

transparent governance and disclosure practices, many of which were in existence even

before they were mandated by legislation.

The Company's essential character revolves round values based on transparency,

integrity, professionalism and accountability. At the highest level, the Company

continuously endeavours to improve upon these aspects and adopts innovative

approaches for leveraging resources, converting opportunities into achievements

through proper empowerment and motivation, fostering a healthy growth and

development of human resources.

L&T believes that the true and full measure of growth, success and progress lies

beyond balance sheets or conventional economic indices. It is best reflected in the

difference that business and industry make to the lives of people. Through its social

investments, L&T addresses the needs of communities residing in the vicinity of its

facilities, taking sustainable initiatives in the areas of heath, education, environment

conservation, infrastructure and community development.

HEALTH

L&T's participates in building a healthy community through continuing initiatives in

several areas of healthcare, with a focus on mother & child care and HIV/AIDS

awareness. All L&T locations, including construction sites, have in-house AIDS

awareness programs. Five additional mother & child care centers were set up in 2006-

07. In partnership with local NGOs, these centres benefit children of commercial sex

workers, street children and tribal communities.

Through health care centres and regular family camps L&T organizes health checkups,

provides gynaecology and laboratory facilities, carries out free cataract surgeries and

intra ocular lens implants, and helps maintain health data for children. Supply of

equipment and aid for orphanages and physically challenged children, periodic

counseling to combat rampant alcoholism, awareness camps on childcare, reproductive

health, sanitation, dental check-up, provision for safe drinking water, cancer awareness

etc. are other healthcare activities that L&T supports.

EDUCATION

L&T's diverse and sustained programmes in education provide underprivileged children

with learning opportunities through supply of educational materials, teaching aids,

recreational tools and up scaling school infrastructure. L&T also enriches children's lives

through programmes like summer camps, maths coaching, providing facilities like

science laboratories, scholarship to deserving students, etc.

The vocational training institutes of the Larsen and Toubro Public Charitable Trust,

provide local communities with skill-based training in Formwork, Masonry, Agro

Mechanics, Electricals, Fabrication, Welding and Housekeeping. Various diploma

courses are also conducted by L&T Institute of Technology for the children of

employees. L&T has developed training modules in local languages in six centres

across India for imparting skills sets in construction. L&T Training Centers provide

courses for improving the standards of electrical engineering practices and for

upgrading knowledge of maintenance, repair and welding.

ENVIROMENT

Global warming: at L&T, we have always been conscious of the need to maintain

harmony with the environment. We continuously seek newer environment-friendly

approaches in all our operations – energy conservation, exploring alternative sources

like wind and solar energy, waste water reduction, etc.

The Zero Discharge approach of the Powai Campus saves over 350,000 litres water

every day through water treatment and recycling. More than 13,500 trees have been

planted in different L&T campuses in the last year, and an additional 4,000 saplings

were distributed among local communities.

RESPONSE TO NATURAL CALAMITIES

L&T and its employees have provided relief measures during natural calamities like

earthquake and floods. L&T has assisted in disaster relief through employee and

corporate donations, employee volunteering, supply of construction material, medical

and food supplies. After the floods in Surat (Gujarat-India), L&T played a major role in

road-clearing operations, organising medical camps, and supply of food, water, clothes

and other relief materials.

EMPLOYEES VOLUNTEERING

L&T encourages employees to volunteer for CSR activities, resulting in a self-driven

approach while retaining consistency. L&T employees and the ladies clubs formed by

their families at different locations, serve their communities by investing personal

resources and time.From taking initiatives in building the next generation of productive

citizens, empowering women, paying regular visits to old age homes and orphanages,

to organising blood donation camps, our employees have always believed in truly

making a difference to the world in which they live.