walmart case study Essays

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Most of the Americans are familiar with Wal-Mart as, a company with stores offer everything a person could need at discounted prices. In order to keep the operating cost at minimal and maintain low prices, Wal-Mart pays relatively low wages, provides minimal benefits to its employees, and contracts with international manufacturing firms that fit the definition of “sweatshops”. Because Wal-Mart’s business strategy, and opening a new Wal-Mart in Rosemead, there are a groups of people that will gain and groups of people that will lose. This paper will analyze, using John Stuart Mills Utilitarian and the theory of social responsibility by Friedman.
Save Our Community (SOC) is an organization has been created by the groups that would lose the most with the establishing a Wal-Mart store in Rosemead. SOC consisted of local residents who would be affected by potential increase in traffic, noise and pollution, local business owners, attorneys and university professors. To counter SOC, Wal-Mart created its own grassroots organization, Rosemead Pride, which represents a city low income demographic and managed by a consulting firm based in a different city.
Wal-Mart targeted Rosemead because of its demographic, 22.8% of its residents living below poverty line, cheaper price will be a big benefit for this demographic.
Theory of Corporate Social Responsibility-Friedman
The low income of full-time Wal-Mart associates may be in part a reflection of their workweek. Wal-Mart classifies as “full-time” any employee who works a minimum of twenty-eight hours per week. Moreover, Wal-Mart makes no commitment to provide associates with a guaranteed minimum hourly workweek. And this is partially explain why half of Wal-Mart associates, including some full-time, qualify for food stamps and even cash income assistance. Cheaper priced merchandise always comes at price.
Friedman stated that: "There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud”. According to Friedman, Wal-Mart is not required to be socially responsible for its employee’s welfare, the customer would benefit from low cost merchandise more than its employees and it wouldn’t be responsible to its shareholders to use some of the profits for employee’s benefits. So, Wal-Mart is in accordance to the rules of the game.
Utilitarian Reasoning – John Stuart Mill’s
The principle of the Utilitarian ethics is “the greatest good for the greatest number”. The increase in the city revenue was the mean reason behind Rosemead City Council for unanimously approving the construction of the new Wal-Mart. Clearly, Rosemead is looking to increase the city revenue, even though would come at the expense of the most city residents. Gloria Molina, a County of Los Angeles Supervisor, stated that “the bottom line is that revenue is so vital to the well-being of the residents of a city, that cities are having to resort to this kind of big box retailers that we are having all over the area”.
Wal-Mart’s size and growth have also allowed it to force other stores out of business by redirecting their business to the big box store.
John Tran, Rosemead city council member stated "The city of Rosemead is unique because it was built upon small businesses. Currently, we have 54