Walmart Case Study

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Over the course of the last thirty years, Wal-Mart, the retail giant, has seen rapid expansion and huge profit increases. With saturation in every geographically relevant area in the United States, Wal-Mart is a familiar face to nearly every American. As a result of its cost-driven strategy, its performance continues to triumph over the competition. In recent years, the public forum has shifted to debate the ethicality of Wal-Mart’s corporate strategy. Perhaps the most widely discussed criticism of Wal-Mart revolves around their high employee turnover rates and the causes of employee dissatisfaction. Namely, Wal-Mart has been accused of utilizing illegal hiring practices, discrimination, and unlivable wage rates. When questioned regarding whether or not Wal-Mart could increase its employees’ wages by $2 dollars, CEO Michael Duke claimed that it would be simply impossible. In monetary terms, we can look at the facts. Wal-Mart reported profits of nearly $15 billion in 2011. At around 2 million employees, a $2 wage increase across the board would create an additional $7.8 billion in labor costs annually (assuming 40 hour work weeks). If we look at the 2011 data, this would shift the net income of Wal-Mart in half. While Wal-Mart could most certainly increase wages, it results in a significant impact So why don’t they? It is clear that customer service is not a priority, or a core competency, of Wal-Mart. Similarly, it’s not a far stretch to say that employee service is not a priority either. This can be evidenced by the high turnover rates, low rate of employees considered full-time and poor benefits packages offered to Wal-Mart workers. It is clear the proposal of corporate social responsibility conflicts heavily with Wal-Mart’s cost leadership strategy. Wal-Mart does not increase benefits and wages for employees, not because they can’t afford to, but because

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