Cost Leadership Practices Of Walmart

Good Essays
Wal-Mart in 2015 employed over 2.2 million people and is the largest private retailer globally, making more than $485 billion. It’s vision is “To be the best retailer in the hearts and minds of consumers and employees.” and its mission statement is “Saving people money so they can live better.” Despite these vision and mission statements, the company has been in series after series of lawsuits, strikes, complaints from labor unions and environmental activists.. The company uses a cost leadership strategy in keeping prices low by reducing cost in operations and wages, which impacts quality of products and lives of its employees. The true cost of business includes not only profit and loss, but also its impact on people and the planet as a whole. …show more content…
Presidential candidate Bernie Sanders repeatedly points out the fact that many of WalMart’s workers suffer from being paid a starvation wage to live in poverty and have to depend on social programs. The owners of this company owns more wealth than 43% of all Americans combined, yet the company chooses to treat its workers with disdain and dismisses these protests. A Judge in January of this year ruled against Wal-Mart for illegally firing employees for protesting at the company’s headquarters during its yearly shareholder meeting in 2013. The judgement against Wal-Mart states it violated labor laws and must offer the employees back their jobs and compensate for lost wages. It also required Wal-Mart to inform its workers of their right to organize. This sends a message to the company that it must comply by labor laws and cannot silence and coerce employees into submission.
In April of 2015, a class action lawsuit by Wal-Mart employees was filed in the Alameda
County Superior Court for wage theft. Workers were refused proper breaks and reclassified to avoid paying for overtime since 2011. At the same time, Pennsylvania’s Supreme Court ordered
Wal-Mart to pay $151 million in compensation for wage theft to 187,000 employees deprived
…show more content…
150,000 employees in Pennsylvania filed a class action suit against Wal-Mart for not being compensated for hours worked. Texas has a similar class action lawsuit for wage law violations.
Because of the lack of health care provided by Wal-Mart to its workers, they resort to using the emergency rooms, since they have no access to a regular health care providers, and tend to be sicker. Wal-Mart’s approach to this issue is to discourage people considered unhealthy to be hired. The company hires more part time workers so that they do not have to pay for benefits, and reduce 401(k) contributions. No wonder there are massive protests for inadequate health care against Wal-Mart in 35 cities across the nation in the month of April 2015 alone.
When a company does not have good CSR, government has to intervene. In 2006, 30 states worked on legislation requiring large companies like Wal-Mart to provide proper health coverage for employees. As we can see from the few cases mentioned, the company is incurring a huge cost in litigations because of its persistent violations of labor laws against its employees. Perhaps looking at its bottom line of profit and loss, it may still seem viable to this company to

Related Documents

  • Decent Essays

    There are many negative long term effects of providing the lowest prices at Wal-Mart through their corporate methodology. President Obama stated that, “The battle to engage Wal-Mart and force them to examine their corporate values and policies is absolutely vital to America today” (Lichtenstein, 304). Wal-Mart’s history of paying its employees low wages and importing cheap products from China has given them a large advantage over other retail and grocery merchants in America. Wal-Mart consistently forces other companies out of business and causes job loss across the country (Rowell). In the decade following Wal-Mart’s move into Iowa 7,326 businesses were lost (Rowell).…

    • 1383 Words
    • 6 Pages
    Decent Essays
  • Decent Essays

    While, according to Jeffrey Garter, "Wal-Mart is now the world 's largest private employer (1.5 million employees)" (24), the company is taking away a lot of factory jobs and many people have become laid off in the recent years because of the company. Wal-Mart uses a "push-pull" method where the companies bully corporations into selling their product at a low price so that Wal-Mart buy their product and sell it for a low price (Wal-Mart). This method is used to help keep Wal-Mart 's prices low. In the documentary Is Wal-Mart Good for America? there is a scene in the second chapter called "Muscling Manufacturers" where Wal-Mart made thousands of employees from Rubbermaid lose their jobs because Rubbermaid wanted Wal-Mart to pay more for their products.…

    • 825 Words
    • 4 Pages
    Decent Essays
  • Decent Essays

    The Great Depression was the worst economic downturn in American history, and with President Herbert Hoover, who was unwilling to step in and help the growing poor population, it was a never ending cycle that could not be broken. As a result of job loss, American families could not pay their bills which caused the men to leave the homes and move into Hoovervilles because they could not support their families. In light of the sudden poverty amongst families, many Americans could no longer carelessly spend their money on goods they did not need. A lot of people had to learn how to budget their money and learn the value of a dollar so they could spend money on necessities…

    • 1478 Words
    • 6 Pages
    Decent Essays
  • Decent Essays

    However, in this money reduction phenomenon is where the problem lies. Essentially, the entire pharmaceutical industry is motivated by greed and monetary values over the act of helping people with illnesses. According to the 2013 National Health Interview Survey, 8% of U.S citizens did not take their prescriptions in an attempt to save money (Report: Patients Forgo). Pharmaceutical companies are typically granted patents on their drugs for up to twenty years, during which they can be “exploited commercially” (Harvey 16+). After that, more affordable generic brands can be put on the market.…

    • 1236 Words
    • 5 Pages
    Decent Essays
  • Decent Essays

    In fact, many commission salespeople are not even paid hourly for overtime. Because commission-only workers do not always sell enough to generate sufficient incomes, there have been many lawsuits to fight for salespeople’s right to a living wage. For instance in 2013, Nordstrom Inc. agreed to a $7.65 million settlement on behalf of commissioned sales workers. They accused the retailer of violating state minimum wage laws. A former Nordstrom employee, Gino Maraventano, filed the lawsuit in 2010.…

    • 943 Words
    • 4 Pages
    Decent Essays
  • Decent Essays

    One reason is that some of the largest corporations in the country are actively pursuing business models that create profit from these conditions. Wal-mart, which is the largest low income job provider in the country, employs the practice of only hiring workers part time so that they only pay them low wages and aren’t required to provide any health or retirement benefits. With the affordable care act, the solution to this problem was to fine companies who didn’t give health insurance to their full time workers but provided no protections for part time workers. This has lead the fast food industry to begin cutting employees hours to avoid paying any healthcare benefits. CEO composition is also at an all time high.…

    • 939 Words
    • 4 Pages
    Decent Essays
  • Decent Essays

    Yet, it can not pay decent wages or allow the formation of unions. Walmart is notorious for the unfair treatment of workers paying under minimum wage to workers, offering no benefits and also advertising prices that are cheaper than no other, only at the expense of humans. Parmar refers in his article to “Walmart, which employs 1.4 million people worldwide, is its failure to pay workers living wage. Store employees are paid 20-30 percent less than the industry average…”. (Parmar, 2015).…

    • 1003 Words
    • 5 Pages
    Decent Essays
  • Decent Essays

    After Saddam Hussein 's regime was toppled, the denationalization of the oil companies began. This was in opposition to economic development because many Iraqis depended on these jobs that were not being outsourced to companies for a fraction of the cost. An example of this is the story she tells of the man named Mahmud where a fight broke out in the factory he worked in over privatization. Once, the privatization was completed the contractors failed consistently to provide the services they promised or did so at a much higher cost. An example of this is Parsons was given $186 million to build 142 health clinics but in actuality only built 6.…

    • 1462 Words
    • 6 Pages
    Decent Essays
  • Decent Essays

    Many employees leave the company because the staff treats them unfairly. “In some cases, workers alleged they were beaten by supervisors. If certified, 100,000 to 500,000 workers could be included”. This problem needs to be fixed; otherwise Wal-Mart will pay the price, lose its reputation, and dissatisfy customers as well. If Wal-Mart keeps hiring the low skills employee to fulfill current positions, the company will have a high turnover.…

    • 817 Words
    • 4 Pages
    Decent Essays
  • Decent Essays

    Pros And Cons Of Wal-Mart

    • 547 Words
    • 3 Pages

    But for this corporation to be a multi-billion dollar company, why are the workers getting paid below the wages of other employees who are competitors, which are less successful, to Wal-Mart? Sam Walton provided a statement that proves Wal-Mart is spending low-slung employee wages just so they can be “one uppers” to its competitors. With this kind of approach to a business is profitable, which leads to a strategy of failure to many of its employees that work hard to provide their kids leading themselves into poverty. An average employee receives a wage of $7 dollars an hour while working 30-40 hours week. Doing the Math, that amounts up to $13,000 a year which is very impossible to survive.…

    • 547 Words
    • 3 Pages
    Decent Essays