A Corporate Giant

Or
A Corporate Beast
The Cookie begins to crumble
 Criticism of Wal-Mart
Pricing and Competition Issues
→ Sued by many competitors for predatory pricing (intentionally
selling a product at low cost in order to drive competitors out of the
market)
→ Investigated by the Federal Competition Commission for
“monopolistic practices”
→ Retailer pressured suppliers to sell goods below cost or at prices
significantly less than those available to other stores
→ in 2003, the German High Court ruled that Wal-Mart's low cost
pricing strategy "undermined competition" and ordered Wal-Mart
to raise it’s prices
→ Wal-Mart sells all its stores in Germany
→ Accused of using monopsony power to force its suppliers into self-
defeating practices
 Criticism of Wal-Mart
Employee and labor relations
• Wages

→ A Substantial Number of Wal-Mart Associates earn far below

the poverty line
# In 2001, sales associates, the most common job in Wal-Mart,
earned on average $8.23 an hour for annual wages of $13,861. The
2001 poverty line for a family of three was $14,630

#A 2003 wage analysis reported that cashiers, the second most

common job, earn approximately $7.92 per hour and work 29 hours
a week. This brings in annual wages of only $11,948
Criticism of Wal-Mart
 Criticism of Wal-Mart

• Child labor violations and Illegal workers

• Sweatshops in Asian Countries

• Internal Wal-Mart audit conducted in July 2000-
-- 1,371 instances of minors working too late, during school hours, or for too many
hours in a day
• Wal-Mart agreed to pay $135,540 to settle child labor violation charges in
January 2005
 Criticism of Wal-Mart

• Least spending on Advertisements

• Least in Charity

• Declined Quality
 Criticism of Wal-Mart

• Health Insurance

→ Wal-Mart reported in January 2005 that its health insurance only covers 44%
of their employees. Wal-Mart had approximately 1.39 million US employees
that time
→ Wal-Mart increased advertising more than health care
→ According to Wal-Mart’s website, "In January 2006, ...Coverage will be
available for as little as $22 per month for individuals”
→ What the website leaves out- Coverage is affordable, but using it will
bankrupt many employees. Includes a $1,000 deductible for single coverage
and a $3,000 deductible for family coverage
 The Wal-Mart Reaction
• Sam Walton launched the “Buy American” campaign in the
1980s.Agreed to pay 5% more for products made in US.
• In December 1992, in an interview with NBC program Dateline, CEO
David Glass on non-American labor and low wages and child
labor-”We are equally dependent on American factories and ‘Buy
American’ is still active”
• Not satisfied, NBC showed “Made in USA” labels being hung over
merchandize bought from overseas in most of the Wal-Mart stores.
• Glass said- “Its some sort of a mistake at store level, and we don’t buy
from any vendor that uses child labor.”
• During the interview, Glass is shown videos of child labor working in
plants. What does Glass say??
“We take care that we rely least on child labor”
 Anti-Wal-Mart groups
• Over the years, several groups had come up, to bring to light the facts
the public didn’t know about Wal-Mart
• Wake Up Wal-Mart - a union-backed campaign group affiliated with
the UFCW, founded in April, 2005
• The centerpiece of the
organization is its website
-WakeupWalMart.com
• Exposes all the facts and problems
which the website
walmartfacts.com doesn’t.

• Wal-Mart Watch, formed in the spring of 2005, is a joint project of

The Center for Community and Corporate Ethics, a non-profit
organization studying the impact of large corporations on society
 Anti-Wal-Mart groups

• Wal-Mart: The High Cost of Low Price, a documentary film

released in 2005, presents an unfavorable picture of Wal-Mart's
business practices through interviews with former employees, small
business owners, and Wal-Mart executives.
• The movie has been seen by millions and has been highly acclaimed
critically as well.
• New York Times had this to say - “BREATHTAKING”
• Wal-Mart came up with its own DVD film, defending its practices
entitled Why Wal-Mart Works, and Why That Drives Some People C-
R-A-Z-Y.
But couldn’t undo the magnitude of damage already done.