I bought a new lawn mower at Wal-Mart today. I offered to bribe the clerk with $20 if she gave me a 50% discount. She didn't think that was funny.
There's a lot less laughter at Wal-Mart these days, especially at headquarters in Bentonville, Arkansas. Some who follow these issues closely wonder if the bribery scandal, just the latest in a series of attacks on the giant, might be the stone that fells Goliath. It looks to fell some of the top officers who may lose their jobs and go to prison.
Anne D'Innocenzio of the AP wrote an inciteful story about the crisis that has become Wal-Mart. (http://www.therepublic.com/view/story/6fcd6058963b4906983c1af6ec1aa0c2/US--Wal-Mart-Reputation/?utm_source=RSS_Feed&utm_medium=Place&utm_campaign=Mexico) It's a case of building goodwill and then overspending it; getting so big there's a target on their backs (I could write "target" with an upper and lower case T and it would be true.); and about corporate greed and arrogance. I hope you'll read to the end, because this a very useful case study.
D'Innocenzio gets off to a good start in her article, echoing a message I deliver regularly: "In business, you’re only as good as your last good deed."
Wal-Mart has plenty of good deeds. Yet it remains to be seen how all the crises and negative publicity will affect the behemoth. "Wal-Mart, the world's largest retailer, in recent years has tried to repair a reputation that's been damaged by decades of criticism and legal troubles. Community activists have blamed it for damaging the neighborhoods where it builds its stores. Labor groups have lambasted it for not treating its workers well. And politicians have called it a poor steward of the environment."
Sam's management team does dumb things: "The U.S. and Mexican governments reportedly are investigating the chain. Wal-Mart's stock is down almost 5 percent since the allegations surfaced. The company and top executives are being sued by angry investors. And some shareholders are planning to vote against the re-election of several board members at Wal-Mart's annual meeting next month."
In addition, D'Innocenzio wrote:
"Wal-Mart's size has often made it a target. Critics, politicians and activists have portrayed it as a corporate behemoth that puts profits above its workers and the neighborhoods where it builds its stores. Anti-Wal-Mart sentiment reached a fever pitch around the beginning of the century when several groups funded by labor unions formed to oppose the company."
Wal-Mart stock fell 20 percent from early 2005 to an eight-year low of $42 in 2007.
Wal-Mart responded with good deedism. The company tried to soften its image with shoppers by using the recession to bolster its position among low-income shoppers. In 2007, it created a new slogan, "Save money, live better" to replace its long-time "Always Low Prices."
Criticized for its large carbon footprint, Wal-Mart focused on what it could do for the environment. For example, it worked with its suppliers large and small to reduce packaging.
"Additionally, Wal-Mart worked on its image with employees. It improved its health care plan and provided coverage to more workers. It started offering $4 prescription drugs. The company also broke with other big corporations and endorsed a mandate that requires employers to subsidize employee health care — a key part of President Obama's health care overhaul.
"When it comes to healthier eating, Wal-Mart announced a plan to lower salts, fats and sugars in thousands of the products it sells. It also agreed to cut produce prices by 2015.
"To address its image with women, Wal-Mart last year rolled out sweeping measures that it says will help women around the world, including offering training of 60,000 women working in factories in places like India. It enlisted Secretary of State Hillary Clinton, a former critic, for a project to help up to 55,000 women in Latin America and the Caribbean build businesses."
All this is a reasonable response to all the criticism. The question is will it be enough to preserve its image and income? Wal-Mart's shares have fallen to about $59. That's off about five percent from when news of the bribery scandal broke, but still above the high $40s where they traded during the recession.
Robert Passikoff is president of Brand Keys Inc., a New York customer research firm that measures the image of companies using an index that rates them based on location and value, range of merchandise, store reputation, and shopping experience. He said Wal-Mart consistently scores at about 90 out of 100 on the index, even in times when its reputation is attacked. A rating of below 70 would mean it's in trouble, he said. He added that low-income Wal-Mart shoppers tend to ignore the crises as long as prices are low. Some well-off Americans who value corporate reputation more have shopped elsewhere when Wal-Mart had image problems.
"A lot of the goodwill has been jeopardized," Rep. E. Cummings, (D-Maryland), ranking member of the House Oversight and Government Reform Committee, told The Associated Press.
The more goodwill you deposit into your bank account, the better you will be able to weather a crisis. Reaching out to your key demographics with open communications, charitable donations, and a genuine concern for the people in communities where you fave facilities build support when a wolf knocks at your door. But even a company with stores in 100,000 locations can't be completely immune if it regularly generates controversy and takes too long to deal with it.
Wal-Mart has plenty of good deeds. Yet it remains to be seen how all the crises and negative publicity will affect the behemoth. "Wal-Mart, the world's largest retailer, in recent years has tried to repair a reputation that's been damaged by decades of criticism and legal troubles. Community activists have blamed it for damaging the neighborhoods where it builds its stores. Labor groups have lambasted it for not treating its workers well. And politicians have called it a poor steward of the environment."
Sam's management team does dumb things: "The U.S. and Mexican governments reportedly are investigating the chain. Wal-Mart's stock is down almost 5 percent since the allegations surfaced. The company and top executives are being sued by angry investors. And some shareholders are planning to vote against the re-election of several board members at Wal-Mart's annual meeting next month."
In addition, D'Innocenzio wrote:
- Wal-Mart has been accused by many for failing to pay fair wages and provide adequate health care.
- Some see the big-box stores as eyesores that crush small businesses and wreak havoc on traffic and commerce in local communities.
- Environmentalists criticize Wal-Mart for its negative impact on the environment and complain that the company buys too many goods overseas.
- Labor unions ran ad campaigns, toured around the country holding protests, and tried to help organize workers. They attempted to block Wal-Mart from opening new stores in places like New York City, though competitors like Target were greeted with fanfare.
- Wal-Mart was cited during the 2008 election by Presidential hopefuls Barack Obama and John Edwards as an example of what's wrong with big business.
- In 2004, Wal-Mart was hit with the largest sex discrimination suit in U.S. history. A group of 1.6 million female workers accused Wal-Mart of paying female workers less than male employees. Last year, the Supreme Court blocked the suit.
Wal-Mart stock fell 20 percent from early 2005 to an eight-year low of $42 in 2007.
Wal-Mart responded with good deedism. The company tried to soften its image with shoppers by using the recession to bolster its position among low-income shoppers. In 2007, it created a new slogan, "Save money, live better" to replace its long-time "Always Low Prices."
Criticized for its large carbon footprint, Wal-Mart focused on what it could do for the environment. For example, it worked with its suppliers large and small to reduce packaging.
"Additionally, Wal-Mart worked on its image with employees. It improved its health care plan and provided coverage to more workers. It started offering $4 prescription drugs. The company also broke with other big corporations and endorsed a mandate that requires employers to subsidize employee health care — a key part of President Obama's health care overhaul.
"When it comes to healthier eating, Wal-Mart announced a plan to lower salts, fats and sugars in thousands of the products it sells. It also agreed to cut produce prices by 2015.
"To address its image with women, Wal-Mart last year rolled out sweeping measures that it says will help women around the world, including offering training of 60,000 women working in factories in places like India. It enlisted Secretary of State Hillary Clinton, a former critic, for a project to help up to 55,000 women in Latin America and the Caribbean build businesses."
All this is a reasonable response to all the criticism. The question is will it be enough to preserve its image and income? Wal-Mart's shares have fallen to about $59. That's off about five percent from when news of the bribery scandal broke, but still above the high $40s where they traded during the recession.
Robert Passikoff is president of Brand Keys Inc., a New York customer research firm that measures the image of companies using an index that rates them based on location and value, range of merchandise, store reputation, and shopping experience. He said Wal-Mart consistently scores at about 90 out of 100 on the index, even in times when its reputation is attacked. A rating of below 70 would mean it's in trouble, he said. He added that low-income Wal-Mart shoppers tend to ignore the crises as long as prices are low. Some well-off Americans who value corporate reputation more have shopped elsewhere when Wal-Mart had image problems.
Remember that the bribery crisis is far from over. If Wal-Mart is found guilty of violating the Foreign Corrupt Practices Act, the company could be fined hundreds of millions of dollars and top Wal-Mart executives could lose their jobs or go to prison. The California State Teachers' Retirement System filed a lawsuit against Wal-Mart, asking that any financial damages as a result of its leaders' actions be returned to the company. It holds more than 5.3 million shares, well under 1 percent. Leaders of New York City's pension funds plan to vote their 4.7 million company shares against five Wal-Mart directors up for re-election next month.
The more goodwill you deposit into your bank account, the better you will be able to weather a crisis. Reaching out to your key demographics with open communications, charitable donations, and a genuine concern for the people in communities where you fave facilities build support when a wolf knocks at your door. But even a company with stores in 100,000 locations can't be completely immune if it regularly generates controversy and takes too long to deal with it.
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