RESEARCH AND ANALYSIS

PROJECT
TOPIC 20: WALMAR

Submitted by: 3321682

Word Count: 7414
Contents
Chapter One: Introduction.......................................................................................................................
1.1 Research Context...........................................................................................................................
1.2 Research Objectives:.....................................................................................................................
1.3 Research Questions:.....................................................................................................................
1.4 Topic Selection Justified................................................................................................................
1.5 Organization Selection Justified:..................................................................................................
1.6 Research Approach.......................................................................................................................
Chapter Two: Methodology.....................................................................................................................
2.1 Data Collection...............................................................................................................................
2.1.1 Sources of Secondary data Used:........................................................................................
2.2 Research Ethics:............................................................................................................................
2.3 Business Models Used:.................................................................................................................
2.3.1 Carroll’s Model of CSR:..........................................................................................................
2.3.2 Mendelow’s Matrix:...............................................................................................................
Chapter Three: Results and Analysis...................................................................................................
3.1 CSR Framework of Walmart:......................................................................................................
3.2 Carroll’s Model of CSR:...............................................................................................................
3.2.1 Economic Responsibilities:..................................................................................................
3.2.2 Legal Responsibilities:..........................................................................................................
3.2.3 Ethical Responsibilities:........................................................................................................
3.2.4 Philanthropic Responsibilities:.............................................................................................
3.3 Mendelow’s Matrix of Stakeholders’ Analysis..........................................................................
3.3.1 Key Investors:........................................................................................................................
3.3.2 Employees:............................................................................................................................
3.3.3 Customers:.............................................................................................................................
3.3.4 Communities:.........................................................................................................................
3.3.5 Regulators:.............................................................................................................................
3.3 Conclusion and Recommendations:..........................................................................................
Recommendations:................................................................................................................................
Chapter One: Introduction

1.1 Research Context

The main weapon of building a strong brand name and bolstering its image is
Corporate Social Responsibility (CSR) (Murphy, 2019). It is a concept of
management whereby organizations integrate environmental and social issues into
their standard business practices (UNIDO, 20119). It helps to empower employees
to use business resources in best possible manner through raising their morale. CSR
is all about showing greater concerns for social issues rather than focusing only
those factors which affect profitability of business. Companies which show strong
commitment to CSR are often standing out their competitions (Murphy, 2019).
According to Cone survey of 2015, it was revealed that globally, 91% customers
require companies to address environmental and social issues while 84% customers
always look for responsible products. Thus, a socially responsible business can get a
competitive advantage over the others, increase its customer base, get engaged
employees and ultimately higher profitability and satisfied investors while those
which do not perform in a responsible manner are deprived of most of such
advantages (Collier, 2018). With the aim to understand the impact of CSR practices
on business, this RAP has been carried out. In this regard, the research has
analyzed an organization with different flaws in its CSR practices for last five years
and the impact of such activities on stakeholders of business

1.2 Research Objectives:

This research has been carried out to fulfill the following research objectives:

 To investigate the CSR activities of Walmart Inc. in terms of its economic,

legal, ethical and philanthropic responsibilities;
 To understand the impact of CSR activities of company on its stakeholders;
 To evaluate the response of stakeholders against weak CSR practices of
company using Mendelow’’s matrix of stakeholders;
 To make valuable suggestions to Walmart Inc. in order to improve its CSR
performance
1.3 Research Questions:

For the purpose of addressing the research objectives, following research questions
have been formulated:

 How has Walmart Inc. performed in terms of its key CSR responsibility over
the last five years?
 What is the impact of poor CSR performance of Walmart Inc. on its key
stakeholders?
 What is the response of key stakeholders of Walmart Inc. against poor CSR
performance of company?
 How can Walmart Inc. improve its CSR performance in future?

1.4 Topic Selection Justified

I have selected topic 20 for this research which requires analyzing the weak CSR
performance of a company in recent past. I have selected this topic because of
different reasons. First, CSR is my favorite area of study and I wanted to practically
analyze the impact of CSR on business and its stakeholders. Secondly, with the
passage of time, importance of CSR has been growing for both small, medium and
large-scale industries, however, still organizations pay lesser focus towards it. It led
me to select this topic in order to understand what consequences companies face
which ignore the importance of CSR.

1.5 Organization Selection Justified:

In order to conduct my research, I have selected Walmart Inc (Walmart). It is an

American multinational superstore found in 1945 which operates as a hyperstore,
wholesale club or cash and carry center. It operates with more than 13000 stores
located globally in 27 countries (Yahoo Finance, 2019). Over the years, Walmart
expanded its operations and improved finances but, in terms of CSR, it has failed to
prove it a socially responsible company. There are huge corporate scandals which
have shown that Walmart has been struggling to fulfill its social responsibilities. In
this regard, violation of federal labor laws for hiring and paying salaries,
environmental pollution through excessive emission and wasting hazardous water in
rivers, tax evasion and other food related scandals have been observed for Walmart
(Bebtor, 2019; Rubin, 2018). Owing to such scandals, the selection of Walmart for
this research is justified.

1.6 Research Approach

Research approach is concerned with establishing a clear framework as to how the

research will be carried out (Bryman and Bell, 2015). This research is qualitative in
nature since it does not follow strict pattern rather investigates the research
problems in multiple and wider spectrum. It has collected data from different
secondary sources including annual reports of company and other online information
sources since primary data collection is not feasible due to time and costs
constraints. The collected data has been evaluated using business models of CSR
including Carroll’s models of CSR and Mendelow’s Matrix of stakeholders’ analysis.
Chapter Two: Methodology

2.1 Data Collection

To start with methodology of research, the first step is the collection of data after
formulation of clear research objectives. Broadly, there are two main ways for
collection of data including: primary data collection and secondary data collection.
The primary data collection involves gathering data from original sources using
questionnaires, surveys and observations. Bryman and Bell, (2015) have reported
that data collected from this method is more reliable as it is directly relevant with
research questions. However, it is very time consuming to collect data from primary
sources and in various situations it is costly too.

On the other hand, secondary data collection is the gathering of data from data
bases and websites. These secondary sources could be both online and offline
which provide advantages of time and cost savings. Thus, secondary data collection
is quick as compared to primary data collection. The limitation of secondary data is
that its reliability and validity is affected if original source of data collection is not
reliable (Bryman and Bell, 2015).

This research has relied only on secondary sources of data since the CSR
performance of company can better be analyzed from previous reports and expert
analyses provided by industry experts at different online forums like online
magazines and newspapers. Primary data collection is also not possible because the
stakeholders of company are spread in various parts of the world and the time and
cost constraints make in difficult to collect data from primary sources.

2.1.1 Sources of Secondary data Used:

The sources of secondary data collection which have been consulted for this
research include the following:

 Annual Reports of Walmart: The annual reports of Walmart have been

consulted for the last five years in order to analyze the economic performance
of company. The annual reports as well as sustainability reports of company
are an internal source of company’s financial and CSR performance which
provide rich data on business affairs and future plans.
  Newspapers: Newspapers are another important source of information which
provide expert analyses on different happenings inorganizations. Thus,
newspapers have been used in this research to consult information about
different CSR scandals of company and how company managed to fight with
these scandals. The main newspapers consulted for this project included The
Washington Post while the main business magazines included CNBC, Forbes
and Business Insider.
 Journal Articles: There are few journal articles which have been used in this
research. With the help of journal articles, it was easy to select the right
business models for this analysis and to determine its merits and demerits.
 Internet: Internet is the richest source of data collection which provides
information on each and every topic of interest. An extensive use of internet
has been made in this research in order to collect data from online
newspapers, online annual report, online journal articles and other business
websites like Forbes, The Guardian and others for the purpose of collecting
data relating to CSR conduct of Walmart. The use of internet helped to extract
masses of data relating to CSR practices of company within lesser time and
costs.

Limitations of Secondary Sources Used:

 Relying only annual reports of company may not be beneficial for decision
making since they always contain rosy picture of business. To cover this
limitation, the current research has used a mixture of various internal and
external sources of information including newspapers, journal articles,
magazines and other online sources.
 The study has faced an important limitation in the use of newspaper
information. It is because newspapers do not cover all aspects of information
and they mostly disclose only scandals or present even better position of
business. Thus, focusing only on scandals may make a biased research.
Thus, I have collected data from other sources as well;
 A limitation of using internet faced during the project work was that internet
provided me with rich data and I filtered out the most relevant data by
 spending greater time and effort i.e. by validating the same data from more
than one source.

2.2 Research Ethics:

This research has been carried out complying all the ethical principles. In this regard,
it has considered the following:

 It has used data from secondary sources which are both internal and external
to Walmart. It helped to provide unbiased and impartial opinion about
company’s affairs;
 All the sources of secondary data have been properly acknowledged using
Harvard referencing style.

2.3 Business Models Used:

The above section has elaborated in detail the sources of secondary data used to
collect data and information. This information has been analyzed using two important
business models for evaluating the CSR practices of company and how they have
affected the key stakeholders of business. These business models have been
discussed as under:

2.3.1 Carroll’s Model of CSR:

Carroll presented his model in 1979 to analyze comprehensive CSR responsibilities
of any organization. According to Carroll, (1991) an organization needs to exercise
responsibility in everything it performs. From earning profits to contributing towards
society, the businesses must be responsible in everything they do (Visser, 2005).
Thus, he categorized the CSR responsibilities of business into four main areas which
have been explained as under:
Figure 1: Carroll Model of CSR, Source: Visser, 2005

Economic Responsibilities

The first responsibility of every business is to earn profits which are reasonable and
in ethical way. As for instance businesses exploiting consumers for unreasonably
increasing prices are unethical. For a business to show CSR in its economic affairs it
should not exploit consumers, instead, it must charge reasonable prices and provide
promised quality of goods and services for which it takes money. However, it should
generate money for its owners because earning of money provides the base
performing other business responsibilities (Carroll, 2016).

Legal Responsibilities

This is the second main responsibility of a business that it should earn its profits
through legal and lawful means. There are various laws and regulations for a
business depending upon the nature of business in which it operates. The
businesses which perform in more than one country should abide by the laws of all
countries where they operate. Thus, according to Carroll, a business should be
profitable at first place and secondly it should conduct its affairs under lawful means
(Carroll, 2016).

Ethical Responsibilities

The ethical responsibilities of a business are not in written form rather they include
the acceptable norms and traditions of a particular society in which the business
operates. The businesses which are fulfilling both economic and legal responsibilities
but falling short to fulfill the ethical responsibilities cannot be categorized as socially
responsible organization (Carroll, 2016).

Philanthropic Responsibilities

The organizations fulfilling economic, legal and ethical responsibilities are placed
well in socially responsible organizations. However, at this stage the organizations
are required to make contributions towards community development. In this regard,
the organizations which contribute in education, health and safety and other such
projects of society are categorized among those businesses which are highly
responsible organizations (Carroll, 2016).

Limitations of Carroll’s Model

Despite of make a though provoking contribution in literature of CSR, Carroll’s model

contains certain limitations discussed as under (Kush, 2019):

 The responsibilities of business do not always flow in a sequence that a

business must fulfill its economic responsibilities first then legal, ethical and
philanthropic. A business may not be profitable but is following laws and
regulations.
 When it comes to legal responsibilities, the systems are not the same in all
countries for every type of business. As for instance, in under-developed
countries, there are different political favors for multinationals and thus, legal
responsibilities are almost negligible for big businesses;
 Similarly, the philanthropic cultures are also different in different countries.
Anything which is regarded philanthropy in America may not be considered
same in other parts of the world.

2.3.2 Mendelow’s Matrix:

Mendelow’s matrix was presented to categorize various stakeholders of business
according to their interest and powers in any business. In this regard, there are four
quadrants where all business stakeholders fall (Eskerod and Jepson, 2013).
Figure 2: Mendelow’s Matrix of stakeholders, Source: Slaba, 2014

Quadrant One: Minimal Effort

The quadrant A is the first quadrant which contains those stakeholders with lower
powers as well as lower interests. Normally communities fall into this category since
they do not have interests on individual businesses neither they can control the
decision making. Businesses usually exercise minimal efforts to keep such
stakeholders satisfied (Manivannan, 2013).

Quadrant Two: Keep Informed

Quadrant two contains those stakeholders who have lower powers but higher
interests in business affairs. Customers can be categorized into this category since
they have higher interests as to what the business is doing for them but individually,
they cannot affect the decision making of business. Employees of business can also
be categorized into this category since they have higher interests in how a business
has been performing but individually, they cannot change its decision making. These
types of stakeholders must be kept informed by business (Slaba, 2014).

Quadrant Three: Keep Satisfied

The third quadrant contains such stakeholders who have higher powers but lower
interest in business affairs. Normally, governments and regulators are categorized
into this quadrant since they have significant influence over decision making of
business. However, they have lower interests in individual businesses as to what is
the result of business operations. These types of stakeholders must be kept satisfied
(Kakabadse et al, 2005).

Quadrant Four: Key Players

The quadrant D contains the stakeholders which have both the higher powers as
well as higher interests in the business. This is why they are called as key players.
They must be kept satisfied since they can influence the decision making of business
if their interests are not satisfied by the business. These are most important
stakeholders of business and investors are largely categorized into this quadrant. It
is because every business happening can directly influence the interests of investors
and in return can put significant influence on decision making of business (Aaltonen,
2011).

Limitations of Mendelow’s Matrix

Mendelow’s matrix of stakeholders is a comprehensive matrix to analyze the

stakeholders of any business. However, there are certain limitations of Mendelow’s
matrix which are explained as under (Cultivate, 2019):

 The stakeholders’ analysis is needed to be performed on regular basis since

the powers and interests of stakeholders continuously change;
 The stakeholders’ groups have been described to be very general. Some of
the stakeholders of one category may fall in one quadrant and some form the
same category may belong to another quadrant;
 Another criticism is that the concept of power of stakeholders has been
misunderstood in this matrix. It is not about power rather the dominance of
expectations of stakeholders.
 Chapter Three: Results and Analysis

3.1 CSR Framework of Walmart:

CSR is critical to business success of Walmart. There are three key principles of its
CSR framework which include environment, social and governance (Patrick, 2018):

To provide economic opportunities for employees, the company has been investing
heavily for all employees in its supply chain to provide them training, to advance their
careers and to work for elimination of unethical and unfair labor practices. It has
formulated a clear plan to reduce all major risks to workers in its entire supply chain
till 2025 (Patrick, 2018). In pursuit of its goals of women empowerment and inclusion,
the company has achieved 30% inclusion of female employees in top management
while 55% of the total workforce operating in US consists of females till 2019. The
board composition of company is diverse with 6 men and 3 females in it while it has
nearly 1900 compliance team associates.

To reduce its environmental impact, the company has committed to reduce 18%
emission from its operations, to go for 50% renewable energy sources, to achieve
zero wastes and to do 100% recycling of its packaging till 2025 (EMF, 2018;
Danigelis, 2018). In this regard, it has reached to 78% waste reduction and 28%
renewable energy at its stores till 2019 (Walmart Sustainability Report, 2019).

For community building, the company makes different investments. As for instance, it
donates for disaster relief, relieving hunger and supporting communities. In this
regard, it has spent $50 million,$38 million, $6.8 million and $5.8 million in disaster
relief programs for 2019, 2018, 2017 and 2016 respectively. Moreover, for
supporting local communities, the company associates volunteered 776,500 hours in
2019, 850,000 in 2018, 1.2 million hours in 2017, 1.6 million hours in 2016 and 1.5
million hours in 2015. For fighting hunger, the company actively contributes by cash
and kind to communities. In his regard, it has donated 2.5 billion pounds of meal in
US only (Walmart Sustainability Report, 2019).
3.2 Carroll’s Model of CSR:

3.2.1 Economic Responsibilities:

The first and foremost CSR responsibility of any business is to be profitable and
grow continuously. The financial results of company have revealed that its sales
revenues have been consistently increasing over the years except in 2016, but with
varying degree of growth rates.

Revenue Growth rate

2.98%
2.81%

1.52%
1.25%

2015 2016 2017 2018 2019

-0.75%

Source: Walmart Annual Report, 2019, 2018, 2017, 2016, 2015

For 2019, the revenues of company have increased by 2.8% primarily by its
increased e-commerce business after acquisition of jet.com and other technology
giants for $3.3 billion in 2016 (Rey, 2019; Heller, 2019). Despite of the fact that
company has undertaken an aggressive e-commerce strategy to compete with its
competitors, the growth margins are slow (TrefisTeam, 2018). On the other hand, the
company has been struggling to increase its revenues in international markets after
strengthening of USD against a basket of currencies while it has also been failed to
crack the online business as against its other competitors including Amazon, while
the business model of company also focuses low margin products (Toepke, 2017;
Isidore, 2018). During 2015 and 2016, the company saw biggest ever fall in
revenues in 35 years due to lower customer service, low quality products and
incapability to cope up with growing digital shopping (Banjo, 2016).
 Profitability Analysis
30.00%
25.00% 25.31% 25.50% 25.28% 25.10%
25.00%

20.00%

15.00%

10.00%

5.00% 3.49% 3.15% 2.94% 2.10% 1.40%

0.00%
2015 2016 2017 2018 2019

Gross Margin Net Margin

Walmart warned its investors since 2015 for falling profits due to increased labor
wages and training for better customer services while it also made investment to
purchase online giant jet.com, Flipkart, Moosejaw, Bonobos and ModCloth to
effectively compete with Amazon (Layne and Ramakrishnan, 2015). It has been
facing increased pressure from competitors of Amazon in the form of increased
online presence, Aldi and Lidle in the form of increased discounts while increased
wages call (Toepke, 2017; PhysOrg, 2018). This is because company’s everyday
low rice strategy has been unable to compete with superior quality provided to
customers. It has been costing it in the form of poor product quality, lower customer
confident and ultimately lower sales since customers believe that low cost does not
compensate for poor quality (Greenwald, 2020). The customer satisfaction score
amid low quality cheap products and poor customer service of company has been
continuously declining (Hill, 2015). Moreover, the litigation costs of Walmart are also
rising, hitting its bottom line. During 2019, the settlement of its bribery case resulted
in $282 million penalty for company, reducing its profit margins (Corkery, 2019).
However, the total costs attached to scandal reached $900 million for last seven
years (The Wall Street Journal, 2020).

3.2.2 Legal Responsibilities:

It has been a key principle of CSR framework of company to be sustainable in its
operation which requires legality of its conduct as well. However, the company has
been failed in meeting its compliance duties. In this regard, its biggest failure is of
non-compliance with Foreign Corrupt Practices Act (FCPA). In a class action lawsuit
brought against company by shareholders alleging that it has been involved in
bribing government officials in 2012 to open more store in Mexico has reached to
final settlement of $282 million after the case was finally decided against company
(Comtois, 2018; Feeley, 2018; Nassauer, 2018). It has also been charged to pay
$282 million for ignoring Foreign Corrupt Practices Act during its expansion in Brazil
and Mexico (Debtor, 2018; Bose, 2019). It was specifically alleged that company
executives responsible for internal controls were aware of the noncompliance, but
they remained silent over the issue. It proved insufficient internal controls of
company and its noncompliance with both national and international laws (Harvard
Law School Forum, 2019).

Walmart is also inconsistent in compliance of its legal duties when it comes to

employees. In this regard, it has been failed to act as equal opportunity employer.
Around 100 plus employees have filed lawsuits against company for unequal pays
based upon gender and age discrimination (Sainato, 2019). The company is further
expected to face a class action lawsuit from female employees over years of gender
discrimination (MacLellan, 2017). For inaccurately recording workers’ wages for
extra hours, employees took company to court and court decided matter against
company awarding employees $224 million as compensation (Business and Human
Rights Resource Center, 2016). In another case of refusing to provide with seating
arrangements to cashiers, the US district court of California charged company with a
fine of $65 million (Weissner, 2018).

The company has also been failed on its claim of providing safe and healthy
environment at its stores for customers since an old man of 61 years slipped on wet
floor of company and his hip was broken, so the jury awarded $7.5 million to
customers for his claim against company (Isenberg & Hewitt, 2017). Walmart is also
facing another lawsuit of negligent security of its stores in EI Paso when a shooter
entered the store and killed more than 22 people and several others injured in 2019.
It has raised many questions on security conditions of stores (Morris, 2019). For its
environmentally unsafe practices in the form of improperly dumping pesticides to get
economic advantage, the company has been charged with $110 million penalty
which is second largest environmental fine in entire US history (Bedard, 2013).
All this indicates that Walmart has been failed in meeting its legal duties towards
investors, customers, employees and regulators.

3.2.3 Ethical Responsibilities:

Walmart has remained involved in a world class bribery case where the giant retailer
defrauded its investors to expand its operations in Mexico while the share prices
were also inflated by virtue of this case (Thu, 2016). Company’s involvement in
bribery and corruption cases for rapid expansion at international level is highly
unethical (Schoenberg, 2018).

Walmart has been failed to meet its environmental duties despite of many claims.
The company has been falling short of its renewable energy targets since out of the
total energy consumption of company, only 26% comes from renewable energy
sources (Gunther, 2015). Analysts claim that Walmart has been involved in higher
amount of marine pollution through ships for some economic gains in the form of
taking supplies from cheap Asian markets and selling to US and European
consumers. The company, while declaring its annual emission, intentionally omits
marine pollution emitted by ships. This is unethical on part of company that it claims
to be sustainability leader but intentionally omits to disclose its actual emissions
(Mitchell &Wuthmann, 2015).

Walmart, in race of winning digital battle has left behind its principles of CSR
framework which are honesty and integrity since it has been mislabeling products
only to save vendors’ commission. This is why it has been failed to process various
customers’ returns orders (Delventhal, 2018). It has adopted a strategy to win the e-
commerce war at all costs, therefore it silences the whistle blowers who fight against
company’s unfair policies to ‘win at all costs’ (Delventhal, 2018). In this regard, it has
fired its ex-executive from company for his whistle blowing because of company’s
unethical practices to win against Amazon. The expelled director filed suit against
company claiming company is losing grounds of honesty and integrity to regain its
long-lost e-commerce share to Amazon. It failed to process $7 millions of customers’
returns orders just to inflate its sold inventory (Money Control, 2018).

The overall culture at Walmart looks unethical as the cashiers at company stores are
often engaged in unethical practice of overcharging customers for items which they
do not even buy. Such cases are being reported in company for more than 10 years
and it has been failed to take serious actions against it (Titus, 2017). Moreover, its
cashiers also deceive customers through forcing cash back option and stealing
money. However, the company sources instead of controlling such unethical
practices, deny allegations (Emery, 2019).

Thus, in the light of these findings, it can be said that Walmart has been doing its
operations in an unethical way. From intentionally hiding its emission limits, stealing
money of customers, involving into corrupt policies for economic gains and treating
employees discriminately, Walmart has lost grounds of an ethical player.

3.2.4 Philanthropic Responsibilities:

Philanthropy occupies the highest position in Carroll’s model of CSR. Though,
Walmart has been failed to meet its legal and ethical responsibilities while its
economic responsibilities are also tumbling, the company has made its mark for
philanthropy. The company sets aside $1billion per annum to fund its philanthropic
priorities (Walmart Foundation, 2019).

As a part of its philanthropic activities, the company has set aside $100 million since
2015 to improve employee skills and to help them grow in their careers. Moreover,
for the creation of new jobs in America, the company has pledged that it will
purchase $250 billion of retail products from 2013 to 2023. It has been helping
communities and has allocated millions of funds for disaster relief programs from
2017 to 2020 (Walmart Global Responsibility Report, 2018; Hanna, 2019).

Under its community grant program, it provides meals and shelters to low income
groups, supports public safety programs with the help of increased training, medical
treatment as well as screening services (Rural Health Information Hub, 2019).
During 2019, the company donated $500,000 for people affected by record floods
and tornados in south and western states (Walmart, 2019b; Langlitz, 2018; WITN,
2018).

However, critics are of the view that company funds only those communities where it
wants to establish its stores as per its expansion plans. Instead of feeding families
under its fighting for hunger program, the company can offer jobs so that people can
take burden of their families. By way of charities and donations, it avoids taxes which
can be used on public welfare. Thus, the philanthropy activities of company have
deep roots with its own economic benefits rather than purely doing it for social
welfare (Mannos, 2013).

3.3 Mendelow’s Matrix of Stakeholders’ Analysis

3.3.1 Key Investors:

Investors are the key players of business since they have greater interests in
business affairs and also, they possess greater authority to influence the decision
making of business. The large investors of business, like Warren Buffett put pressure
on company by realizing online threat from Amazon and eventually sold its $3 billion
stake in company owing to such threats when it was seemed struggling to fight
against online giant Amazon (Rosenbaum, 2018; Duggan, 2018). The same is
depicted in the following graph and it led to so much pressure on company

Source: Lutz, 2017

The shareholders of company reacted aggressively against its poor financial

performance amid poor quality products and declining customer satisfaction,
resulting in dropping stock values (Rivas, 2018).
The disappointing guidance of company for its growth targets in 2015 led to its
biggest stock reduction on a single day when stock prices went down by 10%
causing losses of $21 billion to shareholders (Krantz, 2015;Delventhal, 2018).

The stocks of company plunged nearly 15% in 2018 which is the biggest fall in its
shares in 30 years mainly due to lower profit forecasts and increased competition
(Los Angeles, Times, 2018; Kramer, 2018).

The involvement of company corruption case for its rapid expansion in foreign
countries did not only result in charging it with penalties but shareholders who
acquired stocks between December 2011 to April 2012 filed class action law suit
against company for misleading investors and court awarded $160 million as
compensation (Comtois, 2018; ISS Governance, 2019).

Investment Efficiency
ROA ROE

19.56%
18.04% 17.74%

13.02%

8.25% 9.02%
7.56% 7.19%
5.14%
3.27%

2015 2016 2017 2018 2019

Source: Walmart Annual Reports, 2019, 2018, 2017 and 2016

Despite of lower returns on investments, Walmart has significantly raised its dividend
per share to better compensate investors (Teopke, 2017).
 Shareholders Returns in USD
EPS Dividend per share

5.05
4.57 4.38

3.28

2.26 2.07
1.92 1.96 2 2.04

2015 2016 2017 2018 2019

Source: Walmart Annual Reports, 2019, 2018, 2017 and 2016

The allegations over its whistleblowing policies by the ex-executive of company

created deep concerns among shareholders and the intraday prices of stock were
greatly declined, showing that company has no margin of error from its investors
over its working or ignoring its CSR principles (Boyle, 2018).

For its failure to disclose marine pollution generated by ships, shareholders are
putting pressure on company by way of resolutions and forcing it to take steps for
reduction of marine pollution as other retailers have achieved (Mitchell and
Wuthmann, 2015).

To address the grievances of shareholders, and to connect with them, the company
makes regular calls and conducts meeting and conferences of shareholders for
answering their questions, providing them explanations of important financial moves
and all other matters of investors’ interest (Corporate Responsibility Report, 2018).

The company announced a huge buyback of $20 billion for compensating

shareholders due to drop in value of their stock after low earnings forecasts.
However, analysts estimate that with huge buybacks the company cannot fool its
customers if the same is not translated into real earnings and growth in profitability of
business (Pisani, 2017).

All this has indicated that Walmart is under great pressure from its shareholders
especially large shareholders due to lower profitability amid its CSR issues of lower
product quality and poor customer services but still it has been not very successful in
dealing with concerns of shareholders. This is why, its shares prices have remained
instable over last few years despite of it paying huge dividends and buybacks to
compensate them.

3.3.2 Employees:
Employees have greater interest in business affairs, but they have low to moderate
powers for influencing the decision making of business. Over the last five years,
Walmart have different employee scandals owing to toxic workplace culture. In order
to avoid employee pressures, the company has banned forming labor unions or any
form of unions. This is why, it has been facing increased number of lawsuits from
employees over the years for gender and racial discrimination as well as poor
workplace culture (CNBC TVN, 2015). However, owing to greater interests of
employees, they take company to court for protection of their interests in absence of
employee unions.

Walmart has been found guilty of employee discrimination of the basis of gender. In
this regard, a report published by Wall Street journal has provided that the company
has practiced discrimination against more than 150 female employees working on
stores (Thomas, 2019). It has also been facing lawsuits from more than 100 female
workers alleging unequal pay in company (Sainato, 2019). In addition to it, a leading
business website Fortune has analyzed 4,385 job ads of company and has found
that more than half of them attract only male employees presenting clear gender
discrimination even at the time of job posting which is entirely against its CSR values
(Jones and Donnelly, 2017).

Analysis of Walmart Job Description

 Source: Jones and Donnelly, (2017)

Farfan (2019) has reported that Walmart has been facing frequent class action
lawsuits from its employees on regular basis showing company has disengaged
employees. In this regard, a class action lawsuit has been filed by its employees
alleging that company has failed in providing appropriate seating arrangements to its
cashiers against which it agreed to pay $65 million to existing and previous cashiers
as damages and accepted to provide them with seating arrangements (Farfan, 2019;
Wiessner, 2018).

A pay discrimination suit filed against company in 2000s by thousands of women

which was ultimately won by Walmart in 2011, has been filed again with other solid
grounds (Smith, 2019). The salaries across many store employees are so low at
Walmart that employees are applying at different positions in other government
departments. Such an action of employees is creating problems for company in the
form of poor customer services (Mourdoukoutas, 2018). On the other hand,
employees also put pressure on company by way of filing lawsuits. Osterndorf,
(2015) has reported that on average, Walmart receives 5000 employee lawsuits per
year.

Another way through which employees are putting pressure on company is through
increased minimum wages at Amazon attracting talent and Walmart is left with no
other option except to compete by retaining the talent with increased minimum
wages (Thomas, 2018). In order to further facilitate workers in the wake of tough
competition from Amazon, the company has been offering $5000 aid and parental
leaves at the time of adopting child. However, the has not been doing all this in
pursuit of their CSR objectives but to fight against competition and to avail tax
benefits under new tax policies (Bhattarai and Frankel, 2018).

All this is clear in contradiction of company’s key CSR principle of creating economic
opportunities for employees. Though, it has been investing on employees through its
training and development programs for not only its own employees but for all those
working in its supply chain and also has started to arise minimum wages due to
increased pressure, yet the unethical practices of company in the form of employee
discrimination are continuing.

3.3.3 Customers:
For understanding customers’ needs, the company makes regular contacts with
customers through social media interaction, emails, phone calls and through
customer call centers.

Poor services provided by company to its customers have led to downgrade its
overall customer satisfaction ranking. In this regard, the American Customer
Satisfaction Index (ACSI) has shown the total score of company reached to 77.4 in
2018 which is second worst in the list (Ausick, 2019). This poor ranking of company
has been associated with many factors including higher prices despite of claiming
low price leader, understocked shelves and poor customer services. The problems of
empty shelves were widespread in company during 2013 after Walmart cut huge
jobs (Lutz, 2013). When it comes to quality of fresh food, supermarket has been
ranked at bottom lowest in the list as per consumer reports (Bedell and Scinto,
2018). The main thing due to which customers attach low satisfaction with Walmart
products is that the low prices do not compensate for the poor quality of items
offered at the retail chain. In the wake of selling low priced goods, Walmart is in-fact
selling shoddy products, lacking quality and durability (Bolluyt, 2018). Owing to it, the
company has shifted its stocking to daytime in orderto deal with empty shelves while
it has been using latest technology including in-store inventory robot for inventory
management (Keyes, 2017). It has also planned to invest on training of employees
and provide better online services to customers (Mitchell, 2015).

Customers in world’s largest grocery market of China started losing trust on Walmart
in 2014 when the donkey meat scandal erupted. The company recalled all the
donkey meat sold after complaints of fox food packaged inside donkey food labels
(Jourdan, 2014, Abad-Santos, 2014). After the scandal, the company faced
increased threats of reputational damage in Chinese market where it has been about
to open 110 new stores, has ultimately decided to increase its food security spending
from $16 million to $48.2 million from 2013 to 2015 (Sullivan, 2014). Thus, it closed
down 74 stores from 2012 to 2017 dueto poor store location, damaged reputation
and increasing online shoppingtrends (Product Report, 2019).

It has been increasingly noticed that Walmart uses ribbed practices of

underweighting its packed items while it also overcharges for environmental fees at
many stores in Canada, but customers are often unaware of the situation. Its
everyday low-price slogan is also deceiving customers and Amazon has sued
company for using this slogan (Phillips, 2018).

Thus, it has been analyzed that Walmart has been performing low and is not in
compliance to its CSR principles of providing sustainable services to its customers.
However, owing to increased buyer powers, the company has always been
concerned to remove their grievances in the form of paying higher wages to
employees to provide quality customers services, massive product recalls after
donkey meat scandal and enhanced spending on food safety.

3.3.4 Communities:
Communities possess low level of interests and powers for individual businesses.
Thus, through minimal efforts they can be satisfied. In this regard, Walmart has been
taking different initiatives for building communities as per its key CSR focus. In this
regard, for building communities, it has started Walmart rise initiative. Under this
program, it has distributed $5,000 across all its stores in US to help local
communities. It also donates to local food banks and healthcare screening efforts
(Walmart, 2019). During FY 2018, the company has volunteered 850,000 plus hours
in US alone for community building (Walmart Sustainability Report, 2018). The other
community building efforts of company have been explained in Philanthropic
responsibilities section mentioned above.

On the other hand, company has also been involved in influencing communities
negatively. According to estimates of Northwest Community Group, the Walmart
stores are putting negative impact on economy in a way it will create lost wages of
around $14 million for the next 20 years due to lower pays (Mielach, 2012). Walmart
has also been hurting dairy farmers as it has been engaged in its own milk
generation at quite a large scale which has resulted in cancellation of orders of
nearly 100 farmers in 8 different states in America by Dean Foods (Brewer, 2018;
Hook, 2018; Ed Zwirn, 2018). Aiming at cheap grocery items and clothing, Walmart
has been engaged in increased environmental pollution in the form of shipping from
Asian markets to US ports, putting negative influence on environment and sea
creatures (Mitchell &Wuthmann, 2015). It has also been involved in violating clean
water Act by improperly handling pesticides where it allows hazardous wastes to
California and Missouri and ultimately charged with a penalty of $82 million (Levin,
2013; EPA, 2013).

Walmart also bear poor track record when it comes to animal welfare. In this regard,
it hosts cock fighting games for attracting customers on the stores (Osterndorf,
2015). However, in 2015, the company has announced a new animal welfare policy
aimed at providing relaxed and better living condition for animals (Cheeseman,
2015). Moreover, it has also been taking stand to reduce cruelty of animals and
overuse of antibiotic of them (kastrenakes, 2015).

It indicates a mixture of both positive and negative influences of company on

community but owing to weaker powers, communities have not taken substantial
steps to fight against its negative steps.

3.3.5 Regulators:
Regulators possess greater authority to influence the decision making of business.
This can be evidently seen in case of Walmart as company has faced number of
penalties from its regulators for noncompliance with legal requirements. In this
regard, Walmart China has been fined with $10 million for violating food safety
regulations in 2014 (Burkitt and Banjo, 2014). The company has been handling this
crisis through different techniques including introduction of more inspections, making
recalls and adding different training programs. The company has also been
pressurized to raise minimum wages in US during 2015 which resultantly increased
its total cost by $1billion in only one year (Ross, 2019). In addition to it, the company
has faced various lawsuits and penalties as well for failing to act as equal opportunity
employer since it has been largely engaged in employee discriminatory practices as
discussed in ‘employees’ section (Osterndorf, 2015). It has also faced penalties in its
worst corruption case where the company was involved in bribery for expansion of its
operations in Mexico and Brazil (Feeley, 2018). The company has also been facing
tough regulations in its one of the key markets India. After making its highest ever
acquisition of Flipkart for $3billion, Walmart has been facing new e-commerce rules
from Indian government which are threatening its profitability (Iyengar, 2019).

On the other hand, the company has been found guilty of huge tax evasions in the
form of hidden taxes which it invests in opening its stores in international markets.
Till 2015, American Advocacy group found $76 billion of hidden taxes of company
(O’Connor, 2015). During 2019, an ex-executive of company alleged that Walmart
dogged $2.6 billion of taxes creating a ‘fictitious’ entity based in China (Haldevang,
2019). For this the company has been under serious investigations both in US and
China.

Thus, regulators can always influence the entire decision making of business
strongly and the business must show compliance to them to avoid huge financial
costs and poor reputation.

On the basis of results obtained from Mendelow’s matrix, the position of

stakeholders of business can be drawn as under:

Minimal Efforts: Keep Informed:

 Community  Employees

Keep Satisfied: Key Players:

 Customers  Regulators
 Investors

3.3 Conclusion and Recommendations:

This project has been carried out to investigate the CSR conduct of Walmart and its
influence on key stakeholders of business. In this regard, the two business models
i.e. Carroll’s Pyramid of CSR and Mendelow’s Matrix of stakeholders’ analysis were
used. The results obtained from Carroll’s model have revealed that Walmart has
been failed to meet its ethical and legal responsibilities while its philanthropic
responsibilities have also been criticized by analysts. In terms of economic
responsibilities, though, business has remained profitable for last five years, yet, its
profit margins have declined owing to issues in its CSR activities in the form of poor
quality and poor customer service but the company has been aiming to win the
competition at all costs. Thus, it shows that Walmart has been struggling to meet its
CSR responsibilities. On the other hand, Mendelows’ matrix has shown that the
company has been facing increased pressures from regulators and investors due to
its failure to comply with CSR framework and to meet its responsibilities. Employees
of company have been deeply affected by discriminatory practices for which they are
taking company to court while customers are also complaining about problems in
Walmart’s customer service of food items it offers to public. Finally, communities
have negligible powers against company, however, the company has been taking
steps to build local communities.

However, Walmart has been taking steps for its performance improvement. It has
been investing on employee training, changing the way it has been restocking its
shelves. It has been rewarding investors with increasing dividends and stock
buybacks. Towards employees, it has been spending on training and increased
employee compensation.

All this indicates that Walmart has been failed to fulfill its CSR responsibilities and
ultimately putting negative influence on its stakeholders. The stakeholders are, in
turn, putting pressure on company as per their relative powers against company for
improvement in its operations.

Recommendations:
In the light of detailed analysis and conclusion, the following recommendations can
be made to company:

 For its tough competition from Amazon, the company is needed to focus on
quality of products. It has both online and physical presence which are very
helpful to fight against competition, but low-quality products are a big hurdle
which can push company at back end as reported by consumers;
 Walmart has been increasingly criticized for low wages and employee
discrimination which puts negative influence on talented potential workforce.
Thus, company needs to pay prime focus in this area in order to attract
employees who can contribute positively;
 Walmart has been poor in its legal compliance. The company needs to
improve its internal controls and operations to avoid increased litigation and
improve its public image.
 Finally, the company also needs to undertake more steps for environmental
sustainability in its entire supply chain to make a positive mark as per its
sustainability framework