Walmart’s stakeholders influence the strategic direction of the company. These stakeholders are the people or groups that the business affects directly or indirectly. Thus, they exert pressure on Walmart’s business to push the company to consider their interests. With its large organizational size and global scope of operations, Walmart has many stakeholders. However, only some stakeholders have a significant impact on the company. To understand the dynamics of the relationship between stakeholders and the business, managers must identify these stakeholders and their interests. Walmart can use such information to guide decisions to achieve a satisfactory leadership position in stakeholder management.
Managerial decisions at Walmart are partly based on the company’s stakeholders. Thus, the company and these stakeholders influence each other.
Walmart’s Stakeholder Groups
Walmart’s stakeholders can be grouped based on their shared interests. These stakeholder groups also have different levels of priority, based on the company’s beliefs and policies. The following are the main stakeholder groups considered in Walmart’s corporate social responsibility strategy, arranged according to the company’s priorities:
- Investors
- Customers
- Employees
- Suppliers
The investors are the stakeholder group with Walmart’s highest priority, while the suppliers have the lowest priority. Nonetheless, all of these stakeholder groups are considered in the company’s decision-making process. Walmart’s prioritization of its stakeholders is similar to those of many businesses, with investors usually getting the top priority.
Investors: Stakeholders with Walmart’s Top Priority
Investors are mainly interested in profits. They want Walmart to have more profits, which translate to higher dividends or earnings per share. In relation, investors are also interested in minimizing the operational costs of the company. Lower costs usually lead to higher profits, which are beneficial for Walmart’s investors.
Walmart prioritizes investors in its strategies. This is one of the reasons why Walmart continues to minimize costs, such as through the minimization of wages. Theory suggests that the primary objective of business is to generate profits. Otherwise, there would be no business at all. Thus, in prioritizing investors as the primary stakeholders, Walmart simply fulfills this theoretical primary objective of its business.
Customers: Walmart’s Second Priority
Customers are generally included as a stakeholder group in business. In Walmart’s case, customers are interested in low prices or the affordability of goods, as long as these goods have acceptable quality. This is especially true among American consumers, who tend to gravitate toward retailers that offer low prices, such as Walmart.
Walmart addresses the interests of customers as stakeholders. The company maintains its cost leadership generic strategy, which involves offering the lowest possible prices. In fact, the company is popular because of its low prices. In this regard, Walmart is effective and successful in addressing the interests of customers as a stakeholder group.
Employees: Walmart’s Third Priority
Walmart’s employees are a significant consideration in the company’s managerial decision-making. Employees have two main interests: job security and higher wages. Job security pertains to the guarantee that Walmart will keep the employees as part of its business. Higher wages are a typical interest, especially because the firm continues to give low wages to its employees.
Walmart is only partially effective in addressing the interests of its employees as stakeholders. The company has policies and programs that provide a considerable degree of job security. However, Walmart maintains its position of minimizing wages. As a result, the firm does not effectively address the interest of employees with regard to wages.
Suppliers: Walmart’s Least Prioritized Stakeholders
Suppliers are interested in getting more of their products sold at Walmart stores in a profitable way. This interest involves not just the selling of the suppliers’ products, but also the selling of these products at acceptably profitable prices. As businesses, suppliers are stakeholders that want Walmart to sell their products at higher prices. Even a tiny increase in prices can have a significant benefit to suppliers.
Suppliers are at the bottom of Walmart’s prioritization of stakeholders. Suppliers provide the goods that the company needs at its stores. However, as the biggest retailer in the world, Walmart has the business leverage to influence suppliers. The company has more power than its suppliers. Thus, suppliers generally do not get what they want. For example, Walmart requires suppliers to offer their products at very low prices. Understandably, most suppliers comply. Otherwise, Walmart would not sell their products.
Analysis & Recommendations: Walmart’s Performance in Addressing Stakeholders’ Interests
Walmart is effective in addressing the interests of the stakeholder groups of investors and customers. However, the company only partly satisfies the interests of employees because they continue to get low wages. The firm also fails to satisfy the interests of suppliers. Thus, Walmart is only about 50% effective in addressing stakeholders’ interests.
To improve its performance in satisfying stakeholders, Walmart must implement some changes in its business. For example, the company can make a small but significant increase in wages across the board. Also, Walmart can improve supplier relations by meeting the suppliers in the middle instead of insisting on excessively low prices. While these recommendations might lead to a slight increase in selling prices at Walmart stores, they can improve the company’s standing as a corporate citizen and in stakeholder management.
References
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