Walmart’s stakeholders influence the strategic direction of the company’s corporate social responsibility programs. These stakeholders are the people or groups that the business affects directly or indirectly. They exert pressure on Walmart’s business to push the company to consider their interests regarding sustainability, environmental impact, human resource management practices, and business ethics. With its large organizational size and global scope of operations, the big-box retailer 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 uses 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. This relationship means that sustainability, green operations, business ethics, and related corporate citizenship variables affect the fulfillment of the goals of Walmart’s mission statement and vision statement.
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
Investors are the stakeholder group with Walmart’s highest priority, while suppliers have the lowest priority in the company’s corporate social responsibility strategy. Nonetheless, all these stakeholder groups are considered in the company’s decision-making processes. Walmart’s prioritization of its stakeholders is similar to those of many businesses, with investors usually getting the top priority in governance and corporate citizenship efforts.
Investors: Walmart’s Top-Priority Stakeholders
Investors are mainly interested in profits. These stakeholders want Walmart to have higher profits, which translate to higher dividends or earnings per share. Also, investors are interested in minimizing the operational costs of the company. Lower costs usually lead to higher profits, which are beneficial for Walmart’s investors. A corporate social responsibility strategy that reduces retail business costs contributes to the satisfaction of this stakeholder group.
Walmart prioritizes investors in its corporate social responsibility strategy. This is one of the reasons why the retail company continues to minimize costs, such as through the minimization of wages. A strong market presence and the other strengths identified in the SWOT analysis of Walmart enable the business to minimize costs and maximize profits to satisfy its governance goals for this stakeholder group. 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: The Second Priority
Customers are a major stakeholder group in the retail 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. This stakeholder group’s interests require the company to include low costs and low prices as variables in its goals for retail business sustainability and corporate social responsibility.
Walmart addresses the interests of customers as stakeholders. The company maintains its cost leadership generic strategy, which supports the lowest possible prices. In fact, the company is popular because of its low prices. This pricing strategy is evident in Walmart’s marketing mix (4P). In this regard, the retail company’s corporate social responsibility strategy is effective and successful in addressing the interests of customers or buyers as a stakeholder group.
Employees: Walmart’s Third Priority
Walmart’s employees are a significant consideration in the company’s managerial decisions for corporate social responsibility and corporate citizenship. 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 retail company tends to minimize wages.
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, the retail business maintains its position of minimizing wages. This wage minimization aligns with Walmart’s generic competitive strategy and intensive growth strategies. As a result, the firm’s corporate social responsibility strategy does not effectively address the interest of employees regarding wages or compensation.
Suppliers: Least Prioritized Stakeholders in Walmart’s ESG
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 profitable prices that support suppliers’ businesses. As businesses, suppliers are stakeholders that want Walmart to sell their products at higher prices. Even a tiny increase in selling 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 sells at its stores. However, as the biggest retailer in the world, the company has the business leverage to influence suppliers. The company has more power than its suppliers. The Five Forces analysis of Walmart shows that this stakeholder group has weak bargaining power in the retail industry, especially over big-box retailers. Thus, suppliers are at a disadvantage in influencing the retail corporation’s strategies, including its strategies for corporate social responsibility and corporate citizenship. The company requires suppliers to offer their goods at low prices. Understandably, most suppliers comply. Otherwise, they run the risk of not having their goods sold at the retail company’s stores. The supply chain management aspect of Walmart’s operations management establishes communications with suppliers and allows the company to determine its options for corporate citizenship regarding this stakeholder group.
Assessment & Recommendations: Walmart’s CSR Performance in Addressing Stakeholders’ Interests
Walmart is effective in addressing the interests of the stakeholder groups of investors and customers. However, the company’s corporate social responsibility and corporate citizenship initiatives only partly satisfy the interests of employees because they continue to get minimized wages. The firm also fails to satisfy the interests of suppliers. Thus, Walmart is only partially effective in addressing stakeholders’ interests.
To improve its CSR 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, the retail business 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 for its corporate social responsibilities.
References
- Park, J. G., Park, K., Noh, H., & Kim, Y. G. (2023). Characterization of CSR, ESG, and corporate citizenship through a text mining-based review of literature. Sustainability, 15(5), 3892.
- Paruzel, A., Schmidt, L., & Maier, G. W. (2023). Corporate social responsibility and employee innovative behaviors: A meta-analysis. Journal of Cleaner Production, 136189.
- U.S. Department of Commerce – International Trade Administration – Retail Trade Industry.
- Walmart Inc. – Environmental, Social & Governance Reporting.
- Walmart Inc. – Ethics & Integrity.
- Walmart Inc. – Form 10-K.
- Walmart Inc. – Supplier Inclusion.
- Walmart Inc. – Sustainability.