Walmart. Investor Relations Essay by Oana stefancu

Stakeholder Communication Essay from an Investor Relations Perspective Case study: Walmart

Contents Hypothesis ....................................................................................................................................................... 4 Case study. Walmart ...................................................................................................................................... 4 Appendix ........................................................................................................................................................ 15 Appendix 1. Walmart history timeline .................................................................................................... 15 Appendix 2. Walmart around the world ................................................................................................. 16 Appendix 3. Damaging blogging ............................................................................................................ 19 Appendix 4. Criticism about Walmart..................................................................................................... 19 Appendix 5. Walmart and PR.................................................................................................................. 20 Appendix 6. Walmart major shareholders ............................................................................................. 23 Appendix 7. Walmart Executives ............................................................................................................ 25 Appendix 8. Walmart importance in the communities ......................................................................... 29 Appendix 9. Customers............................................................................................................................ 30 Appendix 10. Walmart Good Works Foundation ................................................................................. 31 Appendix 11. Walmart competitors ........................................................................................................ 32 Appendix 12. Supplier Standards for Walmart ..................................................................................... 33 Appendix 13. Walmart and its pressure groups ................................................................................... 34 Appendix 14. Walmart and the politics .................................................................................................. 39 Appendix 15. Media .................................................................................................................................. 39 Appendix 16. Different stakeholders, different perspectives .............................................................. 41 Appendix 17. Financial highlights for investors .................................................................................... 41 Appendix 18. Investors importance........................................................................................................ 41 Appendix 19. Walmart 2012: definetly a good investment ................................................................. 42 Appendix 20. Primary and secondary stakeholders ............................................................................ 43 Appendix 21. Global Women’s Economic Empowerment Initiative .................................................. 43 Debate discussions ...................................................................................................................................... 46 Motion 1. “All publicity is good publicity” ............................................................................................... 46 Motion 2. “What the public thinks doesn’t always matter” .................................................................. 50 Motion 3. “You don’t always have to tell the truth to the press” ......................................................... 52 Motion 4. “Shareholders are more important than customers” .......................................................... 54 Reference....................................................................................................................................................... 56 Blogs ........................................................................................................................................................... 61 2

Social media .............................................................................................................................................. 62

Hypothesis The essay will focus on the hypothesis that financial highlights have to be communicated to investors in an easy and effective way. This is an important corporate communication aspect, as stockholders are directly interested in the company’s performance. However, the hypothesis will also consider that a company does not have to communicate the financial factors to all its stakeholders, but should rather focus on more relevant issues that they could be interested in. Considering this hypothesis, the essay aims to fulfill the following terms of reference: 

Consider the reputation of the company considering its relationship with the stakeholders



Identify the stakeholders of the company



Analyse how the company is communicating its financial performance with its stakeholders, majorly focusing on investors.

The essay will consider Walmart - biggest retail company in the world, according to Forbes 2000 Most Influential Companies in 2011 - as case study to support the above statement.

Case study. Walmart How effective is Walmart’s communication with its investors regarding its financial performance and how well is that communicated to other key stakeholders? 1962, Rogers Arkansas USA, Sam Walton opens the first Walmart Store. This was the result of a long research regarding the condition of the discount retailing in America. The company was incorporated as Wal-Mart Stores Inc. in October 31, 1969 and only one year later its shares began trading on OTC markets. In 1971 Walmart was listed on the New York Stock Exchange (www.walmart.com ) *Appendix 1. Nowadays, Walmart is considered an omnipresent in the American scene and for the past 15 years has gradually expanded its retailing operations worldwide * Appendix 2. Walmart corporation has 9.759 retail units in 28 different countries with sales of $419 billion in 2011 (www.forbes.com). Walmart is considered “something new, a global economic superpower operating beyond the reach of fair competition” (Brunn, 2006 : 3). 4

Despite the company’s position on the global market, there is no secret that Walmart reputation was severely affected by significant communication and public relation problems. Its brand and image have been taking hits in the public marketplace for years. There

are

blogs

exclusively

dedicated

criticizing

the

company

such

www.wakeupwalmart.com and www.watchwalmart.com * Appendix 3. All these criticism have been brought up mainly due to the poor communication strategy undertaken by Walmart executives over the past decade, leading to an extremely bad reputation *Appendix 4. This severely affected the company’s image as corporate reputation had become essential nowadays; is a fundamental element in the communication strategies of contemporary companies (Christensen et al. 2008 : 84). The demonstration of the hypothesis above presented will consider the corporate reputation and stakeholder communications with particular focus on how organizations build their reputation through stakeholders’ relationships. These relationships are important as lead to growth , high market value and high earnings. When the criticism regarding various issues arose on Internet sites connected to unions and religious groups, the company’s CEO at that time, Lee Scott, decided to ignore it. As demonstrated by the following events, this was a wrong decision. The criticism did not only damaged the company’s reputation but led to serious problems with its corporate responsibility. When the company’s CEO decided to respond to the media, the chosen communication strategy was not effective as he didn’t understand how Walmart was perceived by key audiences; this is why is essential to identify the company’s stakeholders and their needs before communicating to them (www.bloggingstocks.com) *Appendix 5. As Christopher (2002 : 77) affirms, it is fundamental to control these relationships in order to maximize shareholders value. If Walmart wants to re-establish its reputation successfully, in domestic and global markets, it must create connections with its stakeholders, moving from a short-term transactional-oriented goal to a long-term relationship-building goal. However, it is important to consider these strategies in conflict with the interests of powerful stakeholders (Harris et al. 2008 : 4). This is why an identification of Walmart’s stakeholders is necessary Walmart’s market stakeholders include:



Shareholders, are also known as stockholders *Appendix 6. This group is made by share owners; they are interested in the company’s performance as this influences the return on their investments. As previously affirmed, they can lead to growth , high market value and high earnings as they can choose to sell their stock, hold on to it or buy more. All these decisions are influential in the price of the company’s stock.



Board of Directors. Walmart Executives have same interests as shareholders as they own stock in the company. Often, shares are included in their salary *Appendix 7.



Employees. According to Global 500 world’s largest corporations, Walmart is the biggest company by number of employees, with more than 2.100.000 people worldwide. They care about the performance of the company as is their primary source of income. They can also influence the company based on how committed they are to the brand/company.

Illustration 1. Employees in the World’s largest organizations in 2010 - 2011

Source: www.onlinemarketing-trends.com



Communities. Their influence upon Walmart can be either positive or negative. Some communities rely on Walmart for jobs and a place to buy products at a low price while others, consider the retailer as a negative influence for the local businesses. Even if from different points of view, both groups are interested in 6

Walmart’s performance. It is impossible not to be influenced by Walmart’s presence as 90% of Americans live within 15 miles of Walmart *Appendix 8. Illustration 2.Walmart in America

Source: www.onlinemarketing-trends.com



Customers. They are an important part of Walmart’s performance. The company records 19.7 million customers each day. Last year was recorded that 84% of Americans have shopped at Walmart. People living in households with incomes of less than $30,000 a year are the ones that buy the most, due to the low prices *Appendix 9.



Non-profit organizations. According to Walmart Good Funds Foundation, 97 percent of the company’s donations is allocated to non-profit organizations in the communities where the stores are located (www.walmartfoundation.org) *Appendix 10.



Competitors. Walmart is the largest retailer in the US and the number one in the world according to Fortune 500 list *Appendix 11.



Gasoline retailers. Walmart partnerships with gasoline companies such as: Tesoro Petroleum, Murphy Oil USA and Sunoco.



Suppliers. They are important to a company’s performance as they can bring new ideas and products before taking them to the competitors *Appendix 12.

Walmart non-market stakeholders are: 

Pressure Groups and Labor Unions. They have a political interest in the company as they have a strict policy about unionized workers; however, Walmart does not want any interference from the labor unions as they consider that are able to take better care of their employees and provide them better benefits and compensations plans. Pressure groups include a wide range of interests groups that can affect the company’s performance *Appendix 13.



Politicians. They are interested in Walmart’s performance as they rely on political campaign funding * Appendix 14.



Media can be considered either one of the company’s stakeholder, or a channel to release information to stakeholder groups. As stated above, the bad relationship that the company had with the media in the past decade led to the damage of the corporate reputation *Appendix 15.

At this point, the essay consider its second term of reference fulfilled as a complete identification of Walmart’s stakeholder has been identified. “When Walmart is described by its customers as cheap and reliable, by its suppliers as a tough negotiation partner, by the media as an old-fashion employer, by employees as a hierarchical and efficient workplace, by the local community as an arrogant capitalist and by Fortune’s Most Admired Companies as a top-performing company, Walmart’s reputation is obviously seen in completely different terms by different stakeholder groups” (Christensen et al. 2008 : 90). Walmart does not have only one reputation. Each interest group will have a different opinion, so it’s essential to understand what kind of information is relevant to each of them *Appendix 16. As stated in the hypothesis, is not necessary to communicate the financial performance of the company to all the groups, even if the relationship with the investors is essential *Appendix 17. The National Investor Relations Institute (NIRI) defines investor relations as a “strategic management responsibility using the disciplines of finance, communication and marketing to manage the content and flow of company information to financial and other constituencies to maximize relative valuation” (Argenti, 2003 : 144). Investor relations has

today become a fundamental compartment of corporate communications and an area of interest of all companies *Appendix 18. In 2011 Walmart U.S. reached $260 billion in sales recording a 3.1 percent income grew. Today Walmart counts 3.800 stores based on 617 million square feet of selling space. In the International market Walmart grew 12 percent reaching $109 billion, and further development is predicted for the next year (Annual Report 2011, www.walmartstores.com) *Appendix 19. “The purpose of the annual report is to provide an accurate guide to the financial state of the business over the last year” (Martin, 1998 : 99). As many companies nowadays, Walmart uses its annual report as a way to do PR to a wide range of stakeholders. The financial performance is communicated but they focus more on their mission: “ Save people money so they can live better”. This corporation mission creates a pattern in the communication with its main stakeholders. When transmitting the financial performance indicators to a wide range of stakeholders, is recommended not to use any technical jargon, but to be clear (Martin, 1998 : 40). This approach was really effective in the Shareholder Meeting that had place on June 3, 2011 in Bentonville Arkansas. The approach was casual and successful. The presence of Will Smith as speaker was really effective as he presented indicators of the company’s growth in a funny and comprehensible way for everybody. Illustration 3. Will Smith as guest speaker at the Annual Shareholder Meeting

Source: www.flickr.com/photos/walmartcorporate 9

Even the Chief Executive Officer at Walmart International, Doug McMillon, presented the sales growth in the international market by showing a plastic plate and saying that from 8 million units, sold on 2010, they reached to sell 13 million units this year. This easy way to present numbers to groups with no financial knowledge was a successful approach. On the Walmart corporation website there is a whole section dedicated to the company’s stakeholders. This section offers information regarding stocks, financial news, events and shareholders services. The information is detailed and well structured. However, the approach is not interactive and this does not make the user “stick” to the website. In comparison with its main competitors, Target had a much more interactive approach while Kmart corporation website is not even easy to find on the search engine. Another way in which Walmart releases its financial performance information is through specialized

media

such

as:

New

York

Times,

Finance

Yahoo,

UnderTheInfluence.nationaljournal., businessweek.com, retailindustry.com, forbes.com, marketwatch.com, onlinewsj.com, dailyfinance.com etc. In UK, information regarding the company can we found also on major newspapers such as Guardian, Telegraph but the information regards only ASDA, and not Walmart. Walmart focuses its stakeholder communication management on a range of main stakeholders such as: investors, customers and communities. Other interest groups are included as well but in a less evident way. During the last two decades many public companies have focused their efforts solely on investors and shareholder value, leading in this way only to a short term planning. Walmart stakeholder groups are prioritized based on their impact on company’s profits; estimating the influence upon a company is a smart strategic decision. The benefits of this approach taken by Walmart has been proven by Kottler and Hesket. Based on an observation over 11 years they found that companies that emphasize communication with three main groups – customers, communities and stockholders – had an increase revenue of 682% versus only 166% for the companies with a more limited stakeholder focus (Duncan and Moriarty, 1997 : 56) *Appendix 20. Customer relations have increasingly become a part of corporate communication and a business strategy for Walmart: “Helping people to save money so they can live better” (Argenti, 2003 : 48). Customer relationship management is a strategic approach in order to

improve stakeholder value through the development of appropriate relationships with specific customer segments. Walmart’s “corporate management strategy involves selling high quality and brand name products at the lowest price” (Vance, 119). As more Americans are faced with economic problems and shoppers become increasingly focused on the price of their products, Walmart focuses on lowering the overall pricing of goods. This is much more important for customers, than the revenue of the supermarket they shop from, especially in these difficult economic times. Based on the analysis of the company’s reputation, this communication strategy is effective. Community relations are fundamental for the commitment of the company as a: 

Responsible member of the society regarding the community and its local and national authorities and the environment within operates.



Organization that recognizes the importance of environmental issues.



Organization that will support local education. (Martin, 1998 : 127)

Walmart Foundation supports charitable causes that are important to company’s and associates and their local communities. The communication of these facts is important in order to raise awareness about the funds invested. In this way, Walmart will be recognized as a social responsible company. This approach is much more effective than the communication of the company’s financial highlights to stakeholders that are not necessarily interested in. However, despite the donations and the projects that the company is involved in (such as the Global Women Empowerment Initiative), the company still lacks of credibility due to the past reputational issues *Appendix 21. ‘The internet changes everything’ was a common way of thinking during the dot.com initial period. Today, the release of information through websites is outdated. Websites are important in order to release information (Walmart websites: www.walmart.com, www.walmartstores.com,

www.samsclub.com,

www.walmartcommunity.com,

www.walmartempowerswomen.org) but social networks have the power to shape a company’s reputation. The two-way communication, between company and stakeholders, is fundamental in order to create a long-term relationship.

Today Walmart uses different social networks to interact with followers and release instant information to its stakeholders. With more than 800 followers, the Community Twitter page of Walmart gives constant updates about donations and charities. Financial indicators are not nominated. Walmart has other Twitter pages such as @WalmartSpecials with information about the latest products and offers and @WalmartAmy and @WalmartKelly, pages of two associates that release general information about the company, especially about donations and environmental programs. Walmart has also: 

an official Facebook page with more than 11 million likes and more than 270.000 conversations about the company’s products and ongoing projects.



a YouTube channel with videos regarding: economic opportunities, shareholder meetings (2010 and 2011), environmental issues and careers. The channel has more than 507,000 overall views.



a Flickr page with pictures and latest news



a Foursquare page with more than 11.000 followers that focuses more on financial information.

The communication strategy build on social networks is efficient and able to reach a wide range of stakeholders. The information released usually regards projects that the company is currently involved in and not necessarily financial highlights. This is a successful approach as different stakeholders have different interests. The above presented analysis considers the third term of reference fulfilled. The essay concludes that despite the criticism and the PR issues that Walmart had to face, the communication strategy currently adopted is effective. The company is well know as a leader in the retailing industry in all the world and investors have plenty sources to find financial information and news. The decision to focus on other stakeholders, as communities and customers, and releasing them information they are interested in, is very effective. This highlights Walmart’s culture, based on customer satisfaction and low prices: “Save money. Live better”. However, more interactivity is required with the other stakeholder groups as little space is dedicated to them both on the corporate website and social media. Walmart’s financial communication strategy is efficient and the decision to

communicate that information only with investors is demonstrated to be successful. At this point, the essay consider all its terms of reference fulfilled and the hypothesis demonstrated.

Shareholders Board of Directors Employees Communities Customers Non-profit organizations Competitors Gasoline Retailers Suppliers

Market Stakeholders

Non-Market Stakeholders Politicians

Pressure Groups and Labor Unions

Republicans Democrats MediaSelectional groups

Causal groups

Lobby groups

Social medial Online Media Specialized media Newspapers

Politicians

Republicans

Democrats Media

Online Media

Social media

Specialized media 14

Newspapers

Appendix Appendix 1. Walmart history timeline 1962 Sam Walton opens the first Walmart Store is located at 719 Walnut Ave. in Arkansas, USA. 1968

The first stores to open outside Arkansas are situated in Sikeston, Missouri and

Claremore, Oklahoma. 1969 Company was incorporated as Wal-Mart Stores Inc. 1970 The first distribution center and home office was build in Bentonville, Arkansas 1970 It was the beginning of the trading stock as a publicly held company 1971 Walmart has stores already in five states 1971 Walmart was listed on the New York Stock Exchange 1975

Walmart has 125 stores with more than 7,500 employees and sales reaching

$340,3 million per year 1979 $1 billion annual sales 1987 $24 million investment in the company’s satellite network 1988 Sam Walton is replaced by David Glass as Walmart’s CEO 1988 First Walmart Supercenter in Washington, Missouri 1992 Sal Walton, Walmart’s founder, passes away 1993 $1 billion weekly sales 1993 Walmart enters Alaska, Hawaii, Rhode Island and Washington 1995 Enters South America: Argentina and Brazil Walmart enters China 1998 Walmart opens “Neighborhood Market”

1999 Walmart buys Asda for $10 billion 2000 H. Lee Scott is named President and CEO of Walmart 2000 Sales reached $165 billion 2001 $1 billion daily sales, biggest day sales in history 2002

First time listed in Fortune 500 as Americaâ&#x20AC;&#x2122;s largest corporation surpassing

ExxonMobil 2002 $219.8 billion revenues and $6.7 billion profits 2005

Walmart controls 20% of the retail grocery business with more than 6,200 stores

worldwide and more than 1,6 million associates

Appendix 2. Walmart around the world Illustration 4. Walmart stores around the World

Source: www.csmonitor.com

The company is present in 15 different countries: USA, Canada, UK, India, Japan, China, Argentina, Brazil, Chile, Mexico, Guatemala, Honduras, Nicaragua, Costa Rica and El Salvador. Walmart is not only a grocery store but provides general merchandise as: family apparel, crafts, health and beauty aids, toys, household needs, law and garden, electronics, fabrics, jewelry and shoes. Also, the company runs a pharmacy department, Tire & Lube Express, and a Photo Processing centre. (www.walmart.com) 16

21 November 2011, Walmart corporation was estimates to own the following assets. In the United Stated the corporation includes: 

692 Walmart Stores



2,933 Walmart Supercenters



183 Walmart Markets



10 Small stores such as: Walmart Express, Walmart on Campus and Super Ahorros stores



609 Sam’s Club



Logistics o Walmart Transportation LLC o 130 Distribution Centers/Transportation Offices



Walmart Realty



Walmart Portrait Studios also known as PictureMe! Portrait Studios



Walmart Financial Services Network (offering services such as Walmart Money Card, Money Transfers, Bill Payments, Money Orders, Check Cashing and Check Printing)

Internationally, Walmart owns: 

66 units in Argentina as: Walmart supercenter, Changomàs, Changomàa Express, Mi Changomàs.



11 units in Botswana as: Massmart Holding Ltd including Game, CBW and Building Warehouse



487 units in Brazil as: Walmart Supercenters, Sam’s Club, Todo Dia, Bompreco Hypermart, Bonpreco Mini-Market, Balaio (Bompreco), Magazine (Bompreco) and WMS Supermercados do Brazil including four kinds of supermarkets ( BOG Hypermarkets, Nacional Supermarkets, Mercadorama Supermarkets and Maxxi Atacado Wholesale Clubs).



329 units in Canada as: Walmart Stores and Walmart Supercentre.



291 units in Chile as: Hiper Lider Hypermarkets, Hiper Lider Neighborhood Markets, Express de Lider Supermarkets, Ekono Soft Discount Stores and Super Bodega Acuenta Hard Discout Stores. 17



344 units in China as: Wal-Mart Supercenter, Sam’s club, Walmart market,TrustMart Hypermarket, Smart Choice and Compacy Hypermarket.



185 units in Costa Rica, part of Walmart de Mexico y Centroamérica. The retailer is known under the name of Coporaciòn de Supermercados Unidos and includes: Pali, Màs X Menos, Maxi Bodegas and Hiper Màs.



77 units in El Salvador, part of Walmart de Mexico y Centroamérica. The retailer is known under the name of La Fragua and includes: Despensa Familiar, Despensa de Don Juam and Hiper Paiz.



1 unit in Ghana: Game (part of Massmart Holding Ltd.)



182 units in Guatemala, part of Walmart de Mexico y Centroamérica. The retailer is known under the name of La Fragua and includes: Despensa Familiar, Supertiendas Paiz, Hiper Paiz, Maxi Bodegas and Club Co.



60 unit in Honduras, part of Walmart de Mexico y Centroamérica. The retailer is known under the name of La Fragua and includes: Despensa Familiar, Supertiendas Paiz, and Maxi Bodegas.



7 units in India, in partnership with Bharti Walmart Private Limited: BestPrice Modern Wholesale.



413 units in Japan, part of Seiyu Group: Seiyu Supermarkets, LIVIN Department Stores, Sunny Supermarkets, Seiyu Supercenters, Seiyu GMS (food and apparel) and Seiyu GM (general merchandise)



2 units in Lesotho: CBW (part of Massmart Holding Ltd)



1 units in Malawi: Game (part of Massmart Holding Ltd)



1880 units in Mexico, part of Walmart de Mexico y Centroamérica: Walmart Supercenter, Sam’s Club, Bodega Aurrerà, Mi Bodega Aurrerà, Superama, Suburbia, VIPS Restaurants, Pòrton Restaurants, Mercamas and Bodega Aurrerà Express.



7 units in Mozambique as: Game, CBW and Kawena (part of Massmart Holding Ltd)



3 units in Namibia as: Game and CBW (part of Massmart Holding Ltd)



64 units in Nicaragua, part of Walmart de Mexico y Centroamérica. The retailer is known under the name of Corporaciòn de Supermercados Unidos and includes: Pali and La Uniòn.



1 unit in Nigeria as: Game (part of Massmart Holding Ltd) 18



54 units in Porto Rico as: Walmart Stores, Walmart Supercenters, Sam’s Club and Supermercados amigo.



290 units in South Africa as: Game, Game Foodco, DionWired, Makro, Builders Warehouse, Builders Trade Depot, builders Express, CBW, Jumbo and Cambridge.



1 unit in Swaziland as: CBW (part of Massmart Holding Ltd)



1 unit in Tanzania as: Game (part of Massmart Holding Ltd)



1 unit in Uganda as: Game (part of Massmart Holding Ltd)



536 units in UK, known as Asda including: ASDA/Walmart Supercentres, ASDA Supercentre, ASDA Living and ASDA Small Town



1 unit in Zambia as: Game (part of Massmart Holding Ltd)

(www.wikipedia.com)

Appendix 3. Damaging blogging A really bad reputation influential factor is WalmartWatch, a blog founded by United Food and Commercial Workers International Union. WalmartWatch seeks to make Walmart fully responsible for its impact on local communities in which operates, the global retail sector, the environment and the nation’s economy. WalmartWatch exists to dare the company to embrace its corporate responsibilities. The stakeholders targeted by this blog are: policymakers, communities and press. The only official blog of Walmart is targeting the local communities, and does not regard the company’s financial successes, but only charities and donations. For example, one of the news released on Walmart Foundation blog considers the affiliation with National Fish and Wildlife Foundation to develop the “Acres for America” program. Walmart have invested $35 million to permanently conserve a minimum of one acre of wildlife habitat for each acre that the company occupies at the moment. Appendix 4. Criticism about Walmart Walmart’s reputation management became so famous that finding bad news about the company’s

easy

finding

good

deal

one

its

stores

(www.brandchannel.com). Despite all the criticism, the company’s executives and especially, the ex CEO, Lee Scott, decided not to take any measure against it. The 19

situation worsen so badly that the company was considered to hire practices that were unfair to minorities, especially in hiring and promoting women. This issue was publicly discussed by the New York based Interfaith Centre on Corporate Responsibility, headed by Sister Patricia Wolf. The company didn’t respond at any criticism until the media started to talk about the possible illegal surveillance operations within Walmart. Illustration 5. Walmart discrimination

Walmart was also criticized by the New York Times columnist Paul Krugman, affirming that the company destroys jobs, small businesses and small towns; is anti-union and pays low wages; exploits its workers; is too big and sells too much junk, doesn’t provide health insurance to all its workers and buys too much from “Red” China (www.mises.org/daily). Furthermore, Laurence M. Vance,(a columnist for LewRockwell.com and the Future of Freedom Foundation) affirms that there are several reasons in the customers experience that can convince not to shop at Walmart such as: crods, parking space, carts, lines, cashiers, inventory, selection, self check-out registers and getting help.

Appendix 5. Walmart and PR 2006. Eldeman Worldwide

In 2006 Walmart hired the mega PR firm Eldeman to resolve the company’s reputational issues. However, this not helped but only worsen the situation as the company seemed to take one bad decision after another. All these issues were reported in the media and this led the company to an even bigger damage of its reputation. It was revealed that the company was using blogs in order to release information on the behalf of the company. The “independent” blogs were “Wal-Marting Across America”, “PaidCritics” and “Working Families for Walmart”. Regarding this embarrassing situation, Mya Fraizer states: “It’s ironic that Eldeman Worldwide helped to write the World of Mouth Marketing Association’s code of ethics, which states: “Honesty of identity: You never obscure your identity”. (www.sunbeltblog.blogspot.com) The “New 360” was going to be the PR strategy that should have re-stabled Walmart’s reputation. Illustration 6: Eldeman’s PR strategy in 2006

Source: (www.sunbeltblog.blogspot.com)

2008. Pr firms for Walmart

In 2008 Walmart has chosen three major PR companies: Interpublic Group of Cos.’Golin Harris, WPP’s Cohn & Wolfe and Omnicom Group’s Porter Novelli. The agencies will have to promote Walmart in different business categories such as: food / grocery and health / nutrition; apparel and home; hardlines (lawn and garden, hardware, automotive); entertainment (electronics, movies, music, toys, sports) and seasonal events; financial services; online reputation via www.Walmart.com. (www.adage.com) Interpublic’s Martin Agency is Walmart’s main creative agency while, Publicis Group’s Mediavest handles the media relations. In February, Walmart brought Publicis & Hal Riney on board to manage work on its Great Value brand and a month later to expand its digital presence with the help of Interpublic digital shop R/GA. 2009, Tara Raddohl, spokesman for the retailer, announced that “Walmart is currently talking to a number of public relations agencies to support consumer communications for Walmart U.S. Candidate agencies that may join the roster have already been identified and vetted. The incumbent agency, Edelman, Chicago, is participating in the search.” This move of the company aims to “ bring together a power category marketing and PR”. In order to achieve its target, the company is looking for agencies with “excellent capabilities in the areas of new media, online, media relations, crisis communication and multicultural outreach”. Source: www.waleupwalmart.com

Appendix 6. Walmart major shareholders

Shareholders

Source: www.finance.yahoo.com

Illustration 7. Walmart investors

Source: www.investors.morningstar.com

Appendix 7. Walmart Executives

Board of Directors Walmart Senior Management team is formed by: John Aden Executive Vice President, General Merchandise, Walmart U.S. James A. Barron Executive Vice President, Softlines, Walmart U.S. Michael J. Bender President, Walmart West, Walmart U.S. Rosalind G. Brewer President, Walmart East, Walmart U.S. Eduardo Castro-Wright Vice Chairman, Wal-Mart Stores, Inc. M. Susan Chambers Executive Vice President, People Division David Cheesewright President and CEO, Walmart EMEA Brian C. Cornell President and CEO, Samâ&#x20AC;&#x2122;s Club Leslie A. Dach Executive Vice President, Corporate Affairs Cindy Davis Executive Vice President, Global Customer Insights Johnnie C. Dobbs, Jr.

Executive Vice President, Logistics, Walmart U.S. Michael T. Duke President and Chief Executive Officer, Wal-Mart Stores, Inc. Rollin L. Ford Executive Vice President, Chief Information Officer Jeffrey J. Gearhart Executive Vice President, General Counsel and Corporate Secretary P. Todd Harbaugh Executive Vice President, Operations, Samâ&#x20AC;&#x2122;s Club Linda Hefner Executive Vice President and Chief Merchandising Officer â&#x20AC;&#x201C; Sam's Club Charles M. Holley, Jr. Executive Vice President and Chief Financial Officer Pamela K. Kohn Executive Vice President, Merchandise Services, Walmart U.S. Ed Kolodzieski Executive Vice President, Global Sourcing Duncan Mac Naughton Executive Vice President and Chief Merchandising Officer, Walmart U.S. Thomas A. Mars Executive Vice President and Chief Administrative Officer, Walmart U.S. Wan Ling Martello Executive Vice President, Global eCommerce, Emerging Markets C. Douglas McMillon President and CEO, Walmart International

Michael S. Moore President, Walmart Central, Walmart U.S. Scott Price President and CEO, Walmart Asia Stephen F. Quinn Executive Vice President, Chief Marketing Officer, Walmart U.S. Gisel Ruiz Executive Vice President, People, Walmart U.S. William S. Simon President and CEO, Walmart U.S. Jack L. Sinclair Executive Vice President, Food, Walmart U.S. Eduardo Solórzano President and CEO, Walmart Latin America Karenann Terrell Executive Vice President, Assistant Chief Information Officer S. Robson Walton Chairman of the Board of Directors Steven P. Whaley Senior Vice President and Controller Eric S. Zorn Executive Vice President and President, Walmart Realty, Walmart U.S.

Source: www.walmart.com The senior management team (presented above) is in charge of Walmart’s general management. The board is always informed about the company’s performance and 27

provides supervision to the management team regarding: company’s strategic planning process, executive development and succession planning. Corporate Governance Guidelines are adopted by Walmart in order to define duties of: board, members of the company and shareholders. Independent directors are those who have no economical relationship with the company, as regulated by the New York Stock Exchange’s Listed Company Manual. Walmart’s committees are: 

Audit Committee. Formed by four independent directors, “audit committee financial experts” as defined by the rules of the Securities and Exchange Commission. Their responsabilities are to: assist the board in monitoring the reliability of the financial reporting process, control financial statements and company’s reports, oversee company’s legal and regulatory requirements, approve compensations, review related-party transactions.



Compensation, Nominating and Governance Committee (CNGC).Formed by three independent directors whose responsabilities are to: evaluate and approve compensations of company’s executive officers, make suggestions to the board about the compensation and evaluate related issues about the overall compensation structure of the company. The CNGC also: suggest eligible individuals for nomination to the board, develops company’s corporate governance values and perform reviews once a year regarding the performance of the board and the senior management.



Strategic Planning and Finance Committee. Formed by six directors, four of whom are independent. They are responsable of: financial matters and assistance in the long-range strategic planning of the board.



Executive Committee. Formed by three directors, one of whom is independent. This group has the duties of the board between the board’s meetings.



Stock Opinion Committee. Formed by two directors and is responsable of the administration of equity-based compensation plans.

Appendix 8. Walmart importance in the communities

Communities “As the Los Angeles Times reported: ‘ Walmart’s decisions influence wages and working conditions across a wide swath of the world economy…its business is so vital to developing countries that some send emissaries to the corporate headquarters in Bentonville Arkansas, almost as if Walmart were a sovereign nation.’ “ (Talton, 2004 cited in Brunn, 2006 : 3).

Appendix 9. Customers

Customers

The understanding of subdivisions of a stakeholder group is fundamental in order to communicate in the most appropriate way. Customers are subdivided in the following way: Illustration 8. Walmart customers categories

Source:www.npdingishts.com

Appendix 10. Walmart Good Works Foundation

Non-profit organizations

Women owned business Charitable giving

Gender diversity

Farm and factories

Job training and education

ÂŁ 1,1bn of food donations

Global Women Economic Empowerment Initiative

$250 million to support hunger relief organizations at the national, state and local levels

Collaboration with food manufacturers and government

College Success Award Winners

Disaster Relief Military Support

$ 3,6 million to help National Heroes to earn College Degrees Partnership with Wreaths Across America in Honor of Late Veterans

Giving Programs

Longstanding Partners American Red Cross

National giving programs Facility giving programs

The Salvation Army

Disaster Relief

State giving programs Scholarship programs

Scholarship Programs

Lifelong learning program

Education

Hunger Relief

$ 4,2 million to help first-generation college students to get their degrees

United Way Worldwide

Disaster Preparednes s Earthquake and Tsunami Relief

Localized efforts

Childrenâ&#x20AC;&#x2122;s miracle network Feeding America

Area in which Walmart Foundation focuses its efforts in order to provide opportunities that improve the lives of customers and associates.

Appendix 11. Walmart competitors

Competitors In America, Wal-Mart's primary competitions are Kmart and Target. In North America there are also ShopKo, Meijer, Canada's Zellers, The Real Canadian Superstore and Giant Tiger: while in South-America the competitors are Mexico's Comercial Mexicana and Soriana. Below it is shown a comparison between Walmart and s&p500 on the 22 nd of Nov at 15.12p.m. Illustration 9. WMT vs. S&P 500

(www.dailyfinance.com)

Appendix 12. Supplier Standards for Walmart

Suppliers According to Jespersen and Skjott-Larsen

(2005 as cited in Harris 2008 : 4) “the

competitiveness of international companies are highly dependent on their ability to deliver customized products quickly and timely all around the world. Therefore, focus has moved between firms at the same level in the production process to competition between supply chains, from raw materials to end customers.” In order to be a supplier for Walmart, you have to fulfill certain expectations: 

Compliance with laws. Must comply all national and/or local laws and regulations including labor, immigration, health and safety and environment related laws.



Voluntary labor. Walmart does not tolerate use of child, forced, bonded, prison or indentured labor. Furthermore, all their workers must work according to local regulations and have rest days.



Hiring and employment practices. Suppliers must hire workers only after verifying their legal right to work in the country and age.



Compensation. Is suppliers responsability to compensate all their employees with wages, overtime premiums, and benefits that meet or exceed local legal standards, local industry standards, or collective agreements.



Freedom of association and collective bargaining. Suppliers must respect the right of workers to choose whether to lawfully and peacefully form or join trade unions of their choosing and to bargain collectively.



Health and safety. Is suppliers responsability to provide a safe and healthy environment for their workers.



Environment. Suppliers must be environmentally responsable; they must ensure to fulfill all national and local environmental laws, including laws related to air emission, water discharges, toxic substances and hazardous waste disposal.



Gifts and entertainment. It is forbidden to offer any kind of gifts or entertainment to Walmart associates.



Conflicts of interest. It is forbidden to work with Walmart is that creates a conflict of interests.



Anti-corruption. Suppliers must not get involved in unethical practices.



Financial integrity. Suppliers must keep evidence of all transactions made with the company, in accordance to accounting practices such as Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS).

Appendix 13. Walmart and its pressure groups

Pressure Groups and Labor Unions Selectional groups

Causal groups

Lobby groups

Pressure groups are one of the fundamental stakeholder groups, especially for such a big corporation as Walmart. Pressure groups, that can be: advocacy groups, lobby groups, interest groups and special interest groups, are “an organized collection of people who seek to influence political decisions and policy, without seeking election to public office” (Harris et al. 2008 : 14). Groups are divided in different categories such as: 

Selectional groups. They represent the interests of their members (Trade Unions, British Medical Association, etc.)



Causal groups. They seek to manipulate the policy in a particular area. (For example, Greenpeace is a causal group regarding the environment) etc.



Lobby groups. They are interested in a specific issue and they exist only until the matter will be resolved.

Union / labor organizations that can influence Walmart’s performance can be divided in the following categories and subcategories. International Federations can be: 1. Global 34



International Workers of the World



International Transport Worker’s foundation



International Trade Union Confederation



International Workers Association



World Federation of Trade Unions

2. Sector Global Union Federation 

International union of food, agricultural, hotel, restaurant, catering, tobacco and allied workers’ association

Walmart is an international company so various Unions can influence the organizations’ performance. In order to consider all the pressure groups, the countries in which Walmart operates will be considered in alphabetic order. Argentina: 

Argentine Workers’ Center



General Confederation of Labor

Botswana: 

Botswana Commercial and General Workers’ Union



Cen



tral Autonoma de Trabaldahores



Central ùnica dos Trabalhadores



Confederaçao Brasileira de Tradalhadores Cristaos



Confederaçao Geral dos Trabalhadores



Nation Union of Public and General employees



Central Autònoma de Trabajadores

Brazil:

Canada:

Chile:



Workers’ United Center of Chile

Costa Rica: 

Central de Trabajadores de Costa Rica



Central del Movimiento de Trabajadores Costarricenses



Confederaciòn Unitaria de Trabajadores (Costa Rica)



Confederaciòn du Trabajadores de Costa Rica



Costa Rican Confederation of Workers

El Salvador: 

Central Autònoma de Trabajadores Salvadorenos



Central de Trabajadores Democraticàs



Federaciòn Nacional Sindical de Trabajadores Salvadorenos



Ghana Federation of Labour



Trades Union Congress of Ghana

Ghana:

Guatemala: 

Central General de Trabajadores de Guatemala



Confederaciòn de Unidad Sindical de Guatemala



Uniòn Sindical de Trabajadores de Guatemala

Honduras: 

Central General de Trabajadores de Honduras



Confederaciòn Unitaria de Trabajadores de Honduras



Federaciòn Unitaria de Trabajadores de Honduras



Honduras Workers’ Confederation



National Union of General Workers



General Union

Japan:

Lesotho: 

Congress of Lesotho Trade Unions



Lesotho Congress od Democratic Unions



Lesotho Trade Union Congress



Malawi Congress of Trade Unions



Confederation of Mexican Workers



General Confederation of Workers (Mexico)



Regional Confederation of Mexican Workers

Malawi:

Mexico:

Mozambique: 

Mozambique Workers’ Organization



National Union of Namibian Workers



Trade Union Congress of Namibia



Democratic Confederation of Workers of Nigeria



General Union of Workers of Nigeria



Nigerien Confederation of Labour



Union of Workers’ Trade Unions of Nigeria

Namibia:

Nigeria:

Porto Rico: 

General Confederation of Workers (Puerto Rico)



South Africa:



Food and allied Workers’ Union



Confederation of South African Workers’ Unions

Swaziland: 

Swaziland Federation of Trade Unions



Swaziland Federation of Labour



Trade Unions’ Congress of Tanzania



Zanzibar Trade Union Congress



National Organization of Trade Unions



General Federation of Trade Unions (UK)



Trade Union Congress



Association of Management and Professional Staffs



Industrial Workers of the World – British Isles



CTW (Change to Win Federation) that includes: Service employees

Tanzania:

Uganda:

UK:

USA:

International Union and Workers United Zambia: 

Federation of Free Trade Unions of Zambia



Zambia Congress of Trade Unions

Appendix 14. Walmart and the politics

Politicians Republicans

Democrats

Walmart has always been a Republican-leaning company (during the past 15 years, more than 75% of its political donations were given to Republicans). However, Walmartâ&#x20AC;&#x2122;s campaign contributions have been given to the Democrats for the last elections. The companyâ&#x20AC;&#x2122;s political action committee has given $108,500 to federal candidates and parties in 2010 election cycle. From this funds, 69 percent was donated to Democrats and the remaining 31 percent to Republicans, according to the Center for Responsive Politics. This is a change from the 2008 elections when out of a total of $1.24 million, 46 percent was given to Democrats and 53 percent to Republicans. In 2006 elections, Walmart contributed with $1.29 million, of which 32 percent went to Democrats and 68 percent to Republicans. Furthermore, Walmart gave $857,000 in the 2004 elections, $431,000 in 2002 and $330,000 in 2000 (www.retailindustry.about.com). Walmart is the 52nd company in the USA regarding the political contributions for the elections according to www.opensecrets.org.

Appendix 15. Media

Media Online Media

Social media

Specialized media

Newspapers

The media can or cannot be considered a stakeholder. However, in Walmartâ&#x20AC;&#x2122;s case, is fundamental to examine a wide range of media coverage as the company had to face several PR problems. The media examined for this essay is subdivided as following: 39

Financial and PR online media: 

Financial Times



Forbes



Fortune 500



Harvard business review



The economist



Time



Daily finance



Wall Street Journal



Investors Morning Star



Ney York Times



Market Watch



Business week



Retail industry



Uk Finance. Yahoo



Millerwood communications



Market Watch

Social media: 

Facebook



Twitter



YouTube



Flickr



Foursquare

Blogs: 

Walmart watch



Why walmart works



Blogging stocks



Walmart associate blogspot



Communication strategy blog 40



People of Walmart



Walmart sucks

Links for the previous websites and social media pages cited above will be presented in the bibliography.

Appendix 16. Different stakeholders, different perspectives Relationships are communication drive, analysis of brand communication, especially the two way communication, can provide insight into the nature of these relationships. From a company’s point of view this means learning what type of support is needed for each group, as Duncan and Moriarty stated (1997 : 64). Each stakeholder group generally has a different set a perspectives about a company’s strengths and weaknesses. Investors, for examples, are much more interested in the expertise of management than are most customers. Therefore, each internal group or department is responsible in managing the relationships with its stakeholders.

Appendix 17. Financial highlights for investors In 2011, Michael T. Duke, President and Chief Executive Officer Walmart Store, Inc., proudly announced in the annual report that the company returned a record of $19,6 billion to shareholders through dividends and share repurchases. In March 1974, Walmart declared its first cash dividend of $0,05 per share. Walmart has increases its dividend every year since then.

Appendix 18. Investors importance In order to understand the importance of the investors is necessary to consider that 76 percent of the average U.S. company shares listed in the New York Stock Exchange in 200 had turned over in the previous year (www.ft.com).

Appendix 19. Walmart 2012: definetly a good investment For this year the company is considered to be an attractive solution for the investors. As known by most investors, shareholder value is mainly considered by the history of the companyâ&#x20AC;&#x2122;s success of the stock. Faster is the growth of the company and the more value it will generate on its shareholderâ&#x20AC;&#x2122;s behalf. The illustration below indicates a 17-year plotting of the companyâ&#x20AC;&#x2122;s earnings per share creating a consistent above-average growth. Walmart earnings have increased its annual earnings growth rate of 13.5%, which is more than double the 6.3% earnings growth rate for the average company as measured by the S&P 500 over the same period. Illustration 10. Earning over the past 17 years.

Source: www.seekingalpha.com From 1996, the company grew earnings at a rate of 13.5% generating returns of 12.6%.

Illustration 11. Walmartâ&#x20AC;&#x2122;s growth over the past 17 years

Source: www.seekingalpha.com

Appendix 20. Primary and secondary stakeholders As Argenti (2008 : 27) affirmed, the primary stakeholders of a company to communicate with are: employees, customers, shareholders and communities while secondary stakeholders are: media, suppliers, government (local, regional, national) and creditors. Based on this theory the essay can affirm that the approach chosen by the company is the most effective.

Appendix 21. Global Womenâ&#x20AC;&#x2122;s Economic Empowerment Initiative The company was involved in a lawsuit with the U.S. Supreme Court regarding a classaction sex-discrimination. This news had massive coverage in the media and involved 1.5 million women, being the largest employment suit in U.S. history. The Court considered Walmart not guilty and allowed to move forward as a class-action, believing that Wal-Mart

was entitled to individual determinations of its employees’ eligibility. The women’s cases are expected to proceed on an individual basis or in smaller, more closely linked classes On 14th of Septembre 2011 Wal-Mart stores announced a new Global Women’s Economic Empowerment Initiative. The new initiative is based on a “five-year plan that includes sourcing $20 billion from women-owned businesses in the U.S., providing training to 60,000 female factory workers to improve leadership skills at work and at home, helping 200,000 female retail employees gain job skills and access to higher education, and giving philanthropic grants of more than $100 million to support women’s empowerment— about 2.3% of its annual sales” (www.forbes.com). Regarding this initiative, Melanne Verveer, Ambassador for Global Women's Issues affirmed: "Walmart's initiative has the potential to be a game-changer for women and for world economic growth". Furthermore, professor Geffeti from Duke University affirmed: “the company is so influential that has the power to shape global food chain suppliers”. The company had set specific goals for different countries in which Walmart sells: 

China. Help women farmers to make their agricultural operations more sustainable



India. Launching Bharti Walmart Training Center, provides skills and career development.



Brazil. Walmart hired women construction workers for the building of new stores.



Central America. In Partnership with “Una Mano para Crecer” is helping women suppliers to grow their business.

In order to reach the intended goals the company will work in partnership with companies such as: CARE, Vital Voices, CountMeln, WBENC and WeConnect International. (www.walmarstores.com and www.forbes.com) For the first years, the initiative will focus on the development of the e-commerce site selling jewelry from Guatemala, Thailand and Ethiopia, Coffee from Central America and dresses from Kenya. Walmart partners for the initial line will be Full Circle Exchange and Ethical Fashion Africa (part of International Trade Centre program). “Walmart’s effort to empower women through e-commerce will truly create scale for good and transform the

lives of countless women, allowing them to work their way out of poverty in ways that are both sustainable and dignifiedâ&#x20AC;? said Mark Priddy, co-founder of Full Circle Exchange.

Debate discussions Motion 1. “All publicity is good publicity” The quote “There’s no such thing as bad publicity” is related to Phineas T. Barnum, an American showman of the 19th century. A century later, Oscal Wilde was stating: “The only thing worse than being talked about is not being talked about”. Another version of the expression was given by Brandan Dehan, an Irish Republican, saying: “There’s no such thing as bad publicity except your own obituary”. All these are versions of the above motion. This proverb was discussed over the last decades by academics, businessmen and critics so, in order to give an appropriate discussion of the motion and to examine if the intended company, Walmart, is pro or cons the statement, several opinions will be analysed. The motion has to be considered from different points of view. For example, for someone seeking notoriety and attention from the press, like Paris Hilton, this statement is definitely true; but companies as BP and Toyota - that had to face major crisis and suffered falls in their market price - will certainly not agree with the motion. However, there are contrasting opinions among academics. For example, Alan Sorensan, an economics professor at Stanford analysed book reviews featured in The New York Times and found that when critics gave bad reviews even to an unknown author, the sales of the book were increasing by a third. He affirms that the same theory can be applied at small

businesses

that

are

trying

became

known

the

market

(www.businessinder.com). But what about the worldwide known brands? Can bad PR be harmful to the company’s profits? An example pro motion, is the case of Jet Blue. On the 9th of August, an employee publicly quit and left by sliding down the exit chute of the aircraft. On that day the company recorded a stock price of $6.24 and one week later the stock price decreased by 3.21% reaching 6.04%. However, when this kind of assumptions are made, a wider analysis is required. A comparison of the studied company to its industry and the markets in general in required. Sometimes companies loses are not necessarily linked with bad news. For example, on the on the 13th October 2010 the market relied on good news from JP Morgan and Intel, but still, the next day Intel fell 2.68%. So, when statements about bad publicity 46

affecting a certain company are made, a wide analysis is required to avoid misunderstandings. Considering Walmart, there are several factors to consider. Firstly, the PR disaster that the company had to face due to inappropriate communication strategies (further information in essay, appendix 3 and 5). One of the company’s main crisis was the class-action lawsuit that is considered to be the largest civil rights class action suit in the United States history. History of the case: 

2000. The case stated with a sex discrimination claim again Walmart from an employer, Berry Dukes.



2001. The lawsuit started in San Francisco and the plaintiff represented 1.6 million women, employees of Walmart since 26th December 1998.



June 2004. Martin Jenkins, the federal district judge, ruled in favor of class certification and Walmart appealed the decision.



February 2007. Judge Harry Pregerson and Judge Michael Daly Hawkins while Judge Andrew J. Kleinfeld dissented, criticizing the majority’s view of the class certification standards.



December 2010. The Supreme Court accepted Walmart’s appeal as Wal-Mart v. Dukes.



June 2011. The Supreme Court ruled in the company’s favor, saying that the plaintiffs could not constitute a class discrimination.

The lawsuit created a lot of bad publicity to the company for a long period of time. For 11 years, the media followed the court case and published articles with titles such as: “Female Wal-Mart Employees file new bias case” (New York Times), “Wal-Mart ‘sexism’ case in court” (BBC news), “Supreme Court decision in Wal-Mart class-action claim brings praise, anger” (Fox News), “Walmart women watch and wait” (The Guardian) etc. Despite this reputational crisis, there is no evidence of reduction of people’s interest in the company or fall of the revenues. According to Google Insights, the interest in the company continued to grow from 2004 till today. The interest could have grown because the lawsuit that the company was involved in or because of its continuous development in the retailing

market. In 2011, Walmart U.S. reached $260 billion in sales recording a 3.1 percent income grew. Today Walmart counts 3.800 stores based on 617 million square feet of selling space. In the International market Walmart grew 12 percent reaching $109 billion, and further development is predicted for the next year (Annual Report 2011, www.walmartstores.com). Illustration 12. Online interest

Source: www.googleinsights.com

The following illustration shows the key words that the users type on the search engine, when searching information about Walmart. This demonstrates that the interest in the company was not due to the lawsuit that Walmart was involved in but to other topics, as seen below. Illustration 13. Key words in Walmartâ&#x20AC;&#x2122;s search engine

Despite the billions of dollars spent in the lawsuit and the damage of the reputation Walmart was not accused only of sex discrimination in the past decades but has also been subject to criticism by labor unions, community groups, grassroots organizations, religious organizations, environmental groups and Walmart customers - the shareholders return continued to grow in the last 17 year with an increase of the return from 1% in 1996, reaching a return of 15.9% in 2012. Illustration 14. Companyâ&#x20AC;&#x2122;s growth over the last 17 years

In conclusion, it can be affirmed that not all publicity is good publicity. When a company is involved in a big crisis, especially if regarding the social responsibility, the publicâ&#x20AC;&#x2122;s opinion is going to change. However, this does not always mean the bankruptcy of the company, and in some cases not even the loss of customers or decrease of sales. As demonstrated above, the company continued to expand nationally and internationally and the shareholders returns increased year after year more than any other retailer on the market. This demonstrated that bad publicity is not always an influential factor in the companyâ&#x20AC;&#x2122;s performance. 49

Motion 2. “What the public thinks doesn’t always matter” As stated in the discussion of the first motion, bad publicity is not always an influential factor in the company’s performance. Despite the 11 year class-discrimination lawsuit, Walmart kept growing, opening new stores, gaining more money and reaching new customers. However, one thing that it will always be influenced by a crisis, is the public opinion. Due not only to the lawsuit, but to all the criticism that the company had to face in the last decades, today is considered by some, the worse company of the world, as: 

The products are majorly sourced from foreign countries, especially China



The environmental practices are immoral



The use of public subsidies



The company’s security policies



Kills small local business

The public opinion is reflected in the countless blogs, social network pages and newspaper articles that criticize the company. Despite this situation and the opposition of the public to Walmart, the company became one of the most admired companied by Fortune 500. However, the long term criticism and the continuous reputational issues led to a lack of trust from media and customers. For example, on the 23 rd January 2011, Walmart announced in a press conference alongside the First Lady, the new promise of the company that are focused on the improvement of the affordability and health qualities of the food it sells. The Times presented the news with the following title: “Wal-Mart Shifts Strategy to promote Healthy Foods” and it mainly focused o the critics that the company had to face in the past than on the news itself. Another example is the Global Women Empowerment Initiative focusing on a “five-year plan that includes sourcing $20 billion from women-owned businesses in the U.S., providing training to 60,000 female factory workers to improve leadership skills at work and at home, helping 200,000 female retail employees gain job skills and access to higher education, and giving philanthropic grants of more than $100 million to support women’s empowerment—or about 2.3% of its annual sales” (www.forbes.com)(for further information about the project see Appendix 21). The move was encouraged by Melanne 50

Verveer, U.S. Ambassador at Large for Global Women’s Issues and Nell Merlino, founder and president of Count Me In for Women’s Economic Independence. Despite the amazing project in which the company is investing billions of dollars, Forbes magazine affirmed that the project is a way of covering the sex discrimination class-action the company had to face until three months ago. Jennifer Stampleton, representative of the United Food and Commercial Workers International Union (UFCW) stated that “Wal-Mart’s latest PR gambit is trying to cover up decades of unjust treatment of women. The company causes systematic economic harm to women in the U.S. and around the world, and that is precisely why Wal-Mart is trying to sell us a new image” What Jennifer Stampleton and Jenna Goundreau - the writer of the article on Forbes – forgot, is that half of Walmart’s 2.1 million employees are women and that the company employs more women in senior leadership positions that the national average. The public opinion is now strongly influenced by the past issues of the company, and whatever the company will make, it will be only considered as an excuse to take out the past stories. However, considering the matter from an investor relation point of view, in this situation the public’s opinion didn’t matter. As already stated, the company kept developing and growing despite the general opposition, and this led to an increase dividend for the shareholders year after year. In this case, the public’s opinion

didn’t matter and the

company was listed by Fortune 500, as first company in the world based on the end of the fiscal year, 31 March 2011

Illustration 15. Top 10 companies of the world based on revenue

Motion 3. “You don’t always have to tell the truth to the press” Is difficult to argue the motion from Walmart’s perspective as the motion itself is very complex; the motion does not only have to be discussed but another consideration ha to be analysed firsts. Is important to consider that the media itself does not always tell the truth. Sometimes, the media will lie just to sell more copies and sometimes will accept a so-called corporate censorship. The corporate censorship takes place when a journalist agrees to publish an information as given by the company without altering anything, even if conscious of the fact that the information is not totally true. Stakeholders are fundamental for the company but is also important to remember that media is not a stakeholder but only a channel that reaches some stakeholders, and like any other industry is driven by profit making. Media is not an always effective channel, as a third party is involved in the process. George W. Bush told ABC anchor George Stephanopoulos : “Just because it’s reported doesn’t make it true”. Best communication is based on the relation between a company and its targeted stakeholders through social networks. For example, last month Forbes released an article stating that there are immoral alliances between politicians, the press and the police (for example the News of the World case). Fortunately, today, social media has replaced

gonzo journalism giving the opportunity to the companies to have a direct relationship with its stakeholders and avoid , as in this case, irresponsibility in media itself. “The media have a moral or normative interest in the organizations and have the capacity to mobilize public opinion in favor of, or in opposition to, a corporation’s performance”. (Cornelissen, 2008:43).

However, a survey back in 2007 showed that 80% of press

material was copied and rewritten from press agencies, magazines and other newspapers; each time with the risk of errors and spin being inserted -and the best we can hope for is an offhand paragraph of apology weeks later and hidden next to the small ads. This demonstrates that the journalists are the first ones now to about the truth. They will publish what the media relation person will send them as long as the story will sell. Corporate censorship Nicholas Johnson, United States Federal Communications Commission commissioner argues that many broadcasters are fighting, not for free speech, but for profitable speech. Jonathan Alter is an American journalist and author who was a columnist and senior editor for Newsweek magazine from 1983 until 2011. He states that: "In a tight job market, the tendency is to avoid getting yourself or your boss in trouble. He also state that: "Even among journalists who entered the field for the noblest of reasons there is a tendency to avoid any controversial journalism that might embroil the news company in a battle with a powerful corporation or a government agency” www-medbib.com. Croteau and Hoynes also reported that this kind of censorship in journalism is ordinary; results of studies revealed that more than 40% of journalists and news executives are willing to in such censorship by avoiding newsworthy stories or softening the tones of stories. More than a third of the journalists participating at the survey, stated that newspapers would ignore news that might hurt their financial interests. In February 2003, a Florida Court of Appeals unanimously agreed with an assertion by FOX News that there is no rule against distorting or falsifying the news in the United States. In December of 1996, Jane Akre and Steve Wilson, were investigated in Tampa Bay, Florida, on behalf of FOX News. In 1997 they started to edit a documentary about the bovine growth hormone (BGH), a contentious essence manufactured by Monsanto 53

Corporation. The investigators edited a four-part series revealing that BGH was not healthy and that Florida supermarket chains didn’t take the necessary precaution is selling milk from cows treated with the unhealthy hormone. The investigators affirmed that initially the company was happy with the documentary that they were producing but a week before the release of the video Fox executives and bovine producing company attorneys wanted the reporters to use different statement. The producers know that the information was not true but they tried to force Akre and Wilson to continue to produce the distorted story. When they refused to edit the documentary they were instantly fired. During their appeal, FOX asserted that there are no written rules against distorting news in the media. They argued that, under the First Amendment, broadcasters have the right to lie or deliberately distort news reports on public airwaves.

Motion 4. “Shareholders are more important than customers” In the last decades the companies choose to focus mainly on investor relations, focusing in this way on profits and interests. However, several academics as: Duncan and Moriarty (1997), Christensen (2008), Cornelissen (2004) and Harris (2008) affirmed that a relationship with a more wide range of stakeholders is required in order to develop a successful communication strategy. Walmart focuses its stakeholder communication management not only on investors but also on customers and communities. Other stakeholders such as: suppliers, politicians or environmental

company

are

not

considered

primary

interest

Walmart’s

communication plan. For a big company as Walmart, shareholders are important. As already analysed in the essay, the communication of financial performances is not fundamental. Walmart is such a big company that investors are already aware that is a fast developing business able to make them gain lots of money if deciding to invest in it. However, Jan Maudin, Director of Marketing and Community Programs for Walmart stated that “while profit is the goal, service is the process”. In fact, Walmart culture focuses on high quality products at low prices, values embedded in the company’s values since Sam Walton founded it. Nobody 54

can deny that they offer the lowest prices on the market; this is the core of Walmart’s business “We save your money so you can live better.” A long-term orientated customer relations will lead to the loyalty of a company’s customers guaranteeing a certain amount of income because the better a business is able to manage its relationship with clients, the more successful it will become. At that point, when the company will increase its revenue, the stockholders will invest in the company. David Glass, famour American businessman, affirms that, five key point in order to be successful are: 1. A company must think as a customer 2. Supplying products that you will want to buy 3. Provide genuine value to the client 4. Ensure that the customers are having a good time while shopping 5. Exceed the customer’s expectations. All his tips are related to the value of the customer relationship that the company is able to build. He also states that Walmart’s relationship with its customers is build on trust and commitment and seems to get stronger over the time. This solid customer relationship was helpful to the company during really big reputational crisis. Despite all the negative media coverage that Walmart faces, its customers loyalty didn’t failed.

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