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1. Wal-Mart has ranked high on Fortune’s annual Most Admired list. Yet many stakeholders vilify the company. Which is closer to your view? Have you modified your view during the last few years?
2. You are an account executive at Fleishman-Hillard and the Wal-Mart account was dropped on your desk, what would you advise the client?
3. Toys R Us (TRU), a key competitor of Wal-Mart in the toy sector, is committed as a Signator to the SA8000 system, devoting substantial resources to audits and training of its suppliers and serving on the SA8000 Advisory Board. Where TRU shares factories, Wal-Mart is a free rider. Which firm do you think will benefit more from this asymmetry? How would you advise TRU to address the free rider problem?
RECENT NEWS
| Wal-Mart and Public Relations – 2002-2008
Wal-Mart's bad reputation costs it $16 billion, reports Business Week:
"Few Wall Street analysts have tried to assess how much damage Wal-Mart's reputation for poor labor and environmental practices did to the stock price. But New York's Communications Consulting Worldwide (CCW), which studies issues such as reputation, puts it in stark dollars and cents. CCW calculates that if Wal-Mart had a reputation like that of rival Target Corp., its stock would be worth 8.4 percent more, adding $16 billion in market capitalization." Read the article2002-2003. Wal-Mart has zigzagged in the 2003-2008 period as it has attempted to address a campaign against it by labor unions and other NGOs. The following discussion is based on a NY Times Article on Wal-Mart by Constance L. Hays in 2003.
Wal-Mart is driven by a low-cost model and has not spent much on public relations. That changed in 2002 when Wal-Mart started investing in "reputation research" and then attempted to address the bad news about itself that it uncovered. The consultant Wal-Mart chose first was Fleishman-Hillard, part of the Omnicom Group. Some of the issues that attracted negative notice to Wal-Mart were hiring part-time workers, treatment of female employees, and resistance to organized labor. Other opponents include communities opposed to building Wal-Mart stores and manufacturers pressed to sell their goods to Wal-Mart at lowed prices.
So in 2003 Wal-Mart broadcast three ads nationwide that portray it as a great place to work, produced by GSD&M of Austin, Tex., also part of Omnicom. Wal-Mart says its research, rather than a federal lawsuit by workers, prompted the ads. The lawsuit contends that women were often overlooked or ignored when it came time to promote cashiers and others to management positions. The negatives caught everyone's attention at the company's highest levels.
2006-2008. By 2008, Wal-Mart has been actively engaged on the environmental front and has made some improvements in worker benefits. The environmental improvements have contributed to lower costs. Worker benefits have been improved in a few specific such areas as training and health care, but the company says it has too many employees and too much a focus on low-cost products to be able to afford large increases in wages or benefits.
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