HOMEWORK TOPIC: need for trust, corporate culture and principles of corporate governance.
Is it possible for a retailer to become too large and powerful? This is a question some people have been asking about Wal-Mart, the world’s largest retail company and about Tesco in the UK. Wal-Mart has aggressively pursued its low-price mantra, bringing better value to consumers and forcing suppliers to innovate. A possible concern is that Wal-Mart has become so big that it can do virtually anything it wants in some areas. Obviously this kind of power has enormous ethical and social implications. Some suppliers suggest that Wal-Mart is able to dictate every aspect of its operations, from product design to pricing, in its efforts to maximize savings for customers. Some suppliers claim they have been forced to reduce staff numbers and even locate to lower-cost regions, in order to meet the biggest retailer’s margin demands. Their fear is that if they hesitate to comply, they risk losing their most lucrative outlet and will find their products quickly replaced by a competitor’s on Wal-Mart’s shelves. For the customer, seeking keen prices and great choice, there are obvious benefits to Wal-Mart’s approach, but perhaps there is also a cost.
Questions:
1. Outline some of the ethical and social implications of the power Wal-Mart and other huge retailers are able to exert?
2. Propose any action that a company like Wal-Mart takes to manage these issues?