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Case Analysis: Wal-Mart Rosemead

Case Analysis: Wal-Mart Rosemead

Case Analysis: Wal-Mart Rosemead When Wal-Mart tried to establish one of its Superstores in Rosemead, CA, its Corporate social responsibilities are questioned when the company is met with heavy opposition. With the opening of the new Wal-Mart in Rosemead there are groups of people that will gain and groups of people that will lose.

This paper will analyze, using John Stuart Mill’s Utilitarian reasoning of “the greatest good for the greatest number” and theory of social responsibility by Milton Friedman, whether providing low cost merchandise to the masses outweigh consequences of the expansion of Wal-Mart into the residential city of Rosemead. The groups that stand to lose the most with the introduction of the Wal-Mart store in Rosemead created an organization Save Our Community (SOC). This group consisted of attorneys, university professors, local business owners and local residents who would be affected by potential increase in traffic and noise.

The group that was most to gain was shareholder and stakeholders of the company. Other groups that were set to gain from Wal-Mart is a certain demographic of the city with low income, this low income group was probably best represented by Wal-Mart own grassroots organization, Rosemead PRIDE, to counter the SOC group. This group was managed by a consulting firm based in a different city and did not consist of residents like the SOC group. One of the major points that the City council liked that they favored Wal-Mart was the increase in revenue for the city.

As stated by Gloria Molina, a County of Los Angeles Supervisor, “the bottom line is that revenue is so vital to the well-being of the residents of a city, that cities are having to resort to this kind of big box retailers that we are having all over the area”. This implies that Rosemead is looking to increase revenue for the entire city of Rosemead even though it may come at the expense of certain residents; this is in line with the Utilitarian “greatest good for the greatest number” principle. Local businesses opposed the introduction of Wal-Mart in fear that their usiness may be redirected to the box box store. State Assemblywoman Judy Chu said” Local businesses will watch helplessly as customers disappear to Wal-Mart. Why would any resident shop at a local store if they can buy pickles at a Wal-Mart for a dollar cheaper? My own reports say that local retailers will lose about $8 million annual in sales. ” This implies that even though the local businesses will lose from customers moving to Wal-Mart, customers will gain having competition in the market that will allow for cheaper priced items.

Rosemead was specifically targeted by Wal-Mart for its demographic, a city that has 22. 8% of its residents living below the poverty line, lower prices will definitely benefit this demographic. Cheaper priced merchandise come at a price, job benefit though touted as a benefit to the community by Wal-Mart is often seen negatively by analysts. Peter Cannels, a community Affairs Manager of Wal-Mart replied to a hiring question that “our associates are directly from the community and reside within the community” furthermore “initial hiring process would be about 300 associates” up to 550 depending on customer mass.

Opponents countered that the average pay of Wal-Mart employees were lower than workers employed in large retail. Another complaint against Wal-Mart was that any job creation gains were offset by the taxpayers cost of providing health and welfare services to Wal-Mart employees. But here, according to Friedman, Wal-Mart is in accordance to the rules of the game, there is no requirement that Wal-Mart be socially responsible for the welfare of its employees, the low cost merchandise would benefit the customers more than benefits to its employees.

It could be seen as a “tax” if the company raised prices to give benefits to employees and would not be responsible to its shareholders if it were to reduce profits for employee benefits. Friedman states that the responsibly of business is “to use its resources and engage in activities designed to increase its profit so long as it stays within the rules of the game”. Another major complaint for the introduction of Wal-Mart was traffic, noise and pollution. Lillian Sacco explained “traffic gridlock, diesel delivery trucks, noise pollution, air pollution threatening sensitive receptors of he school children, elderly citizens, et cetra”. The Environmental Impact Review (EIR) is a piece of tool that determines the impact of business on the environment and community. Wal-Mart has been in accordance with the EIR, installing sound wall and traffic lights as deemed necessary. Though the impact of Wal-Mart was significant to the residential community of Rosemead, the benefits of low cost to its demographics and revenue to the city of Rosemead far outweigh the worries and complaints of few residents.

So as we can see, there is a clear divide of people who will benefit and people who will lose with the introduction of Wal-Mart in Rosemead. Jobs will be created, city revenue will be created, low income shoppers will benefit from low prices, on the other hand, local residents will be significantly affected by the increase in traffic, noise and pollution, local business will lose customers to Wal-Mart and the government will have to pick up the tab for lack benefits provided to Wal-Mart employees.

Wal-Mart’s first responsibility is to its shareholders and stakeholders, it does this by maximizing profits while playing by the game, good or bad aside, everything is done legally and following procedures. Though many of the tactics may be seen by opponents as aggressive and unethical, it is done with the goal of offering low prices merchandise which is the “greater good for the greater number”.