Retailing conglomerate Walmart appears to be keen to adopt the ever growing trend of sustainability practices. An article in BusinessWeek entitled “Walmart’s New Sustainability Mandate in China”, describes the steps Walmart plans to implement to achieve their goal of being a more sustainable business. Walmart unveiled this plan in the Walmart Sustainability Summit which was held in Beijing, China. As you can tell from the name of the article as well as the location of the summit, Walmart was primarily addressing China. According to the article, “if Wal-Mart were a country, it would be China's sixth or seventh largest trading partner”, this shows the extent of significance that both entities have on each other. Despite this symbiotic relationship, CEO Lee Scott and Vice Chairman Mike Duke chose this summit to lay out a new business guideline that all their suppliers must follow. These guidelines included: supplier agreements to comply with environmental laws, strengthening of the auditing programs, energy efficiency improvement-top 200 suppliers must have 20% improvement and by 2012 95% of all product source mu st come from companies with highest auditing ratings. Additionally, Scott and Duke also stated that suppliers are expected to have zero defective merchandise by 2012 as well as for suppliers and products to become transparent. Failure to comply with these standards would result in Walmart refusing to buy from them.
When I first saw the article I initially I could not believe that first, Walmart was seriously trying to become sustainable and second that they would really impose their will on China. Ever since taking MQM 385 I have watched videos and read articles condemning Walmart from its unethical employee treatment to its poor environmental practices. During all this, management has seemed to be concerned with the bottom line and was willing to cut corners to achieve it. However, after reading this it appears that management at walmart is being very proactive in setting sustainability goals. It is clear that CEO Lee Scott has improved the vision of his company from just the bottom line to look at Walmart in a bigger picture. Scott and Dukes plan is a great example of transactional leadership. From our text transactional leadership describes a leader who does not individualizes the needs of subordinates or focus on their personal development. In this instance, Scott addresses Chinese suppliers as his subordinates or followers and really does not make concessions for them, you either comply or you will be dropped. Moreover, it appears from the article that Scott’s leadership is similar to factor 6, management by exception. The text describes management by exception as a style that involves corrective criticism and negative reinforcement. It also describes that this comes into forms passive, where action is taken only after standards have not been met and active, where leader monitors their followers closely looking for mistakes and violations. In this case, it would appear Walmart will be employing an active management by exception rule as they have set strict guidelines for suppliers with the negative reinforcement that you will be dropped if you cannot meet Walmart guidelines. While, I feel that this form of management is usually something I view negatively, in this case it appears to be the most effective way for Lee Scott to accomplish the goals that he set for Walmart. With over 900 suppliers it would be near impossible to try to work on an individual basis with all of them to promote a more transformational and individualized approach that I would have liked. In the end, I am glad that a corporation that has the power that Walmart possesses is thinking more forthright and is being proactive and responsible instead of worrying about just the bottom line. I feel that in this way Lee Scott and the Walmart leadership team are setting an example for the other big box retailers in this country.
--Sean Morton
I would agree with you on this. I think that it is great for Walmart to incorporate some sort of sustainable approach. I also feel that this is probably going to be the most difficult one yet considering the size of the company and not to mention the country that they are focusing on. For this, it would seem that the company as a whole would have to take on a transformational approach in that they are going to have to re-direct they entire company in order to achieve the goals they set forth. Great article, and I look forward to hearing more about these initiatives that they are setting forth.
ReplyDeleteJeff Parrish
I am currently in MQM 385 and we just got done talking about Walmart (or atleast I think we are). Through out the class I have heard basically nothing but negative things about Walmart. However, it is good to hear the Walmart is doing something sustainability. Like you stated, Walmart is China's 7th largest trading partner. It is about time Walmart flexes its corporate muscles and begin to make other countries become more sustainable as well rather than just doing business with them because it is cheaper. Walmart has the power to cut ties with almost any of their suppliers, so when Walmart threatens you like this, you need to take it seriously. As long as they enforce the sustainability of these Chinese companies and continue to grow their own sustainability, I think it will have a great impact on the world.
ReplyDeleteJason Svela