Walmart - Sources of Political Risk, Code of Ethics, Social Programs, and Guiding Investment - Case Study Example

International Business Name Course Instructor Date International Business Introduction Different corporations operate in different countries as multinationals corporations. Operating as international business has its vicissitudes as entities are required to adhere to various laid down rules and regulations. Markets and economic environment keep on changing and therefore, requires an entity to remain sensitive to be competitive. This discussion focuses on Walmart Stores as one of the multinational corporations operating in different countries. Various aspects concerning the entity are deliberated in the paper. Company overview Walmart is one of the world largest retailer and public corporation in view of Fortune Global 500 list 2014. The corporation which is family owned begun its operations in 1962 and was incorporated in 1961 (Walmart, 2014). Sam Walton is the founder and currently the family holds the highest number of share -50 percent through their holding company. This therefore makes them the controller of the company. Walmart has branches in 50 US states as well as 27 countries. The total number of stores is over 11,000 under 55 different names (Walmart, 2014). The headquarter of the entity is located in Bentonville, Arkansas. Some of the countries the corporation operates in include, UK as ASDA, Mexico, Japan as Seiyu, Brazil, India as Best Price, Canada, Argentina, China, Puerto Rico among many others (Fishman, 2006). The corporation is as well publicly trades on the New York stock Exchange (Walmart, 2014). It is the company with the highest number of employees estimated at over two million. The company deals in a range of products including electronics, home, furniture, clothing, shoes, gifts, grocery which accounts as the larger revenue generator (Wexler, 2011). The mission of the company is to offer the customers all they want at an affordable price. The products are accessible through utilization to technology and innovation that the company has embraced. Types of market systems and types of legal systems in countries where Walmart operates In market economy, different markets systems do exist depending on the companies and industries within that sector/industry. Understanding the type of market systems as well as legal systems the company operates in is essential when it comes to making pricing and production decisions or when it comes to making decision to enter a given market. The market systems and legal systems that Walmart operates in vary from one country to another because of the different locations or countries. However, the most adopted market systems for Walmart is the perfect competition. In this market system, the company faces or operates alongside many other sellers as well as buyers operate (Hausman & Leibtag, 2007). The number of buyers and sellers are infinite and therefore, company grapples for the same. Some of the seller that compete with Walmart include Target while they aspire to reach or serve many different buyers with different preferences and interests in the market. In these market systems, Walmart has managed to attract a large number of buyers because of the perception of low prices of its goods. This has given it an advantage in the various locations it operates making it to compete favorably with its competitors. The company as well operates under monopolistic competition as another type of market system. Even though in some of its markets, it has many competitors, they are sufficiently differentiated from one another making others to charge even greater prices compared to those that a perfectly competitive firm is likely to charge. Walmart operates under both civil and common laws. This is because; the countries they operate in are different and have different laws. For instance, in USA, common law is used and judicial binding are binding. There is extensive freedom of contract and generally, everything is permitted if the law does not expressly prohibit it (PPP in Infrastructure Resource Center, 2014). On the other hand, in countries such as China and South America, civil law is used. The law is written in constitution and is based on specific codes as only legislative enactments are taken or considered to be binding (PPP in Infrastructure Resource Center, 2014). The law as well may factor in some of the writings of the law scholars in making ruling. Sources of political risk Many countries are faced with political squabbles that threaten the survival and smooth business transaction of multinational corporations. Some of the countries that Walmart is present in are faced with different political squabbles such as civil war, coup de’te among others. Sources of these risks include, politics competition, inciting of the members of the public, vote bribery, corruption of the leaders, and poor governance among many others. These risks result from poor economic performance, inflation, hatred among the members of public. Therefore as a political consultant for the company and factoring in the trends in the political systems, I should advise the company to be vigilant and always carry out a survey of the country political stability before operating to invest in the country. If already established, the company should consider creating a conducive environment with the leaders and the people and as well should consider tasking an insurance cover on any, aspects on risks relating to politics. Stakeholders the company needs to satisfy The company targets different segments of stakeholders in its quest to achieve the desired objectives. For the case of Walmart, it has many stakeholders that it must satisfy to continue achieving its targets and objectives. These stakeholders include, the employees, the customers, the government, the community members, the financial institutions and the suppliers and the distributors. For instance, it must provide quality products at affordable products to the customers to enable them to continue buying their products. Employees are also critical in ensuring that the objectives of the company are achieved hence require closer attention. The government is also important and the company must cooperate and pay its taxes to continue operating in various locations. Even though ensuring that these stakeholders are satisfied it is not that easy. One of the reasons why this is not easy is that, every country has its own preferences and needs. The interest of customers in China differs from those in America and this means that the company must always be sensitive to these to ensure that all clients in the region are satisfied. Government laws and legislations also differ and this is as well as a challenge. Countries have different currencies and experience economic downturns something that may affects its profitability in some of its branches. Code of ethics Organizations must be governed by codes of ethics in their practice or service delivery. Walmart codes of ethics are hinged on integrity in its workplace, market place and community. The company committed to ensuring that it adheres to fairness, honest and adheres to legal principles at workplace. The company ethics are also manifest through its three basic beliefs including respect for the individual, service for the customer and always striving for excellence (Walmart, 2014). The company that operates in foreign countries such as Walmart is required to always adhere to these codes of conducts because of various reasons. One of them is that it helps in shaping the image of the company and making it appear good in the public limelight. Second is that it allows people to associate with the company because of the positive perception of the company, its activities and the products it renders. Codes of conducts also help the company to have a vision and to operate within certain limits making it to avoid indulging in illegal business that contravene the set rules and standards of that foreign country. Social programs Walmart Foundation has been in the forefront in supporting community and those in need in society. It has collaborated with many organizations with whom they share vision to support them through grants. One example of social program that Walmart has participated is the Seattle, wash where they supported by contributing $184,000 for hunger related programming (Walmart, 2014). The funds aimed at providing meals to over 4000 school aged kids that did not mange to afford food. Indicators to monitor to guide investment and actions in the future Some of the indicators to monitor include the revenue, the profits earned, the growth level in terms of number of new stores, the performance of share index, the economic growth, the number of employees, the level of productivity among many others. In conclusion, Walmart has continued to perform exemplary because of many reasons such as low prices and accessibility. Its market systems have critical role in its growth. It has as well understood its stakeholders and this positive relationship has made it record better results. References Fishman, C. (2006).The Wal-Mart Effect and a Decent Society: Who Knew Shopping Was So Important? Academy of Management Perspectives, 20(3):6-25. Hausman, J., & Leibtag, E. (2007). Consumer benefits from increased competition in shopping outlets: Measuring the effect of Wal-Mart. Journal of Applied Econometrics, 22( 7): 1157-1177. PPP in infrastructure Resource Center. (2014). Key Features of Common Law or Civil Law Systems. Retrieved from: http://ppp.worldbank.org/public-private-partnership/legislation- regulation/framework-assessment/legal-systems/common-vs-civil-law#sumary Walmart. (2014). Walmart statement of ethics. Retrieved from: http://ethics.walmartstores.com/ Walmart. (2014). Walmart Provides Disaster Relief for Communities Affected by Washington Wildfires. Retrieved from: http://news.walmart.com/news-archive/2014/08/12/walmart- provides-disaster-relief-for-communities-affected-by-washington-wildfires Wexler, L. (2011). Wal-mart matters. Wake Forest Law Review, 46(11): 95-121. Read More

 

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