Interdependence between business and society
In the present scenario, business is the most dominant institution at national and international level. All businesses are carried out with the objective of earning the profit by serving the society. The activities of the business are performed with the help of resources of society like labor, raw material, natural resources and public finance (D., 2016). This report describes the relationship between business and society and its impacts on the overall performance of the business with the help of a well-known organization in of the U.S. retail sector named as “Walmart”.
Walmart is engaged in the business of providing consumer goods and services with the help of its retail outlets all over the world. This is the largest organization in terms of revenue and providing employment more than 2.3 million employees around the globe. It indicates that the company has a major contribution in providing job opportunities to the society. The organization is engaged with the business of providing consumer goods at reasonable prices which enables the society to get the things of their regular usage at low prices. This example can state that business and society are interdependent to each other. For getting success in the long run, a business has to develop itself as per the changing needs of society as in the case of Walmart (Sastry, 2011). The company started with the availability of a few products and at present, it is dealing with all mind of groceries, electronic items, sports goods, healthcare and skin care products, home furnishings and baby products. This indicates that business and organization are earning from the society and are working for the purpose of serving the society as well. The theory of General System can be used to describe this relationship which indicates that an organization is required to become the part of the society to sustain in long run. It is a true fact that society exactly needs the products and services which are produced and served by the businesses. As in the case of Walmart, the organization does not only gives the products and services but also provides employment and taxes without which, no economy and society can develop and flourish (Huang, Nijs, Hansen, & Anderson, 2009).
The stakeholders of Walmart can be divided into two categories named as market stakeholders and non-market stakeholders. The stakeholders influence the direction of the company as their profit is involved in the profitability of the organization. Thus there is a change in the direction of the organization impact the services provided to the society. Customers can be defined as the most important stakeholders of “Walmart”. Its customers are interested in low price products with acceptable quality. The organization is committed to working as per the same requirements. Other important stakeholders of Walmart are the people who make the investment in the shares of the company. The investors are intended to minimize the cost of operations to increase the profit which is directly related to the increase in dividend (Spitzeck & Hansen, 2010). Thus, Walmart is offering low wages to the workers which impacts the overall wage rate of the society. Employees and suppliers are also considered as the stakeholders of Walmart. Employees may impact the decision-making process of the organization which directly impacts the services provided to the society. The activities of suppliers impact the operations of the business as if there will be no availability of material at the time then it will impact the sale of the company. In such situation, the customer’s would also have to face the problem as they might have to pay some extra charges for the same products (Bonakele, Beaty, Rasool, & Kriek, 2014).
Case study of Walmart
Primary Stakeholders (Market Stakeholders)
The stockholders
These are the people who own shares of Walmart and are interested in the high rate of interest or return on the investments they have made. Thus, their involvement in the decision making process in compulsory.
Many of the top executives receive options of stock as the part of their salary thus to have an economic state in the profitability of the organization. Higher the stock value would result in getting higher compensation.
The employees are always concerned about their job security and salaries. The employees want Walmart to perform well so that there would be no any chances of losing their jobs (Byerly, 2013)
Every community that has a Walmart located in its area, are affected by the well-functioning of the company as the company is providing their day to day necessities at low cost and also offering jobs for the local unemployed persons and a chance to earn their livelihood.
Labour Unions
Walmart commits to provide best compensation and benefits plans to its labor force without the interference of Labour Unions. Thus, the offers and benefit provided by Walmart to its labor forces impact the decisions of the Labour Union also (Tota & Shehu, 2012).
Walmart works with the strategy of providing its services at international level thus it is continuously opening stores in most of the important countries of the world. The laws and legislation of each country must be followed by the Walmart in order to make close public relations with the consumers.
Politicians may or may not willing of opening the Walmart in their districts because of several reasons. On the other hand, politicians may also contribute to the campaigns of Walmart because of their personal interest. The willingness of politicians affects the well-functioning of Walmart up to great extent (Carter & Jayachandran, 2012).
Walmart aims to achieve three main goals under by the well-functioning of its CSR techniques. These are
- Use of 100 renewable energy in its supply
- Creation of zero wastage
- Selling the products which may help in the sustainability of the people and the environment.
Along with the concept of CSR, Walmart is also committed to complying with the concept of corporate citizenship which states that an organization is required to involve the social responsibility up to the extent where it can meet with ethical, legal and economic responsibilities established by the primary as well as secondary stakeholders. Following this concept, the goal of Walmart is to enable the society to improve their standard of living and involve quality of life with maintaining desired profitability for stakeholders. The organizations which are responsible in social, ethical, economic and environmental terms impact the society in a positive manner (Dadson, 2017).
Walmart has to face many ethical challenges in form of opposition from Labour Unions, Political Parties, consumer, and product safety, go green issue, compliance with Corporate Social Responsibility and Code of Conduct of the organization. One of the main important ethical issues is faced by the company is form local farmers as the company has decreased the prices of dairy products to increase the revenue. It is directly affecting the sales of the poor farmers. The organization works at the international level which creates the issue related to the compliance of different cultures, regions, religions etc. The company is doing well in all such areas by following ethics based processes and practices (Dahan & Doh, 2015).
Conclusion
This report concludes that an organization needs to fulfill the needs of society in social, ethical and legal terms to sustain in long run. The stakeholders of the business affect the business as well as the society up to a great extent. The performance of Walmart is good in the area of Social Corporate Responsibility and Corporate Citizenship. Although there are some ethical issues in the day to day working of the company these can be resolved by following the code of conduct or the organization.
References
Bonakele, T., Beaty, D., Rasool, F., & Kriek, D. (2014). South African Journal of Labour Relations, 38(2), 78-89.
Byerly, R. T. (2013). Business IN Society: The Social Contract Revisited. Journal of Organisational Transformation & Social Change, 10(1), 4-20.
Carter, K., & Jayachandran, S. (2012). Retrieved July 16, 2018, from Consumers and Sustainability at Walmart: A Student’s Perspective: https://scholarworks.uark.edu/cgi/viewcontent.cgi?article=1005&context=scmtwscp
D., J. P. (2016). Business and society: Creating shared value: In conversation with N. R. Narayana Murthy, Founder, Infosys. IIMB Management Review, 28(1), 43-51.
Dadson, W. K. (2017). Profit Maximization and Corporate Social Responsibility: The Case of Wal-Mart Stores and AXA Group. International Journal of Management and Commerce Innovations, 5(1), 697-707.
Dahan, N., & Doh, J. P. (2015). Journal of Business Ethics. Pivoting the Role of Government in the Business and Society Interface: A Stakeholder Perspective, 131(3), 665-680.
Huang, Q., Nijs, V., Hansen, K., & Anderson, E. T. (2009). Retrieved July 16, 2018, from Wal-Mart’s impact on supplier profits: https://pdfs.semanticscholar.org/f081/e04125070feb2411bce33311e8553a0b67cc.pdf
Sastry, T. (2011). Exploring the role of business in society. IIMB Management Review, 23(4), 246-256.
Spitzeck, H., & Hansen, E. G. (2010). Stakeholder Governance: How Stakeholders Influence Corporate Decision Making. International Journal of Business in Society, 10(4), 378-391.
Tota, I., & Shehu, H. (2012). The Dilemma of Business Ethics. Procedia Economics and Finance, 3, 555-559.
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