Customer Reviews

The Bully of Bentonville

5 star:		(2)
4 star:		(2)
3 star:		(3)
2 star:		(0)
1 star:		(0)

 

 

Most of the Amazon reviews written of this book so far are irrelevant. In truth, Bianco mostly doesn't exhibit bias in his work. He points out that Wal-Mart is anti-union not because he is pro-union, but because Wal-Mart is anti-union. And I think his argument for the idea that that actually weakens Wal-Mart is a good one. But I don't necessarily agree with it, and it's not necessary to agree with his thoughts and conclusions for this to be a good book. Bianco is not an Ann Coulter or a Michael Moore, and this is not like one of those kinds of books which is an unabashed attack on a target. As other reviewers have said (and then ignore), he actually points out a lot that's good about Wal-Mart as well as the bad. Yeah, a lot of poor people have benefited from those low prices. It's just that they're the ones most hurt by the low wages and benefits as well.

But put all that aside. The reason to read this book is that it is one of the most concise histories of Wal-Mart in a book. It uncovered a fascinating history of Wal-Mart and its founder, Sam Walton, that otherwise I wouldn't have known. Others might say that you need to read Sam Walton's book because who would know Wal-Mart better? But the truth is that the most unbiased history comes from outsiders, and heck, Sam Walton does come off pretty good in this book. It's certainly not a personal attack, and Bianco is less critical of Walton and his choices than I personally am.

Overall, the book is well-written and informative, but the problem is really that he doesn't explore his themes deeply enough. I was left wanting more about the connection between a Wal-Mart and the depression of the local economy, and I really wanted a further exploration of the employee pay vs. profitability comparison that he made between Costco and Sam's. In a nutshell, that's what I wanted from the whole book. That's why it's 4 out of 5.

"The Bully of Bentonville" tells how Wal-Mart has driven down retail wages (an estimated $4-7 billion according to a study done at Berkeley) throughout the U.S., creating 50-70% annual turnover (the latter in '99, the former about double Costo's rate) in the process. (Machiavellian minds might suggest that high turnover is desirable because it reduces those eligible for higher wage levels or to participate in union representation elections.) Bianco's other major point is that Wal-Mart's pricing policies have forced suppliers to move thousands of jobs overseas. In my opinion, however, Wal-Mart could plead "Not Guilty - by reason of competitive pressure" - even Wal-Mart DOES NOT have the power to succeed by providing what Americans do not want! Studies also have concluded that Wal-Mart saves American consumers up to $120 billion/year - clearly that is what consumers want and makes Wal-Mart successful.

Bianco reports that the typical Wal-Mart "associate" (sounds SO MUCH better than "employee" - who do they think they are kidding) was paid $9.68/hour ($17,600/year) in 2005, vs. $12.28 for "average" retail employees. Further, only 44% enrolled in Wal-Mart's medical plan - presumably because they can't afford it. (Bianco is clearly biased throughout the book - for example, what about those who don't need work-provided healthcare because they are already covered by a spouse's job or Medicare? Seniors are a major recruiting pool for Wal-Mart. On the other hand, the 6 month waiting period for full-time and 24-months for part-time employees IS a major impediment, especially given Wal-Mart's turnover.) Bianco also adds that 46% of Wal-Mart employees' children are either uninsured or on Medicaid, that it faced 40 class-action suits in '05 for forcing employees to work extra hours without pay, and shut down the only store that voted to go union. On the other hand, Bianco fails to ask "Why does Wal-Mart receive up to eighty applications/opening at new stores," or "Why are G.M., Ford, Delta Airlines, United Airlines etc. in so much trouble today?" Is Bianco suggesting that Wal-Mart not utilize people who are so desperate for work that $9.68 sounds good, even with meager benefits? Has he forgotten that arrogant unions have run many corporations into the ground? (NO, I do not defend trying to coerce people into working "off the clock," locking workers inside at night, or knowingly hiring illegals as cleaning crews!) The real villain in all this is America's political leaders who, for whatever reason, continue to claim that losing even high-paying, intellectually-demanding jobs to Asia is a good thing - and don't do anything about it! (What could they do? Mandate an expansion of "local content" laws that have preserved thousands of U.S. auto manufacturing jobs.)

Pressuring suppliers is a Wal-Mart strength, one of its competitive advantages. Left to themselves, suppliers, often in implicit collusion with workers, are wont to grow increasingly fat, and then 'make up for it' by raising prices. Bianco correctly reports Wal-Mart's "Plus One" policy (suppliers must either improve quality or reduce price on every item, every year) that counteracts this, but fails to recognize the positive incentive thereby provided. Ruthlessly adhering to this policy has led to some mistakes - eg. forcing Rubbermaid and Vlassic into undeserved bankruptcy - however, it has also created enormous pressure to innovate where formerly there was little or none. Bianco, however, is correct in concluding that it can (and likely increasingly is) overdone - eg. forcing Chinese factories to repeatedly close and move further inland in search of lower wage levels.

Wal-Mart suspended purchases from 1,200 overseas contractors for at least 90 days in '04 because of worker abuses, and over 100 others were terminated, primarily for child-labor violations - and this was despite prior inspection announcement 90% of the time! Did Wal-Mart do this out of altruism - probably not - more likely it was to avoid public relations problems. Regardless, avoiding these abuses requires that other nations' build their own economies and worker protections, as well as the U.S. taking back many of these jobs. Regardless, Bianco also "credits" Wal-Mart with now appealing to environmentalists by pledging to improve truck fuel efficiency 25% (not likely), reduce solid waste within its stores 25%, and energy usage 25% in new stores - realizing that this is part of a new P.R. blitz in response to negative publicity.

Near the end of "The Bully of Bentonville" Bianco tries to show another possible path - happier employees creating happier customers, etc. If only it were so simple - formerly high-paying American Airlines, Delta, Ford, and G.M. would be drowning in money! Reality is that significant, sustainable competitive advantages are what allow business to pay employees well; and those businesses that focus on efficiency cannot even do so then. Thus, his example of large independent grocery store that successfully focuses on entertainment - while NOT YET UNDER COMPETITIVE ATTACK BY WAL-MART - proves nothing! Nor does referencing Costco and its much better-paid employees - Costco appeals to a more affluent market; the "bad news" for Costco lovers is that Wal-Mart is slowly working its way up to more stylish clothing, and soon the two will be competing head-to-head! (Remember Toyota - it used to make only tiny cars - G.M. didn't care; now its Lexus luxury cars, SUVS, and titanic pickups as well, and G.M. is on the rocks!)

Clearly Wal-Mart has stumbled in route to becoming the nation's largest retailer. However, it didn't get there by stumbling all the way - important innovations in distribution center operations, motivating suppliers, use of bar-codes, computer and satellite communications system, and staffing levels have been major contributions. In the '80's I used to occupy time while accompanying my wife shopping by performing random observations of worker productivity - the results were terrible, and we all paid the price. Thanks to Wal-Mart, those days are no more. Further, critics need to also look at the origin of products sold in eg. much higher-cost department stores - they too heavily use China et al as their supply chain. Wal-Mart is only a symptom, NOT the problem.

It's easy to pick out Wal-Mart as the bad guy. As the top-positioned retailer in the U.S. their sins stand out easily within the public spotlight. Understanding the exact impact of Wal-Mart and separating savvy business decisions from irreprehensible ethical missteps remains a difficult process. Is Wal-Mart evil or does it simply appear to be evil by the nature of its position?

While I have previously reviewed "The Wal-Mart Revolution", I found that the insight and perspective that "The Bully of Bentonville" offered paints and entirely different picture. "The Bully of Bentonville" is somewhat the antithesis of the The Wal-Mart Revolution as it focuses heavily on Wal-Mart's wrong-doings and strong arm tactics rather than highlighting the logic of their business model. It's difficult to read "The Bully of Bentonville" and not be repulsed.

Author Anthony Bianca provides an overview of Wal-Mart providing insight into the overall corporate culture and history that steers the company today. Rather than sticking to an outsiders view of Wal-Mart, Bianca ties in hard hitting facts about the major players within Wal-Mart and how their personal touch has affected the company. The book shows how the company has transitioned and where it has outright refused to change.

"The Bully of Bentonville" picks apart the centralized, almost militaristic structure of Wal-Mart and highlights how this structure prevents associates from stepping too far away from the fold. Bianca also documents stores that are trying to compete against Wal-Mart's stronghold on retail sales and the successes and failures of those efforts. He also takes time to show what happens to Wal-Mart's defectors and those that attempt to battle the regime.

Bianca writes in a very accessible format and manages to keep the reader entertained. It's not a book to pick up if you want a quick synopsis of Wal-Mart, but if you are looking for a more detailed account how the retailer operates and how it impacts retail in the U.S. it's a great read. "The Bully of Bentonville" didn't delve into the international side of Wal-Mart's business as heavily as it could (specifically how the stores operate within cultural limitations). Overall it's an excellent read and it provides a portrait that points out the problems with Wal-Mart's operation without outright bashing the company.

Wal-Mart is the largest company in the world. It brings in revenues in excess of $280 billion, employs almost one and half million American workers, and controls a large share of the business done by almost every U.S. consumer-product company. More than 138 million shoppers stroll through its 5,300 stores each week. With a company so powerful and so immense, it is easy to find much to complain about. And really, grumbling about Wal-Mart has become popular--chic even.

The Bully of Bentonville is one in an increasingly long line of books, documentaries and articles detailing "how the high cost of Wal-Mart's everyday low prices is hurting America." It is written by Anthony Bianco, a senior writer at BusinessWeek who in 2003 coauthored an acclaimed cover story dealing with Wal-Mart.

To be honest, there is much about Wal-Mart that can and should concern us. Among the statistics Bianco wants American to know are:

* The average Wal-Mart employee working full-time earns just $9.69 per hour, which adds up to less than $18,000 per year.
* Only 44 percent of Wal-Mart employees are enrolled in the company medical plan. Most who are not enrolled cite the high cost of insurance premiums as the reason they are unable to enjoy the medical benefits.
* 46 percent of the children of Wal-Mart employees are either uninsured or are on Medicaid.
* The company has faced multitudes of lawsuits alleging that it forces employees to work extra hours without pay. Wal-Mart's internal studies have reached similar conclusions, but the company has taken little or no action to correct this.
* Wal-Mart is a strongly anti-union company. When a store in Jonquiere, Quebec voted to join the United Food and Commercial Workers Union, the company simply shut down the store and fired all of the employees.
* Annual employee turnover is nearly 50 percent, meaning that Wal-Mart must hire almost 600,000 new employees every year.
* Wal-Mart alone accounted for over 13 percent of the U.S. trade deficit of $162 billion. Studies have concluded that over 80 percent of Wal-Mart's international suppliers are based in China where labor costs are very low. Wal-Mart is increasingly dealing with international suppliers for this very reason. This is done, of course, at the expense of domestic suppliers, and thus, domestic jobs.

Suffice it to say that Bianco sees Wal-Mart as a great danger to America. He is pro-union, Wal-Mart is anti-union. He appears to be strongly anti-Republican, while it seems that Wal-Mart is pro-Republican. He is clearly and unashamedly biased in writing this book. And from that perspective it is difficult, at times, to take him too seriously. Still, on the whole his attacks on Wal-Mart are measured and avoid falling into senseless rants (despite, at a few spots, using alarmist language and even comparing Sam Walton to the likes of Mao Zedong). He raises many interesting and important critiques of the company. He is more sympathetic with Sam Walton and the company he started, than his successors and the company Wal-Mart has become since Walton's death. While he portrays Walton as a shrewd and calculated businessman, he seems to give him the benefit of the doubt more than those who are now responsible for the company.

While Bianco is long on diagnosis, he is quite short on cure. He seems to feel that many of the most pronounced of Wal-Mart's problems would disappear if the company were just to allow its workers to unionize. And in many ways he is right, though such a move would also sound the death-knell for the company as the rising costs of employee wages would quickly eat up the thin margins and destroy Wal-Mart's very niche. After all, people shop at Wal-Mart not for the experience or the atmosphere, but for the low prices. Unionization would inevitably cut deeply into these margins. As a Christian I have great difficulty with unions, or at least unions that encourage employees to rebel against their employers. He seems to sympathize with and even advocate the type of rebellion that has happened in many stores across North America, where employees have turned their backs on their managers and have tried to unionize. Yet the Bible tells us that we are to respect and obey our employers. If they are not treating us properly, we cannot advocate this type of open rebellion.

Bianco often compares Wal-Mart to COSTCO, a company that is, in many ways, similar. Yet COSTCO does not deal with the skyrocketing employee turnover and pays its employees far better wages. The difference, he feels, is that COSTO takes care of its employees. In the long-run, this lowers company costs, even as wages increase, for the cost of training new employees cuts deeply into Wal-Mart's profits. While he does see some incremental improvements in the way Wal-Mart has run its business in the face of growing criticism, he cannot help but conclude that even Wal-Mart may be unable to survive in the world that it has helped create.

As I read the book, I began to wonder if Bianco is blaming Wal-Mart for something that is a product of American society more than the working of a single company. After all, America has become an increasingly consumer-driven nation. Americans (and most Westerners) want and demand stuff! We want it and we want it now. We want to fill our homes and our lives with gadgets and trinkets, the quantities of which would shock people of other nations and other generations. A few weeks ago I was at the local landfill site, emptying out another van-load of junk taken from my garage. I turned to the man beside me, who was also emptying a great load of trash into the bins and remarked that we truly are a wasteful society. We stood there, almost ashamed, looking at the vast mountains of junk - things we needed not too long ago, but now were tossing away.

And so I wonder, is Wal-Mart creating this consumerism, or is it doing little more than giving us what we demand? It seems to me that Wal-Mart caters perfectly to this Western mindset, giving us more for less. By reducing the costs of manufacturing, distribution and sales, they can give us items of moderate quality for a low price. A quick trip to the local store, and a look at the long lineups at the registers, will show us just how successful they have been in doing this. Wal-Mart's shame is, in many ways, our shame.

The Bully of Bentonville is an interesting book, even if it is not required reading. It is the type of book that may convince people to stop shopping at Wal-Mart, and I am not convinced that this would necessarily be a bad thing. There is something to be said for good old-fashioned service - something that rarely exists anymore. But like most people, I am rarely eager or willing to pay extra for it.

It is not often you find a book that looks at both sides of the coin for a given issue. Authors usually tend to take up one side of an argument and stick to it. In "The Bully of Bentonville" I expected it to mostly stick to how Wal-Mart has harmed the American economy more than it has hurt it and to focus in on the tactics they use to get things there way or no way at all.

Therefore, I was surprised when I began reading this book to find out that the author does point out a lot of problems and questionable activities within the Wal-Mart empire, but he also devotes a great deal of time to also outline some of the things Wal-Mart has done right in his opinion as well as cover some of their more innovative ideas.

Make no doubt about it, though, this book was written to shed light on some of the practices behind those "Everyday Low Prices". You will see how Wal-Mart treats their workers as a disposable resource, often forcing many of them to be on public assistance just to get by. You'll find out how Wal-Mart bullies around suppliers, often forcing good-paying American companies to have to move overseas just to meet the price that Wal-Mart will pay them. And you will also gain insight into how a company that some would say was run strict, but fair, under Sam Walton has become a bully that noone wants in their neighborhood anymore.

A well rounded book that gives the reader food for thought. Even if you are a regular Wal-Mart shopper this book could provide a lot of insight and make you finally realize that you could very well be "shopping yourself out of a job" and not even know it.

After reading this book I will never shop at Walmart again.
I recommend this book to everyone who shops there and works there.
It's a real eye opener...

It is easy, popular, and politically correct to criticize Wal-mart. Better yet, dump on the world's largest retailer, engaging in hyperbole. Catalog anecdotes from disgruntled former employees but never present the voice of a customer. Complain about how the retailer bullies vendors yet never explain why most vendors benefit from doing business in Bentonville. Sure, some vendors let Wal-mart push them into ridiculously low prices, below the vendor's costs, even bankrupting the vendor. But it takes a pretty poor firm to pursue this death spiral. A good vendor knows that some business is not worth having. It reminded me of what a misguided student once said when told that his business plan called for losing money on each and every sale. "We'll make it up on volume," he unwittingly replied. And for each vendor that goes bankrupt, one hundred thrive on doing business with Wal-mart and five more show up at Wal-mart's door.

Better yet, skip the process of really making the case that "Wal-mart's everyday low prices is hurting America." In fact, ignore evidence of how Wal-mart helps the poorest consumers and makes millionaires of those who stick out the long, difficult road to upper management. And, in the end, criticize Wal-mart for wanting an increase in the minimum wage to bring Wal-mart customers more income and to punish firms with wages even lower than Wal-mart's wages.

The startling facts of the history of the firm is that it excelled at mastering a basic value proposition, sticking to its basic principles, using information technology, leveraging customers interests over those of manufacturers, offering employment and productivity growth to the American economy and hundreds of billions of dollars in savings to American consumers, only to see this basic business model run into trouble in the last ten years. Saturating the market with cheap goods can only succeed for so long. There are only so many customers and even Wal-mart's "loyalists" (about 40% of Americans) aspire to something more, more value, better quality, more local products, less driving twenty miles to save $10.

And let's be clear, China is not taking American manufacturing jobs. China's manufacturing share of employment is the same as America's, and China has lost more manufacturing jobs in the last ten years than America has. China may be the new market for Wal-mart, with hundreds of millions of compliant employees and even more customers, but success in China would more likely represent Wal-mart's own death spiral into the oblivion of lower and lower prices. Bianco's book is illuminating yet not really revealing or ground breaking, and it is certainly not compelling. And he doesn't really offer a solution. Going green, going upscale, or going for better employee retention are expensive, risky options. Should Wal-mart unionize? Raise wages? Raise prices? Drive off loyal customers? That's a lose-lose proposition, even for a bully.