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Wal-Mart: The Face of Twenty-First-Century Capitalism Paperback – January 5, 2006
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From Publishers Weekly
Culled from an April 2004 conference on Wal-Mart at the University of California, Santa Barbara, these essays can be redundant, but they offer stimulating perspectives on the world's largest corporation. The rise of Wal-Mart, declares editor Lichtenstein (Walter Reuther), has been abetted by a "southernized, deunionized, post–New Deal America," a business culture in which labor costs can be squeezed, even as a company promotes loyalty via "faux classlessness." Several chapters place these phenomena in context: describing how Wal-Mart represents both an extension of and a quantum leap from previous retail giants and how it places unprecedented price pressure on its suppliers. Wal-Mart saves consumers money, the contributors argue, but only by externalizing many social and economic costs, including benefits for its workers. One provocative chapter, based on anonymous worker sources, describes a workplace atmosphere of relentless stress and understaffing. Some interesting tidbits: Wal-Mart hit a wall trying to expand in Mexico and never gained traction in Germany, in both cases because of the countries' different socioeconomic structures. A final chapter, by a union organizer, proposes a "Wal-Mart Workers Association" for this infamously antiunion company. The association would gain 13,000 members if only 1% of the Wal-Mart workforce joined. (Jan.)
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved. --This text refers to the Hardcover edition.
*Starred Review* In April 2004, Lichtenstein, professor of history at the University of California, Santa Barbara, did something unusual: he invited his academic colleagues to attend a seminar on the largest corporation in America--Wal-Mart. These resulting 12 essays are the culmination of that meeting. The largest employer outside the U.S. government is examined here for the first time by a consortium of scholars rather than through the lens of the typical Wall Street business press. Bethany E. Moreton explores the origins of the company in tiny Bentonville, Arkansas, and describes the behemoth of mass merchandising as a paradox of small-town values and huge corporate efficiency. Edna Bonacich and Khaleelah Hardie investigate Wal-Mart's effect on the logistics of ports and containerized shipping and critique the company for lowering labor standards, driving mom-and-pop retailers out of business, and dictating costs and packaging standards to its suppliers. Brad Seligman looks at the continuing class-action suit that alleges a culture of discrimination against women. With numerous charts and graphs that keep the data flowing, this assemblage thoroughly dissects the Wal-Mart global high-tech phenomenon through overarching historical, cultural, and economic perspectives. Lichtenstein and friends do an incredible job of balancing the wonders and horrors of the force that is Wal-Mart. David Siegfried
Copyright © American Library Association. All rights reserved --This text refers to the Hardcover edition.
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Top Customer Reviews
Let me tell you what I learned from the book. Wal-Mart bases it's 'floor strategy' on a divide and conquer scheme (keep workers divided, very powerful management), where the objective is low margins with high volume. To maximize profits, the biggest item on the Wal Mart agenda has always been controlling 'fixed' labor costs (theoretically necessary with small margins). Corporate obsesses about labor costs. The culture exploits workers 'off the clock' by under staffing and assigning more work than a single person can accomplish. During slow times, workers are sent home and not paid, despite being scheduled to work. Internal rules (borderline legal and also unfair) allow management to arbitrarily assign 'violations' to employees who cannot accomplish the work of three people, and they do. With documentation. This means when Wal-Mart fires a worker, no unemployment, because the firing was 'justified'. Wal-Mart also wants no benefits paid for with corporate dollars, and exploits state run insurance and food stamp programs wherever possible.
Men working at Wal Mart make more than women, and women are preferred for most jobs because they can be paid less with higher turnover. (Entire chapter on a class action lawsuit complete with statistical evidence.)
Wal-Mart aggressively avoids/busts unions in the USA. In Germany, China, the UK, Argentina --- most everywhere else --- Wal Marts are unionized.
In this current economy, the culture of Wal Mart is a hypocritical 'family', where shame is used to control workers, most of whom have little hope of advancement and become gradually disenchanted. Managers enjoy treating unskilled workers as replaceable cogs. This leads to a high turnover (allowing Wal Mart to keep wages low). It is deliberate.
Overall, an enlightening book.
Sam Walton was a natural salesman, passionate about building his retail business. When founded Wal-Mart in 1962, he did not entertain any dream of becoming the wealthiest man in America or creating the world's largest company. Instead, he wanted to bring big-city discounting to his corner of the rural American South, which would cut about 20% off the prices in local stores. But he wanted the discounts to be offered every day, rather than by one-time sales promotions of selected items. He chose to expand locally, opening stores in his native Arkansas and spreading slowly into Oklahoma, Missouri, and Louisiana. Thus, as the book points out, Wal-Mart's culture reflects where it was born, where its salaries were viewed as fair and people could live reasonably well on them and in a context without strong unions or organized workers.
Walton's strategy was simple: to make up for his low profit margins, he would have to sell in higher volumes of sales in a large number of stores. In addition, his company developed a relentless drive to lower costs by going directly to manufacturers and constantly increasing worker productivity, which often translated into low salaries for a high-turnover work force. He also paid close attention to the competition as well as trained Wal-Mart workers to treat customers with courtesy and consideration of their needs. It was a phenomenal success. In 1985, with just under 1,000 stores, he was named by Forbes Magazine as the richest man in America. By 1991, Wal-Mart was recognized as America's largest retailer as it began to expand overseas. It was repeatedly hailed as the most admired company in America.
In the aftermath of Walton's death, the expansion of the company accelerated with a combination of new technologies (the "logistics revolution") and the globalization of its operations. By 2004, Wal-Mart was number one on the Fortune 500 list, as both the world's largest corporation and the largest non-governmental employer.
From the mid-1990s, Wal-Mart became a pioneer in technology-driven productivity enhancement. Elements included: 1) point-of-sale data collection, enabling managers to track inventory and demand in real time; 2) data mining in order to exploit trends to boost sales via novel merchandising techniques, e.g. placing diapers and six packs of beer near store entryways on Fridays, to exploit a spike in demand for both items at the end of the workweek; 3) the establishment of a just-in-time delivery system, which suppliers and distributors were obligated to participate in and obey, in effect joining Wal-Mart's data network. According to a widely cited estimate by McKinsey and Co., Wal-Mart alone was responsible for 25% of the "gain in productivity" of the U.S. economy from 1995 to 1999! Many of these efficiency gains, the company claimed, were passed directly on to consumers in the form of lower prices. Wal-Mart, the company said, saved U.S. consumers over $100 billion per year.
Combined with its sheer size (Wal-Mart accounts for approximately 10% of all retail sales in the U.S.!) these technological capabilities enabled Wal-Mart to exert an unprecedented degree of control not only over its business partners (independent manufacturers, suppliers, and distributors), but over its employees as well.
On the one hand, this represents a fundamental shift of market power to the retailer, which traditionally had served as outlets for manufacturers. In practical terms, this meant that Wal-Mart could force its partners to set prices at whatever levels that the retailer deemed desirable, which translated into direct control of both their marketing through Wal-Mart stores and in many cases, even the manufacturers' brand. Given the imperative of cost containment, this tends to cut their profit margins to the bone. In the case of Vlasic pickles, for example, some have argued that Wal-Mart's insistence that the company lower prices led to its bankruptcy as well as derailed its brand strategy for high quality at slightly higher prices. One the other hand, managers in Wal-Mart headquarters are able track the productivity of workers in its individual stores, allowing them to push for "improvements", allegedly as unpaid over-time and refusal to take breaks, which many critics charged were degrading and often illegal.
Wal-Mart's size and reach attracted many critics, who condemn its practices and began to mount protest campaigns against the company. Their tactics include grassroots campaigns to block the establishment of new Wal-Mart Supercenters, targeted consumer boycotts, a barrage of media attacks (in films and television, on the internet, and in print), and efforts to unionize Wal-Mart associates. In addition, the company became the object of a growing number of lawsuits (on average two per hour, 365 days per year!) from both current and former employees and customers, including many class-action suits.
Wal-Mart's critics argue passionately that the company had to change in a variety of ways. First, they believe, Wal-Mart had to somehow lessen its impact on the communities that it entered. As it stood, they charge, Wal-Mart not only destroys local "mom and pop" stores that could not compete on price, which sometimes turn traditional downtown shopping areas from vital social centers into ghost towns, but also generate such second-hand effects of increased traffic, reduced demand for other local businesses such as newspapers, additional infrastructure costs that create new tax burdens. Second, Wal-Mart's labor practices, which they believe are brutal and unfair, have to change. The company, they demand, should allow associates to unionize, offer better wages and health insurance benefits, and treat them more humanely. Moreover, critics claim, Wal-Mart's labor practices were dragging down those of its unionized competitors, who were asking employees to "bargain away" their higher salaries, pension plans, and other benefits in order for the companies to survive. Third, they argue, Wal-Mart has to provide a more equitable management of its supply chain, from "sweatshop" workers in China to the company's truckers as well as its manufacturing partners. This often means that the company should pay more for the goods and services it buys.
This criticism amounts to nothing less than a fundamental repudiation of Wal-Mart's business model, which in the words of one critic in this book, "can flourish only by externalizing many of its most important social and economic costs, which are displaced onto a relentlessly squeezed supply chain, an underpaid retail work force, and those many thousand communities...which have been forced to absorb so many intangible expenses..." Even worse, evidence suggests that the criticism resonated with a growing portion of the public. In a 2004 confidential McKinsey & Co., it was reported, between 2 and 8% of the public had ceased to shop at Wal-Mart due to the "negative press" about the company. Most alarming to Wal-Mart executives, however, was the disapproval of more affluent, middle class consumers in urban areas, that is, the group that the company had identified as the market that it must next enter if its growth rates were to improve or even be sustained.
This is about where the book stops, which is unfortunate given the things that have happened recently. As media campaigns against the company grew in 2004, Wal-Mart President and CEO Lee Scott decided to mount a counter-offensive. In its aim respond directly to the claims of critics, this represented a new departure for the company. After hiring the public relations firm Edelman, the company created a rapid-response "war room" in summer, 2005. Among the tasks of the group was the cultivation of a more positive image of the company - as environmentally aware and more worker friendly - in the minds of the "swing voters" who had not yet decided against shopping at Wal-Mart. It wants to be viewed as a good guy again, which in my opinion is a dubious proposition.
The next phase of the story is whether or not this new PR will work. The company certainly got lots of praise for its Katrina relief efforts, and deservedly so if you ask me. But the opposition to the company will persist. My advice is: hold onto your seats because it's gonna be a heckuva ride. For example, just after Scott announced some progressive measures, such as a new health care plan and some environmental initiatives, foes of the company released a leaked internal memo (on strategies to keep employees off the company health care plans) with perfect political timing: the vilification was intense, focusing on how the leopard may not really have changed its spots. These opposition groups are media-savvy and driven - and they will not stop. I have interviewed some of them, and to say the least, they are passionate about their mission, which is not just to block Wal-Mart but on how to shape the direction in which their communities will develop. Instead of asking "how many jobs", they are looking at what kinds of jobs are being created. In my view, this represents a fundamentally new kind of social movement and Wal-Mart had better take heed.
Recommended as the best book I have yet read on the company. While it is predominantly historical, it explains many useful things about the company that are unavailable elsewhere. Also, there are wonderful histories about the retail trade.
Most Recent Customer Reviews
One sided books are fine if not disguised. This book has an agenda, anti Wal-Mart and pro union.Read more