Cody Eddington
Dr. Kenneth Plowman
March 4, 2012
Case Analysis: The Wal-Mart PR Campaign
I. Background
Wal-Mart Stores, Inc. was first established and founded by Sam Walton in Rogers, Arkansas in
1962. The rapid growth of the retail store was record setting and explosive. Within a span of seventeen
years in operation, Wal-Mart had already topped annual sales at one billion US dollars (Ivythesis, 2007).
With this momentous development and growth in such a short time frame, in 1991 the retail store
officially operated at the global level and established its first international store in Mexico City. Currently
each week, over 140 million shoppers visit Wal-Mart stores to take advantage of the company's everyday
low prices (Wal-Mart, 2004a).
According to the New York Stock Exchange in 2005, Wal-Mart Stores operate about 1,478
Discount Stores, 1,471 Supercenters, 538 Sam’s Club and 64 Neighborhood Markets within the United
States as of January 31, 2004. These astounding figures account for 8% of total retail sales in America.
Internationally, adding to its already 1,355 store locations in nine other countries, Wal-Mart will shortly
be opening the company’s 5000th store (Hemphill, 11). Combined with its international market, WalMart totals over 1.3 million associates worldwide and these employees are distributed throughout the
United States, Canada, Brazil, Mexico, Argentina, Puerto Rico, China, Germany, Korea and in the United
Kingdom (Govindarajan & Gupta, 23).
The business is divided into three main parts consisting of Wal-Mart retail stores or Superstores,
Sam’s Club and International stores. The Wal-Mart stores are further subdivided into Discount Stores,
Supercenters and Neighborhood Markets. Sam’s Club on the other hand, is a business segment that
consists of club memberships to warehouse stores. Wal-Mart’s international division is divided into
several industries including retail stores, restaurants, discount stores, Sam’s Clubs and Supercenters
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which are expanding daily (Ivythesis, 2007). The company is also continually looking to extend its reach
into new markets and other segments of business year to year. Amongst all the impressive expansion and
continual growth, Wal-Mart has also dealt with its fair share of difficult circumstances and unsuccessful
attempts to smooth over the company’s rough edges.
In 2003 and 2004, Wal-Mart was named by Fortune as the “most admired company in America”.
In the arena of public opinion, Wal-Mart has garnered recent awards and accolades attesting to its
“laudable corporate citizenship” (Wal-Mart, 2004a). However, these and other accolades have not quieted
the voice of countless critics, including organized labor groups, feminists organizations, human rights
activists, environmentalists, local businesses, and anti-sprawl activists, all of whom revile the retail giant
for its business practices, resulting in a growing negative consumer perception of Wal-Mart's corporate
citizenship. Wal-Mart has instituted a comprehensive nonmarket strategy to counter this criticism,
employing a proactive combination of social, political, and legal strategies to manage a contentious
environment that could threaten its future growth and financial success (Hemphill, 11).
II. Critique of Wal-Mart’s Public Relations Campaign
Based on the analysis of the selected company, this segment will review key sections of the
Matrix Approach to Public Relations and how it was applied to Wal-Mart’s campaign strategies. The
company’s core factors affecting its growth and progress will also be considered.
With this type of strategy, Wal-Mart tried to improve its public image by means of modifying or
enhancing its public relations strategies from four questions presented throughout the Matrix Approach to
Public Relations. Additional suggestions for improvement will also be given.
A. Goals & Objectives
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The company possesses a strong brand name in the retail industry that represents both value and
quality. This strength emphasizes Wal-Mart’s capability to attract new customers and maintain customer
loyalty (Ivythesis, 2007). Preserving that perspective was their number one goal with their PR campaign
and overall to settle the growing negative consumer perception of Wal-Mart.
“Reputation,” best defined is “a perceptual representation of a company's past actions and future
prospects that describe the firm's overall appeal to all its key constituents when compared to other leading
rivals” (Fombrun, 1996). Corporate reputation is a combination of both reality and perception. Using
statistical regression models measuring the interaction effects of longitudinal financial and reputational
data, recently found correlative evidence supporting the proposition that superior-performing firms have a
greater chance of sustaining their profitability over time if they also possess relatively good reputations
(Roberts and Dowling, 2002). This main objective was the core purpose for Wal-Mart’s campaign.
Preserving the company’s goals established since the beginning was also a focus of the campaign.
Since its founding in 1962, Wal-Mart has embraced the three basic principles enunciated by its founder,
Sam Walton: (1) provide value and service to customers by offering quality merchandise at low prices
every day; (2) corporate dedication to a partnership between the company's associates (employees),
ownership, management, and vendors; and (3) a commitment by Wal-Mart to the United States and the
communities in which its stores and distribution centers are located (Hemphill, 11). The second and third
goals are obviously more focused on when dealing the issue of settling the growing negative consumer
perception of the company by the key publics considered below.
B. Publics and Messages
The next question within the Matrix Approach to Public Relations that applies to Wal-Mart’s
campaign is which key publics were involved in their efforts to reach and influence this negative opinion.
The objective of assuring consumers of Wal-Mart’s corporate integrity and image would have to
be directed at making all of its potential publics believe the company cares about its employees,
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community and international involvement. This would also include the organized labor groups, feminist
organizations, human rights activists, environmentalists, local businesses, and anti-sprawl activists
mentioned previously.
In essence, there are three key publics considered: the internal public including: employees,
mangers, corporate workers, vendors and investors. The external publics consisting of: consumers, local
businesses, political and social groups as well as the international business entities consisting of the 9
other countries in which Wal-Mart currently operates.
C. Strategies and Tactics
Bob L. Martin, president of Wal-Mart’s international segment, stated that one of the major
strategies of the company has been the promotion of a global brand name. This insignia has helped in
promoting the Wal-Mart trademark: low costs, best value and greatest selection of quality merchandise as
well as highest standards of customer service (Shah & Phipps, 2002). The company has since then
implemented other corporate strategies that are patterned after this main strategic structure. In order to
effectively analyze Wal-Mart’s corporate strategies, the discussion is divided based on the different
aspects affected by the company’s efforts (Ivythesis, 2007).
Within the corporate strategy of the company, Wal-Mart sees to it that its management and
operations are supported by its three main values, which were previously mentioned and implemented by
the founder Sam Walton. As the management of the company served as its main support, the refocus and
integration of these values in Wal-Mart’s managerial approach has allowed it to overcome constant
criticism in times of crisis. In essence, the dedication of the company’s management to its community, its
production, delivery of services and overall operation enables it to strategically operate effectively
countering the public attacks and criticism.
One of the most serious complaints currently upsetting the majority of Wal-Mart’s publics is the
subject of compensation. Wal-Mart employs some 1.5 million men and women worldwide, with 1.2
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million of these employees in the U.S. alone. While providing wages, benefits, and training to many
people with limited education and marketable skills, Wal-Mart, concludes in Business Week that this
problem, “is widely blamed for the sorry state of retail wages in America” (Bianco & Zellner, 2003).
According to documents filed in a lawsuit pending against the company, Wal-Mart “associates” earned,
on average, $8.23 per hour in 2001, or $13,861 a year. At the time of the court filing, the U.S. federal
poverty line for a family of three was $14,630. While Wal-Mart employees begin at the same salary level
as unionized employees in the retail industry, they, on average, make 25% less than unionized retail
workers after 2 years on the job (Hemphill, 12).
Wal-Mart has countered this criticism with an effective benefits program. Competitive wages,
profit sharing, 401 (k) plans, stock ownership/stock loan program, paid vacation and holidays, discount
cards, medical and dental coverage, life insurance, accidental death and dismemberment coverage, shortand long-term disability insurance, free confidential and professional counseling and assistance,
scholarship bonuses, child-care discounts are all added to the current benefits list Wal-Mart offered to full
time employees. Based on company policy, to qualify as a full-time employee, however, one must work a
minimum of 28 h per week; approximately 70% of Wal-Mart workers meet this minimum (Wal-Mart,
2004c).
According to surveys conducted by Wal-Mart, the company's 44% annual turnover among
employees in the first year is attributable to a lack of recognition and inadequate pay, which could be a
problem in the immediate future: from 2004 to 2008, the company plans to add 800,000 new positions,
including 47,000 managers (Wal-Mart, 2004d). Yet, when it comes to diversity and opportunity in
employment, Wal-Mart Stores is the leading employer of minorities in the U.S.
Another serious complaint Wal-Mart has encountered deals with poor policies and procedures or
a lack thereof. The company has made significant efforts in the implementation of work practices and
policies that have been directed towards the establishment of a more effective impartial and complete
environment. To fulfill this, Wal-Mart has instituted programs for feedback and opinions of the
employees with regards to their assigned work responsibilities and compensation, the company’s existing
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regulations as well as values, beliefs and work principles (Ivythesis, 2007). The management of the
people in the company also has refocused its efforts on the safety and protection of the staff.
In relativity, Wal-Mart has also provided extensive training and orientation programs that would
enhance individual leadership skills to be used in other work environments outside of Wal-Mart as well as
important work issues pertaining to diversity, prevention of sexual harassment and discrimination, and
equal employment opportunities (Ivythesis, 2007). These legal issues have been a focus due to the sexual
discrimination and employment of illegal aliens that have plagued Wal-Mart executives. The Equal
Employment Opportunity Commission has reported that it has sued Wal-Mart 48 times since 1990,
mostly for discriminatory hiring practices, acquiring $8.6 million for the aggrieved and changes in policy
and training from Wal-Mart management (Joyce, 2004).
The company has also implemented better training programs in the form of distance training,
classroom courses, corporate internet sites, computer-based education, mentor programs, skill
assessments, satellite broadcasts as well as job announcements. These training instruments have been
valuable particularly in enhancing the skills of the company’s women employees as well as those who
belong to certain minority groups. In addition to the tools used, the efficacy of this strategy within WalMart has been supported by the company’s standard to respect all individuals. The success of this
corporate strategy in the company has in fact been recognized, enabling the company to be one of the top
100 companies top employment training programs for two consecutive years (Wal-Mart, 2004a).
Due to criticism of local communities simply stating that Wal-Mart moves in simply to make
money and suck the local economy dry, a huge effort of the company’s corporate strategy has been to
participate in various community-based activities. For this, Wal-Mart has implemented a number of
college scholarships for would-be high school graduates as well as provider of manpower and financial
assistance for fund-raising organizations, churches and schools. The company also actively participates in
community efforts that are involved with environmental protection and preservation (Ivythesis, 2007).
Wal-Mart Stores Inc. believes each Wal-Mart store, Sam's Club, and distribution center has a
responsibility to contribute to the well being of the local community. “Our more than 3400 locations [in
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the U.S.] contributed more than $150 million to support communities and local nonprofit organizations.
Customers raised an additional $75 million with the help of our stores and clubs” (Wal-Mart, 2004e). By
coordinating with relevant organizations, the company has been able to educate the public on various
environmental topics such as recycling and recent “going green” movements.
There has also been criticism made in regards to customer service related issues. According to
Wal-Mart, the company greatly values the satisfaction of the customers’ needs. They have recently
implemented effective strategies that are centered on enhancing its customer service. Using the most
current technology is one of the methods used by Wal-Mart to extend its services even further for its
consumers (Ivythesis, 2007). Internet “e-tailing” and involvement on Facebook are both fairly recent
developments of Wal-Mart to make the company seem more transparent and outwardly involved. The
internet possesses incredible factors that they have found to be extremely crucial to overall public
opinion.
In the past and future, profit gain and maintenance for Wal-Mart have never been achieved easily.
Several concerns have been taken into account in order to have retailing online become successful for
Wal-Mart. Examples of these problems included delivery costs, merchandise returns and data security.
Since 1997, Wal-Mart has been selling its products through the internet. The company intends to continue
investing on this development as well as learn more on online retailing. In 2000, the company launched
its new and improved website www.walmart.com which featured travel services, a pharmacy, and
photography center (Shah & Phipps, 2002). Since then, Wal-Mart has spent millions of dollars every year
updating and improving their influence online.
The company has revamped and made more effective their customer services by means of its
distribution and supply chain management strategies. The distribution operations of the company are
highly automated. Typically, its discount store carries more than 70, 000 standard items in stock.
Supercenters on the other hand, carry more than 20, 000 additional grocery items that are mostly
perishable, hence, must be ordered frequently (Wal-Mart Annual Report, 2004). In order to establish
coordination, associates make use of hand-held computers that are linked by radio-frequency network to
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area stores. When placing orders, every store wires merchandise requests to warehouses that can either be
shipped immediately or reordered (Ivythesis, 2007). All of these efforts with a goal in mind of making it
less likely for mostly produce and dairy products to sit on shelves due to over ordering and eventually
have to be discarded or wasted.
More than 200 vendors are connected to the company’s computer systems, making deliveries
efficient and fast (Shah & Phipps, 2002). About a hundred major manufacturers are servicing Wal-Mart,
including Colgate-Palmolive, Procter & Gamble and Gallo Winery. In order to efficiently provide
services for Wal-Mart, these manufacturers have set up offices near Wal-Mart’s corporate headquarters at
Bentonville, Arkansas (Gosman & Kelly, 2002). In essence, this enables both manufacturers and WalMart to better meet the needs of their consumers. This particular strategy confirms the ability of supply
chain systems in enhancing the just-in-time (JIT) ability of the users (Davis, 1993).
Involving better customer services, certain protocols such as the “Satisfaction Guaranteed” policy
were also implemented to show how Wal-Mart would strive to provide better services. This policy
theoretically states that every associate will do everything that they can possibly can to satisfy the needs
of the customers. Products that need to be repaired, exchanged or refunded are entertained by the store
with “a smile and a thank you” (Newsome, 20). This policy gives importance to Wal-Mart’s clients that
make them come back again and again. This particular behavior is derived from the common observation
that where people are given more respect and feel a sense of importance, they are generally more
appreciative, understanding and loyal (Ivythesis, 2007).
While the company may have the tools, strategies and technologies necessary to address its
ongoing negative public opinion, the significant size of Wal-Mart’s operations leave the company weak in
many aspects and therefore always subject to major criticism nationally and internationally.
III. Conclusion
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As stated in the beginning of this case analysis, Wal-Mart is well understood to be a world-wide
“mega retailer” whose position in the industry is firmly secure. Nonetheless, there will always be internal
and external factors that will affect it and may result to business functionality and overall public
perception. By optimizing all of the company’s “available resources and considering its public
environment”, it is more than possible for the retailer to overcome its present as well as future crisis.
From this case analysis, it has been recognized that the “success or failure” of Wal-Mart is actually
“derived from multiple areas of involvement” (Ivythesis, 2007). It is absolutely critical that this company
continues to identify these areas, and utilize them towards future improvement.
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