Wal-Mart and Costco
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Wal-Mart Stores, Inc now known as Wal-mart from 2008 is an American global company that runs a series of departmental and warehouse stores at a high cut rate price. This corporation is termed as the 18th biggest company in the world and the first while graded according to returns generated. It is also known to be the largest employer among private companies offering employment to about two million workers. Its biggest shareholders are the Walton family with 48% shares of the company.
Costco Wholesale Corporation on the other hand is the biggest member of the warehouse association. In 2011 it ranked as the sixth biggest trader in the United States and the seventh biggest dealer in the world. It is ranked as the biggest retailer of wine in the world. The two companies are the most successful companies in the United States even if their operations are different. They are similar in the sense they are both determined to invent, maintain prices and provide discounts for their consumers among other factors. The prime difference of the two companies is the methods they use to fulfill their objectives.
Conduct research about Wal-Mart and Costco and provide a summary of each organization in relation to their public image, profitability and ethical practices.
Wal-Mart is known to be a neo-classical firm which still puts into practice the basic strategies it started utilizing after the World War II industrial period. Costco is known to be an industrial firm which is diverse between the old and the innovative ways of marketing strategies. They both have very different marketing strategies. When comparing the two, the best factor to start making comparisons of in retail founded businesses is the labor force. This is how they are known to treat employees and the set policies that influence the way the two companies perform economically. When comparing the jobs these companies offer to the public, Wal-Mart and Costco almost offers the same kind of employment. Both companies have optometrists and pharmacies that employ the public to sell and as cashiers. Both firms sell food stuff used in cafes or as grocery. The firms also offer administrative posts to the public like those of managerial, accounting, human resource and leadership posts. The difference comes in where for the tire shops of Wal-Mart vehicle employees while Costco does not.
Costco employs almost 150000 people worldwide and 104000 of the employees are USA based. Out of the two million plus employees, only 1.4 million of the employees are from USA. Both of the companies do not discriminate upon the workers they hire. This is especially after 2010 when most companies took up a non-discriminatory rule of hiring employees at least in the production level. Both companies have workers who work full time while others are part timers. Labor provided through unions has greatly been discouraged by Wal-Mart using a lot of money to ensure that unions do not come between the company and its workers. They have taken steps like the monitoring of workers and anyone who is involved in creating any union loses employment. Costco does not largely discourage unions but the CEO Jim Sinegal also opposes the workers act to act without regulations which would have put workers to a greater exposure with their unions. Costco views unions as an important tool for the American industry and uses money on these unions other than being in opposition with them.
Both companies employ citizens who are not American Citizens. This labor is in form of illegal overseas citizens and legal immigrants. Wal-Mart is way higher in employing immigrants. Costco mainly operates with American employees. Most of its departments are based in America and they have a lot of suppliers. Costco even cut off supplies from China even though this could be for other purposes like not to weaken the dollar or suppliers from China being reluctant to sell their products at low cut prices. Wal-Mart on the other hand even offers employment to illegal immigrants for the cleaning vacancies (Madhav & Gayatri, 2005). There have been rumors that some of these workers have been mistreated by being locked up in departments till dawn. The main differences in the way they treat their employees is evidently shown in the way they compensate their employees (Reeves, 2011).
Costco provides a wage of $17 an hour while Wal-Mart 10.11 per hour. Both firms give added benefits to long term employed workers. Wal-Mart offers only a raise of a dollar while Costco Company pays its workers very well and increases the worker’s salary each year. The CEO of Costco makes an average of 350000 dollars per year while that of Wal-Mart makes an average of 27 million a year. This difference exactly shows how these two companies operate (Cascio, 2006).
The treatment of labor is what is mostly considered to be the general difference of the public image these two companies portray. Even though Costco has been taken to court a couple of times because of creating unfavorable working environments and even looking down upon dress codes of religious reasons, the company is viewed to be excellent in treating the members of the public well in regard to their companies policies. Wal-Mart on the other hand is known to exploit its workers.
In terms of profits, Wal-Mart provides what the consumers want at that particular period thus they focus on the short term profits (Hayden et al, 2002). The same is applied to Costco as they want to keep consumers sprung on their quality products and their low prices. Both of these companies show that it does not necessarily have to be that if a product is of a low price it does not have to mean that a product is of a low quality.
Both companies handle negative publicity differently. Costco advertises by emails and mails that is, by word of mouth. Wal-Mart advertises by contrast. The company tries to depict itself by showing how the company cares about the society. Both companies give back to the community through charity events.
Analyze and evaluate the Code of Ethics for each organization and provide a detailed analysis of your assessment of the effectiveness of the "code".
Wal-Mart gets most of its powers from its purpose of bringing out low prices to its consumers. Its founder Sam Walton devised a number of ethical values to sail his company through as he founded it like rigid work, obedience lack of pretence, humility and prudence. This was so as to create a good working environment for the employees. Walton however was also driven by the company’s success. He devised a plan for the customers to obtain products they required every day from this corporation at low prices, lower than any other company’s products. The company still applies the same values today but the manner in which they are practiced is very different. The company has had cases of exploitation and even illegal behavior at times. Here have been aspects noted like those of looking upon workers during pay and gender based violations (Cascio, 2006). Wal-Mart also exploits suppliers to offer goods at low prices as the suppliers are always working to satisfy this dominating retailer (Gogoi, 2006).
Cascio (2006) goes on to talk about the code of ethics of Costco. The founders of this company Jeff Brotman and Jim Sinegal talked to the company’s shareholders about their values. These values include the obedience to laws of the country, have concern for their worker, are humbled by their suppliers and give benefits to shareholders. Mr. Sinegal believes that a good business is based upon pleasing the labor force so as they can work for the company at their best. Costco maintains its code of ethics. The company has faced a lot of criticism as well as appraisal for this. Some market strategies like catering well for the labor force adds capital as labor is a supplement of capital. Some of the analysts come to a conclusion that there is a time whereby the company’s investment will be unmanageable. If a lot of companies in USA adopted this strategy, this would minimize the wages of workers along with their welfare. This would work against economic growth.
Conclusion: Provide recommendations for how you would change or improve the "code" in order to impact the organizations ethical practices (if you were a member of the Board of Directors).
Wal-Mart and Costco has been performing efficiently in satisfying the needs of customers. They have been involved in the increase of economic growth as they provide employment globally. To improve the code of ethics for Wal-Mart, the board of directors needs to put into practice the foundation values that were in place. This is to improve the environment in which the workers work in. Wal-Mart needs especially to stop illegal behaviors like the employment of the illegal immigrants.
Costco needs to continue practicing its code of ethics as it puts the economic growth of USA in consideration. The company needs to implement religious policies so as to cater for their employees of all religions. Costco’s marketing strategy of having a workforce that is well taken care of and friendly prices prove that everyone involved in the management of a company can benefit from a price control strategy. If I was a member of the board of directors of each company especially, I would improve the public relations strategies of either company to improve their public image which would impact on the organizations’ ethical practices. This would improve the relationship of the companies with their workers, consumers, shareholders, analysts and the media at large thus each company would be obliged to uphold good values.
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