Walmart, which saw its stock tumble 5 percent one day after the scandal broke, employs approximately 1 percent of the American workforce. Is the company simply too big to fail?
Failure to Walmart is absolutely unthinkable — it is a huge cash-flow-generating machine. With that said, the bribery scandal in Mexico is an unintended consequence of two things: one, the quest for continued growth, and two, the challenge of reinvesting the massive cash flow generated by its operations —approximately $24 billion last year. Management's challenge is to recognize this unintended consequence and walk the fine line to ensure ethical and financial performance.
How could the bribery scandal in Mexico affect the company’s expansion into other foreign markets?
I suspect that this scandal will only play to the home market and will not affect future expansion internationally. I've noticed, for example, that small-business advocates in New York City are trying to use the Mexican scandal to their advantage as they seek to keep Walmart out of the city. Developing countries, for a number of reasons, are likely to disregard this scandal: They are more interested in growth and jobs and they have less open press and media.
Where does this crisis rank among other Walmart scandals, which include allegations of using sweatshops, hiring illegal workers and intentionally selling products at low cost to subvert competitors?
Walmart has worked hard in the last decade to improve its ethical performance. Notable among these efforts are its drive to push the farms in America to organic production and its offering of some form of health insurance for its workers. While people argue that the move to organic is selfish and driven by profit potential and that the health care is inadequate, Walmart began these initiatives on its own and should be applauded. This scandal will probably fall onto the shoulders of one or only a few employees and therefore will be less harmful to the image of Walmart than previous scandals.
There is an unjustice and exploitation of the people who could most benefit from the cost of low prices, which Walmart touts. Why are Americans and the rest of the global market ignoring Walmarts business practices? Are they merely weighing the cost-benefit of shoppping at, working for, or selling merchandise at the big box store? It seems like supporters are complacent to ALL the negative effects (environmental, mental, emotional, employee treatment, customer relations, societal, compliancy, exploitation, bribery, etc.) of this store.
Among the one or few employees possibly involved is Walmart’s President and CEO, who, according to the Times article, “received a detailed account of the Mexican bribery allegations in 2005, when he was in charge of Walmart International and ultimately responsible for Mexican operations.” That characterization has not been confirmed or disproved. In the meantime, are we to assume the B-school advice for future executives is “minimize, minimize minimize (to put it kindly) and hope everything blows over?”