Home/Essays Examples/Economics/Wal-Mart and the Political Environment in Canada Us and Mexico

Wal-Mart and the Political Environment in Canada Us and Mexico

Introduction

In its attempt to remain a top player in the retail industry in America and the world, Wal-Mart has made numerous forays into politics; the operations of the company have also been affected by the politics of the host country.

The Wal-Mart and Washington lobby groups

The formation of this lobby group was aimed at improving the standings of the company in Washington in regards to friendly legislation and tax regimes. The group sought to advance company goals such as limitations of port security, the abolishment of estate tax, restrictions on tariff protections, and school vouchers.

The group also lobbied for lucrative government subsidies. The company has taken to funding other lobby groups in Washington so as to champion their cases; for example, the company paid USD600, 000 to Patton Boggs LLP, a lobby group in Washington since 1999 to have the group lobby for the repeal of the estate tax.

Another group that benefited from the Walton family donations to lobby groups is Progress for America, a hard-right conservative pro-Bush group that repeatedly attacked Senator John Kerry during the 2004 US presidential elections. Alice Walton paid USD2.6 million in the run-up to the election. The group also supported the conservative agendas and judicial appointments.

The Wal-Mart’s Political Action Group

The significance of this group has grown significantly over the years in terms of its level of influence. In the 2004 elections in the US, the group coordinated the company’s for the Republican candidates. The group has however a dynamic outlook that has enabled it to remain on the winning side in the face of shifting political tides; this was demonstrated in the next cycle where the PAC supported a good number of democrats (Zimmerman et al., 2008).

Wal-mart And Politics

The company usually has a huge stake on how the politic of the land go as they usually affect their operations. Of importance to note is the labor policy of the company in relation to the regulating legislation regarding labor.

Labor relations

The company is the biggest private employer in the world with nearly two million employees; the company therefore has to deal with a myriad of issues arising in different countries of the relation between the company and workers.

Additionally, the company pursues some policies that evoke complains of poor remuneration and working conditions, and poor support for workforce healthcare. Critics of the company’s labor policy point to the high annual turnover rate of workers as evidence of lack of satisfaction of the workforce; it is estimated that 70% of the workers do not complete the first one year of employment.

The company also has a strong policy against unionization of workers; although the company denied having any anti-union tactics, closure of stores and business ventures in the face of unionization of its workers is generally seen as part of this campaign.

The Employees Free Choice Act that was proposed by the Democrats before the recent elections sought to offer more protection to the workers (Zimmerman et al, 2008); it provides first-contract arbitration for the workers and imposes stronger penalties to employees who violate the National Labor Relations act. The agenda also sought to protect workers involved in a strike from being permanently replaced; this would allow Wal-Mart workers to unionize without risking their jobs in the process. The presumed Democratic Party presidential candidate at the time Barrack Obama personally supported the enactment of the act; the company generally assumed that if he got elected to the oval office, the act would be implemented, resulting in mass unionization among the company’s workers.

This has led to several complaints by the labor groups against the company’s instructions to its employees to vote against Democratic candidates and Obama in the elections. The company spokesman denied that that was the official position and that the managers involved in this were acting without the authority of the main office.

The anti-union activities have also led the company to trouble in Canada; after the workers in the Québec Wal-Mart store decided to form a union in 2004, the company responded in what was seen as a preemptive closure of the store five months later. The management explained that it was forced to close the store due to the fact that it was not profitable stemming from the demands from the labor unions; however, the Québec Labor Board passed a ruling in September of the following year that found the closure was aimed at punishing the unionizing workers; and went ahead to order further hearings to ascertain the same.

The Canadian market is important to Wal-Mart which is only second to the American market with over two hundred stores countrywide. However, the chain faces a stiffer competition in this country since Canadians are more likely to join a union than Americans. In Canada, nearly 26% of unionizable workers are members of one union or the other compared to 13% in the US (Bianco, 2006). Additionally, the labor laws in Canada are more favorable to the worker than the American ones.

Wal-Mart and child labor

The operation of the company in México is among its most profitable, and the company plans to expand its operations even further. However, the company has been blamed for taking advantage of unpaid teenage laborer to do most of the work involving bagging of groceries in the stores (Contreras, 2007).

The teenagers, ranging from 14 to 16 years of age are classified as volunteers and are not entitled to any form of payment or compensation; they work entirely on tips whose payment is entirely dependent on the customers liking. Critics of this system cite that the 19,000 youngsters who works in this system after school contribute to the high profit margins of the Mexican operation and that they are entitled to some form of compensation for their efforts.

Other labor practices in the Mexican market have also caused trouble; for example, the practice of paying workers with vouchers instead of cash. These vouchers could only be reclaimed in Wal-Mart stores, thus denying the worker any form of monetary remuneration. The Mexican Supreme Court of Justice on September 4th 2008 ruled against this practice. The court compared this practice to the Plan of Social Welfare scheme of the dictator regime of Porfirio Diaz in the late 19th and the early 20th century in México (Shaulis, 2008).

The Future Of Wal-mat And Politics

The management of Wal-Mart has a culture of remaining aloof and ambiguous in the face of public scrutiny (Courser, 2005); and the people a growing more skeptical and wary in the face of large corporations, especially those with a sizable market share of the industry. This has not been made any better by the near-collapse of the American economy, all blamed on unbridles ventures by players in the big-business sector. The aloofness set the stake for endless speculation and innuendo. This negative perception of the company has already led to the spawning of many websites dedicated to complaining about or lambasting the company; similar sentiments are being expressed by bumper stickers (Goetz and Swaminathan, 2004); although limited for now, a growing public outrage in the US will not be healthy for the retail business of the company. For a company with its stake in the American market, the policy of translucent involvement in politics is not sustainable and will eventually lead to a backlash in the event of an economic crisis if it is implicated. Additionally, there have been an increasing number of voices calling for government regulation of the retail industry (Courser, 2005).

Apart from launching PR campaigns to improve their outlook, the company should remove themselves as an active political player; this does not mean withdrawal from seeking better terms from Washington; on the contrary, the company should shed the all-powerful-corporation seeking to control the American society image for a more subtle one that is less visible.

Additionally, while the company has been successful in conditioning its workforce to a certain set of conditions for employment, such methods are not transferable to all countries. The company should assess each new location carefully so as to come up with a tailor-made labor policy. This would go a long way in avoiding PR disasters as the one in Québec (Bianco, 2006). In addition to this, to company would avoid using strong-arm tactics like preemptive closures of store as it will be prepared for any issue in the new country

Conclusion

From humble beginnings, Wal-Mart has grown into a world leader in the retail business; to achieve this, the management must have done a lot of right things. Some of the albeit controversial practices are the ones that have enabled the company to return profits every time and to maintain continuous growth, and the management is not going to abandon the practices anytime soon. What, however, should be increased is the tact of handling matters sensitive to the public. The company must seek more public acceptance so as to avoid crippling government regulation precipitated by public dissatisfaction.

Work Cited

Austen I. Quebec panel rejects Wal-Mart store closing. International Herald Tribune, 2005.

Bianco, A. No Union Please, We’re Wal-Mart: Business Week. 2006. Web.

Contreras J. Teens at Work: Thousands of adolescents work as unpaid baggers in Wal-Mart’s Mexican stores. The retail giant isn’t breaking any laws—but that doesn’t mean the government is happy with the practice. Newsweek Web Exclusive, 2007. Web.

Course Z. Wal-Mart and the Politics of Retail: Issue Analysis 2005 No.10. Competitive Enterprise Institute,.

Goetz S.J. and Swaminathan H. Wal-Mart and County-Wide Poverty AERS STAFF PAPER No. 371, 2004, Web.

Shaulis J. Mexico Supreme Court orders Wal-Mart to stop paying workers in-store vouchers: The jurist, 2008: Web.

Zimmerman, Ann, Kris Maher. Wal-Mart Warns of Democratic Win: Wall Street Journal, 2008.