Influence of Politics and Power
Perhaps the influence of corporate power and politics is embodied in a statement made by the CEO of General Motors, Charles Wilson in 1952, cited in Anderson (2008, 1): “What is good for General Motors, is good for the world.” While the assertion may not reflect perceptions of all corporations, it is no further from the truth in relation to marketing strategies used by companies and business to sugarcoat product and service offerings. It is important to recognize that a comprehensive audit of global companies revealed that corporations comprised over 50% of the 100 largest economies in the world, with the rest being countries. In addition, sales of the top 200 corporations are growing at a rate exceeding that of overall global activity. According to Anderson (2008) the growth of sales of the top 200 corporations was from 25% to 27.5% of world GDP between 1983 and 1999. The evidence suggests that corporation’s clout in relations to power and politics is growing by the day and underestimating it would be a risky economic undertaking.
Walmart was a key player during the dramatic wave of consolidation that swept across the US food retail industry in the 1990s owing to its status as the largest global retailer. However, Walmart’s culture depicts a trend across global corporate industry as evidence shows that despite their significant growth in sales, the top 200 corporations employed on 0.78% of the global workforce (Anderson, 2008). Such a culture was what led to rejection of Walmart’s entry into the city of Chicago in a bid to protect the rights of its workers. Hundreds of municipalities have rejected proposed Walmart stores across the US. In the case of Chicago, the City Council has the autonomy of regulating the conditions under which Walmart operates in its jurisdiction (Warren, 2005). Questions about such vehement opposition of Walmart stores exist, but it is important to recognize that the approach adopted by municipalities across the US stems from the fear of thee power and politics wielded by such strong global corporations.
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The influence of corporate power and politics has been well documented. American democracy is defined by the very fact that all citizens have a voice. While such perceptions are ideal, they cannot dissuade critics from observing and documenting the role of corporate and private financial resources in influencing political systems. Revisiting the statement “What is good for General Motors, is good for the world,” one can argue that the statement implies voices of majority are often suppressed by those with financial clout. Walmart is no exception to such power and political dynamics as it has been at the center of various scandals that have led to questioning of its corporate culture. An analysis of the role of retail politics in influencing national political systems is documented in the findings posited in Ruetschlin and McElwee (2014) showing Walmart to be among the leading contributors in political donations. The benefits drawn from such undertakings are evident through leeway provided to such corporations that allow them to establish a culture of rule bending with little emphasis on corporate social responsibility. For this reason, Walmart every move, including its support of law mandating employer-based health insurance, continue to elicit skepticism among stakeholders. Walmart’s corporate culture is perceived as that corrupted by power, with the megacorporation facing criticism for its supposed attempts to mask its intention behind stories of altruism.
Sources of Power
Walmart exerts pressure on political systems through dual approaches – unprecedented influence at community level and active involvement nationally. Factual evidence shows that despite Walmart being the largest corporation in the US, it is set to become the largest business investor in the country’s political arena. Therefore, it is only logical for the political class to return the favor in respect to support of laws and policies that are beneficial to Walmart and its goals. This demonstrates Walmart’s use of legitimate and reward power, to influence, especially those in critical political positions (Lunenburg, 2012). The political power Walmart has affords it the luxury of controlling the supply chain in its favor. While private governance literature praises the innovative nature of the company’s supply chain in transcending global challenges to give the chain a competitive advantage. Walmart supply chain receives criticism for failure to ensure sustainability among its farming stakeholders because its corporate culture, influenced by power and politics breeds feelings of mistrust and unfairness that deny such farmers independence in dealing their produce. As a result, the company resorts to use of coercive power in its dealings. The situation is compounded by evident efforts by Walmart to control the prices of products and its dominant position and centralized power allows it to decide which products to sell or not to sell.
However, Walmart can utilize its power sources to positively influence change both at organizational and global levels. The company’s success in a global arena implies it utilizes expert power to its advantage. The company cannot risk underestimating corporate social responsibility that is now the mantra of international corporations. It is not just enough to reduce or eliminate the brute use of power to influence proceedings. Walmart can redirect its power to more progressive aspects in revolutionizing the supply chain and ensure freedom of stakeholders including producers and consumers in decision making of whom and how to sell and what and where to buy respectively. In addition, evidence shows that Walmart is in the forefront in the adoption of renewable energy in a bid to ensure that its operations are not only sustainable, but also contribute to cutting down the threat of global warming as demands for energy rise (Denis, 2016). Walmart has a 100% renewable energy goal by 2020 and serves as a crucial example to global corporations.
Leadership and Behavior Culture
The global position of Walmart implies that it is only logical to examine the influence of its power and politics at organizational level rather than individuals or teams. It is imperative to recognize that leadership and decision-making at Walmart directly impacts millions of stakeholders globally, hence the need for organizational culture that is acceptable across countries, given the cultural diversity in its marketplaces. It is impossible for Walmart to strategically influence the political class as evidenced in the US in every country in which it operates. Therefore, it is imperative to adopt a self-marketing corporate culture that would endear the company to suppliers and consumers alike. The assertion relies on the basis that power is a medium through which business is conducted, thus Walmart should not take its relationships with suppliers, consumers, or even employees for granted. Recognition that shifts in power relationship change operation dynamics is necessary.
Therefore, Walmart should not risk making the mistake of failing to address the perceived flow of power of employers to employees that dominates most organizational cultures. The case in point is Walmart’s support of law mandating employer-based health insurance, which is contrary to expectation of modern employees who seek inclusion in calling the shots. Walmart must ensure that its corporate power and politics dynamics are not a hindrance in attracting top talent. While the economies of scale may still offer a competitive advantage for a company of Walmart’s magnitude, the recent developments suggest a shift towards economy based on information where medium-sized firms are likely to thrive. The argument advanced is that medium sized companies can make and act on decision faster. Walmart needs to reinvent itself to ensure negative effects from power and political dynamics are drastically reduced. Walmart must also recognize the need for an organizational culture that reflects modern trends such as the transition from management specific approach to shareholder value approach advocated for by institutions that are concentrating ownership including investment firms and mutual funds.
Leadership Influence
One can argue that there is abundant evidence showing Walmart’s intent to maintain a status quo as a global retail leader. According to Ruetschlin and McElwee (2014), American largest retailing companies dramatically mobilized political power at all levels over the past four elections. The implication for such companies is that they base their leadership on outcomes of elections, which are manifested through their reward and coercive powers. The complexity of leadership at Walmart stems from the fact that organizational structure and culture lacks identity as it is strongly dependent on the political will of those elected to office to influence proceedings. Ruetschlin and McElwee (2014) argued that Walmart’s large expenditure in political lobbying exemplifies the relationship between economic and democratic inequity. The company’s position as the leading political spender and the largest global retailer and employer, are cited as distinctions that give the company considerable influence over labor products locally and internationally. Therefore, it is not surprising that Walmart draws on this economic power to exacerbate inequality at the core of its business model.
It is evident that Walmart’s corporate leadership has been infected by power and political dynamics that place business profitability a head of stakeholders’ interests. According to Ruetschlin and McElwee (2014), whenever Walmart opens a store in town, retail workers experience a drop in wages and employment growth rate. In light of the understanding that Walmart organizational structure determines its business dealings and imposes limits on how the business addresses its challenges, one can argue that the complexity of the company leadership is an outcome of a business model that emphasizes on growth through competitive advantage that is unsustainable to stakeholders. The strong link between Walmart’s leadership, position in the industry, long-term success, organizational structure and culture based on evidence cited herein, shows the need for a critical review of the hierarchy and function based aspects of company’s business model. According to Lombardo (2017), decision-making at Walmart is centralized with corporate managers retaining the autonomy to influence the entire organization, a process that is effective in monitoring and control through hierarchical function and organizational structure, but detrimental in support of flexibility due to difficulty in lower levels of the business adjusting policies because of complicate bureaucratic process. Despite the company’s success, evidence indicates that Walmart’s organizational culture components of service to customers, respect for individual, striving for excellence, and action with integrity continue to be perceived by critics as ere marketing gimmicks.
Executive Summary
All evidence, including Walmart’s success in the global business arena shows the company’s ideal organizational structure in supporting its business model. However, the company can gain immensely by applying its beliefs in the context of its organizational culture. While Walmart’s involvement in political proceedings has a long history, the company must explore mechanism of dissociating its business dealings from such contexts that only breed suspicions among stakeholder. The company must strive to ensure that acceptability of its products is a result of retailers and consumers freedom of choice rather than coercion through backhanded tactics that eliminate competitors in the market. In addition, the company must re-examine its labor policies that continue to draw criticism from diverse stakeholders. Walmart must recognize that success can be achieved without necessarily exploiting other stakeholders by holding them hostage through influencing law and policies. Power and political dynamics should be focused to advancing organizational management rather than seeking political favors that compound economic inequality.
References
Anderson, S. (2008). Top 200: The rise of corporate global power . DIANE Publishing.
Denis, F. (2016, Apr).Why companies like Google and Walmart are buying so much wind power. Retrieved 24/08/2017 from: https://www.washingtonpost.com/news/energy-environment/wp/2016/04/12/why-companies-like-google-and-walmart-are-buying-so-much-wind-power/?utm_term=.9b2136315807.
Lombardo, J. (2017, Jan). Walmart: Organizational Structure & Organizational Culture. Panmore Institute. Retrieved 24/08/2017 from: http://panmore.com/walmart-organizational-structure-organizational-culture.
Lunenburg, F. C. (2012). Power and leadership: an influence process. International journal of management, business, and administration , 15 (1), 1-9.
Ruetschlin, C., & McElwee, S. (2014, Dec). The big influence of the big box. The American Prospect. Retrieved 24/08/2017 from: http://prospect.org/article/how-walmart-and-home-depot-are-buying-huge-political-influence.
Warren, D. T. (2005, October). Wal-Mart surrounded: community alliances and labor politics in Chicago. In New Labor Forum (Vol. 14, No. 3, p. 17). Sage Publications Ltd.
