Case Studies of Wal-Mart and Nestle
The Wal-Mart retailers have not yet found their way into our backyard. Though the retailers have been a favorite of many I am an exception. In fact rarely do I buy stuff from their stores. The main reason why I avoid shopping in Wal-Mart is because I feel like I promote their activities, which have been discovered to hurt the economy. I am too patriotic to let a few people run down our country in the name of cheaper prices. I am not persuaded that Wal-Mart has as good intentions as they want everyone to believe. My source of dislike for Wal-Mart is heightened by reports that they underpay their employees and overall lead to unemployment (Neumark, 2005).
The idea of Wal-Mart entering into our neighborhood had elicited mixed feelings from the locals. An otherwise quite neighborhood is awash with noise as people express their view on Wal-Mart. Great divisions of opinions have been encountered. Sections of the locals think Wal-Mart should have come long ago while others detest the very thought of having Wal-Mart around. Those in support feel they will be offered cheaper commodities that local stores have charged exorbitantly. Those in opposition mostly are those with business interests and a section of a patriotic people who have heard of the harm caused by the Wal-Mart. Business persons feel threatened by Wal-Mart because of their low charges, which would draw customers away from the locals.
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I would not advocate for the entrance of Wal-Mart into our area since it would offer jobs that underpay people. This would bar the locals from getting better paying jobs and also because these Wal-Mart jobs are too restrictive. It has been found that actually Wal-Mart raises poverty levels not lowering them. The government has spent too much to maintain these people. The rapid rise of Wal-Mart has reduced more negative results than positive ones. Only a few people may benefit, the owner of the Wal-Mart, as their wealth increases and their power to control an economy strengthens. The risk of creating a monopoly raises and the consequences are known especially when such a big number of customers are concerned.
The growth of Wal-Mart suggests that capitalism has excesses in enriching a few at the expense of others. The workers especially stand to loose out a lot as they get poor compensation, work for more hours and have little time for other important works. This would retain these workers at poverty levels while the business owner’s wealth sours. Yet a retailer cannot expand that much without their effort being felt hard.
The opposition to Wal-Mart’s expansion has more to do with ethical rather than legal issues. This view is taken because the retailers are doing legal business but causing more harm to the overall running of affairs. The matter is also not much of interference into the market system as it is a regulation measure. It is a message that companies should not do business that hurts the economy on an overall scale. Company’s rights are not infringed; they are only checked for excesses. Business opponents have valid concerns only to the extent that big players who have better asset base would edge smaller players out of business.
The Nestle Company underwent a first order change. A first order change involves keeping things stable. It did not encourage a total change of how things were done and to ensure this, new managers were trained of the corporate culture of the company so that they could not divert from it with their own ideas. The Nestle Company was solely propelled by the senior management who were slow to adapting far reaching changes. There was no much involvement of other lower level managers.
Brabeck Letmathe proposed an incremental change as the way to go for Nestle. This, however, is contradicted by his rather sudden replacement of the executive board where the new one was responsible for executing change. The transition from old practice of business was instituted fast, not progressively as the CEO had suggested. Changes in an organization the size of Nestle requires great precaution and a sudden change, if not properly evaluated, may hurt the firm in future. I would agree with Brabeck that change has to be smooth and sensitive. However, the firm should not be so rigid to change. Some changes may have to be implemented fast and on this Brabeck was right.
The change that managers would propose for Nestle is for Nestle not to take up L’Oreal because of its huge debt and no promising profits in the near future. Managers may have proposed a quick uptake of technology for greater efficiency especially since Nestle had diversified form food to other sectors. The Nestle management would argue that the acquisition of L’Oreal would in the long term reap profits than the single products line, its food industry. The management too would suggest slower uptake of technology. The management here does not realize that an industry like cosmetics would require more efficient technology than the food industry.
There are lessons that can be drawn from studying the Nestle case. First a thorough evaluation needs to be done before on acquisition is initiated and such evaluation should involve all middle level managers. The lack of a better evaluation led Nestle to putting lots of money to revive the acquired company, funds that were really unnecessary or at least they did not achieve the main objective. Secondly, it is not enough that a company just focuses on the long-term goals. The cultures of companies should be such that they allow change so that they would take advantage of short-term goals. Lesson three is that the overall management of companies should not always be for the senior managers. Junior ones may also have big ideas and a firm’s culture should allow generation and build up on them. (Megone, 2002).
Holling, C. & Lon, N. (2006). The Economic Impact of Wal-mart Global Insight. Available on http://www.globalinsight.com/gcpath/wal-mart_june_2006.pdf
Megone, C. & Robinson S. (2002). Case Histories in Business Ethics. Routledge Publishers, Oxon.
Neumark, D., et al (2005). The Effects of Wal-Mart on Local Labour Markets. Available on http://www.globalinsight.com/publicdownload/genericcontent/neamark.pdf [cited on 3 August 2007]
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