Wal-mart’s Going Green and Still Making More Money

Ignoring the labor issues that surround Wal-mart, they have made giant strides in “Going Green.”  The articles Wal-Mart’s Environmental Game-Changer and Wal-Mart Going Green And Its Effect both discuss the revolutionary changes that the $401 billion retail behemoth has taken the in the directions to help the environment.   Being environmentally friendly has never been a goal of the organization to date, but making and saving money has.  Wal-mart is very much a rational system with a formal structure and very specific goals.  This direction of going green raises flags because this is a new for the “lowest value” retailer.  In reality, Wal-mart has finally realized that their power in the supply chain can be used to benefit not their profits, but the global environment.

Wal-Mart’s Environmental Game-Changer does a great job discussing Wal-mart’s new labeling program that shows consumers the environmental cost of each product.  The program is non-invasive in terms of how they are not asking suppliers to change anything as long as the environmental cost data is provided for their products.  For these companies, knowing that this data will be seen by consumers they have two options; stop supplying to Wal-mart (bad business move) or begin to take steps to reduce environmental costs (good business decision).   This is a huge leap since the involvement of government wasn’t present.   The program is a big step for the organization and one not common to Wal-mart, but in a rational system goal specificity simplifies the situation.  Goal specificity in this case shows that the goals haven’t changed, but the main goals influenced Wal-mart to choose this alternative activity.  The environmental direction will increase the attractiveness of the company in turn increasing profits while at the same time benefiting society.

Though not the first corporation to do this, Wal-mart “is the biggest, the most visible, and the least likely, given its past reputation” (Game Changer).   Being the company some people love to hate they have finally become a company that people will have to respect through their use of commercial power to benefit the society while making profits.

UPDATE:

After further research and vigilance on the topic of Walmart “going green,” I stumbled upon this article Walmart colours it green (“colours” is spelled weird because this is a Canadian publication).  The article discusses a new twist in Walmart’s “Green” business strategies.  “Believing business can affect change in the world more quickly than anyone, Walmart Canada made four key announcements yesterday — plans for a sustainable product index, a new website to drive business sustainability, plans to open a sustainable distribution centre in Alberta and wind-and solar-energy projects in Ontario.”  Unlike the original initiative in July 2009 that only mentioned using an environmental product labeling system, Walmart Canada has added businesses plans that has showed Walmart interested in becoming more sustainable and environmentally conscious.  Plus, they have taken the initiative to post ideas and strategies on their new website to encourage other companies to follow their lead.  Now, Wal-mart is most likely going to end up even profits-wise in this new business initiative, but this new direction for Walmart Canada doesn’t seem like the Walmart I know.  Any thoughts?

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7 Responses

  1. I agree with this post, but when it comes to going green, part of me has trouble not being a conspiracy theorist. It seems to me that, even if it is subliminal, corporate exec boards number one goal is to drive profits through efficiency. Going green sometimes is not always as efficient as keeping with old ways, but there is a way around this. If “going green” attracts new business but costs a bit more, it basically becomes a wash. So it may be a splitting hairs a bit, but what is the real motive here?

  2. I agree with the previous comment. Walmart has never been an organization worried about much other than profits. As seen in Nickel and Dimed, upper management cares little about the employees and we have all personally seen the company drive out many small businesses as Walmarts continue to shoot up in all areas. This “green effort” by Walmart is most likely going to attract new consumers and therefore affect Walmart’s profits and image more than it will actually affect the environment.

  3. Psssst: Wal-Mart is singular. Can you fix first sentence?

  4. Comments on writing: The title says making “more” money. Is that the hope or the reality? Did the articles discuss their financials? If not, you can use the tools at your disposal to go and out and find that out.

    What do you mean by a rational system with formal structure and goals? Define these terms a more and then apply them to what you observe about Wal-Mart.

    Can you use a single great quotation form the game changer article? Any images of the new system? Something to see would be a real eye-grabber.

    Your explanation of goal specificity and going green is a good use of a concept. Empirically, I still want to know if the labeling system is about meeting a specific goal. Which goal?

  5. On substance:

    How do we know if the labeling program is motivated only by profit-seeking versus a mission to benefit society?

    You say this is a leap forward as government was not involved. Why is that progress? Would government involvement have made this program worse?

  6. @Kurt and Macey – Yes, I think that there is a lot more going on here than greening for the sake of greening. Wal-Mart is smart to leverage the efficiencies in its supply chain to deliver green products and environmental information. They are capitalizing on a trend in the market: consumers want to think that they are being socially responsible. Wal-Mart will make more money. Maybe, as Kurt says, it will be wash (higher costs, but new customers), but I’m inclined to believe that Wal-Mart will not only attract new customers, but that the green products will command a higher price and potentially a higher margin. Wal-Mart is not dumb–they know people will pay more to feel good about themselves. Is there anything wrong with this? Wal-Mart is meeting the desires of the consumer. Like any corporation Wal-Mart is constantly struggling to meet the demands of a diverse group of stakeholders. Stockholders, suppliers, employees, activist groups, consumers, govt, etc. This greening initiative is a wonderful thing in that it will satisfy stockholders through profits, activists through responsibility, and the consumer through demand satisfaction. They may even have a positive indirect effect on their suppliers. Maybe we should be focusing on the net benefit…..yes they are doing it to make more money, but at the end of the day its good for the environment. Regardless of motive, the result is a good thing.

  7. Heartless Capitalist I couldn’t have put it better myself. Wal-mart hasn’t changed its goals of making larger profits, they’ve just finally found a new strategy to attract new (and previously uninterested) customers and maintain (or increase) profits at the same time. The most amazing aspect of this program is Wal-mart really isn’t being responsible, they are just once again using their leverage to get manufacturers to be more responsible. There by increasing the transparency in the consumer product industry. Something that few, if any, other companies can match.

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