Wal-Mart: The biggest company on the planet

Walmart

In 1951 Sam Walton opened the Walton's Five and Dime discount store in Benton, Arkansas. The small family run business enjoyed moderate success in its early years, with little hint that it would spawn the world's largest public corporation by revenue.

Even today its headquarters in the north-west of Arkansas hardly suggests that Wal-Mart is little more than a modest family-run enterprise, consisting of a collection of prefabricated buildings next to a four-lane highway hundreds of miles away from the nearest big city. But as Warren Buffett demonstrates with his minimalist approach to running Berkshire Hathaway, the most profitable businesses can be built and run from the most modest foundations.

The Wal-Mart retail empire now spans over 8000 stores in 15 countries generating annual revenue in excess of $401 billion. The next retailer that even comes close to Wal-Mart's annual sales figures is French hypermarket chain Carrefour, at $124 billion.

Spreading a global message

Far from everybody's favourite brand, Wal-Mart insist they are on the side of hard-working families who need to save every penny they can - and the company have embarked on a mission to spread this message globally - but the company has been hounded by controversy.

In the last five years Wal-Mart has been hit by a brutal onslaught of lawsuits, intense criticism and a plummeting stock price that have resulted in a re-invention of the world's biggest retailer.

In its native North America, Wal-Mart is fiercely anti-union making it understandably unpopular within the industry, but the sheer size of the company means it can afford to brush any unwelcome opposition within the ranks under the carpet. As reported by UK newspaper the Guardian, when, in a rare case in 2005, workers at a Quebecois Wal-Mart store voted in favor of collective representation the company simply closed it down arguing the location was "unprofitable".

Overseas it has proven to be more flexible as a means of necessity, working with unions in Argentina, Brazil and China.

Downward pressure on wages

Unions detest Wal-Mart not only because of its refusal to recognise them in North America, but because of the intense "downward pressure" the company puts on wages. Discrimination against female and elderly staff also account for many of the blotches on Wal-Mart's record and the company also have a reputation for putting smaller local shops out of businesses.

Spokeswoman for Wake Up Wal-Mart, a pan-union campaign group, accuses the company of exploitation. She argues that Wal-Mart have not "shared their wealth".

Much of this wealth is instead used to expand the enterprise abroad as the company spent $4.1 billion on international expansion in the year to January 2009 and expects to spend a further $4.4 billion in the current fiscal year.

The investment is paying off, and many analysts believe much of the success overseas is due to the fact that people are unaware they are shopping in an America multinational retail chain.

Squeezing every penny

But Wal-Mart's desperation to drive down store prices means the firm opts to squeeze every penny out of its suppliers. And as Michael Bride, deputy overseas director at the Food & Commercial Workers Union, explains, "If you're a Chinese supplier and Wal-Mart is pressing you down, you probably can't go and negotiate your electricity rates or your rent down. But you can cut costs when it comes to labour."

This is a real problem for Wal-Mart. Investigations by human rights groups into overseas operations, particularly in China, have found "illegal and degrading conditions", with workers required to work 24-hour shifts for less than 44 cents an hour.

Although Wal-Mart have insisted they will start an immediate internal investigation into the findings, huge numbers of people remain concerned over how the company do business.

The success of free enterprise

Looking to the future, Wal-Mart have insisted on universally higher standards of working conditions for its staff while also promising a more environmentally conscious philosophy. For example under a newly launched "sustainability index," Wal-Mart's suppliers must report to the company on their greenhouse gas emissions, waste reduction initiatives and ethical sourcing.

With a company the size of Wal-Mart's questions will always remain over the way it operates, especially as it looks to further expand around the globe. While it remains a glowing example of the success of the free enterprise system, Wal-Mart will have to work extremely hard to change the growing sentiment that it will stop at nothing to achieve even greater global domination of the retail market.

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