From Sweatshops to Sustainability: Wal-Mart's Journey in Bangladesh
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Case Code: CSRS005 Case Length: 21 pages Period: 2011 - 2014 Pub Date: 2015 Teaching Note: Available |
Price: Rs.600 Organization: Wal-Mart Stores Inc. Industry: Garment Manufacturing Countries: Bangladesh Themes: Corporate Responsibility, Environmental Sustainability |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
The Complex Supply Chain
The growth of the Bangladesh garment industry saw the local manufacturers and global brands depend on a system known as 'indirect resourcing' throughout the supply chain. The process involved the routine practice of subcontracting through purchase agents. The subcontracting process was not transparent either to the buyers or to the regulators. Over time, the subcontracting system became an essential feature of the garment industry as it gave good margins and the required boost to the production capacity of the industry in a cost-effective way...
Factory Fire and Building Collapse
On April 24, 2013, the collapse of an eight-storey garment factory, Rana Plaza in Dhaka, Bangladesh, resulted in the death of more than 1,100 workers and injured more than 2000 people . The incident later went into the records as the deadliest accident in the history of the apparel industry. The building was structurally unsound and poorly maintained. It contained clothing factories, banks, apartments, and other shops. The shops and the banks were closed a day before the incident after cracks were found in the building. However, the garment factory workers were forced by their supervisors to continue working in order to meet tough deadlines....
The Cracks in the Garment Sector
The 2006 labor law of the Bangladesh government was a consolidated and updated from a version of 25 separate acts that had existed previously. The law covered a wide range of subjects, from working conditions to settlement of disputes, maternity benefits, and trade union regulation. However, the main problem, according to journalists, was the implementation of the existing laws...
Walmart
Walmart, an American multinational company, was founded by Sam Walton (Walton) in 1962. It was headquartered in Bentonville, Arkansas, USA. The unprecedented growth of Walmart earned it the name 'Beast of Bentonville'. By 1985, with 1,000 stores, Walton became the richest man in the US. The company was publicly listed on the New York Stock Exchange in 1972. Until the 1990s, Walton focused on rural America which his competitors had neglected. With the strategy of 'everyday low prices' creation of logistics, and an excellent distribution system, Walmart became the world's largest retail company. By the mid-1990s, Walmart dominated the retail sector in the US and then expanded its business internationally. It became highly successful in countries like China, the UK, Argentina, Brazil, Canada, Costa Rica, Japan, and Mexico...
Sustainability Agenda: The Greening of Walmart
Walmart's success brought in its wake criticism from various quarters of society. According to many analysts, Walmart was playing a detrimental role in the local economy by choking off small entrepreneurs and local businesses. The local players couldn't compete with the lower prices or the shopping variety offered by Walmart. Human rights activists raised concerns about the labor practices that Walmart followed and criticized the low wages paid which were often not even enough for survival. Critics often discouraged the pricing strategy of the company's products and suggested that the money be invested in environmental initiatives instead. By the late 1990s, Walmart found through surveys that the company was being viewed by the majority as one having a negative impact on society and the environment as a whole...
Walmart in Bangladesh
Walmart had been in Bangladesh for more than two decades when the accidents at the Tazreen factory and the Rana Plaza building occurred. It was one of the major importers from the Bangladesh garment industry. On an average, Walmart bought more than US$1 billion worth of garments annually from Bangladesh....
Who was Responsible?
Walmart published reports on how successful the company had been in converting itself into a sustainable one since 2007. The company boasted of its initiatives like sustainability goals and the Sustainability Index. However, some analysts opined that at the ground level, Walmart remained reluctant to invest money in areas which would benefit all the stake holders in the long run....
Exhibits
Exhibit I : Political Map of India
Exhibit II : Chapter VI of Bangladesh Labor Law 2006
Exhibit III : About the Accord
Exhibit IV : About the Alliance
Exhibit V : Fortune Global 500 - Largest Companies in the World
Exhibit VI : Walmart - Three Year Financial Summary
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