Sustainability Practices- Walmart vs. Starbucks Sample

The intent of this work is to analyze the mission, values, and core competencies associated with sustainability and the Triple Bottom Line of the corporations Wal-Mart and Starbucks. By analyzing not only the key differences in their values, but also the application of their declared values, they can then be judged for the high quality of their systemic approaches to sustainability.

In the case of these two companies, ethics are the most noteworthy difference, which causes Wal-Mart to experience a myriad of quandaries that Starbucks does not. This cardinal difference is important because “nearly any quandary an organization faces can be distilled down to simple ethical questions” (Eckmann and Frauenzimmer).

Analysis

After analyzing both Starbucks’ and Wal-Mart’s missions, values, and core competencies associated with sustainability and the Triple Bottom Line, key differences are noted, not only in their declared values but also in their real-world commitment to their values. Wal-Mart, for example, repeatedly mentions the cost of their products in their mission statement and values, whereas Starbucks’ primary goal is to provide a positive experience for their customers. There is also a large degree of disagreement between what Wal-Mart claims is important to them and what they actually do. Starbucks, however, adheres to their stated values. These differences warrant a closer look.

First and foremost, Wal-Mart and Starbucks’ mission statements are wholly at odds. Wal-Mart states, “We save people money so they can live better” (Walmart.com), while Starbucks believes their ultimate mission is “to inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time” (Starbucks.com). It is clear that Wal-Mart’s main concern is the low price of their products, whereas Starbucks’ primary goal is to provide a positive experience not only for their customers but also for their employees and community.

This cardinal difference can be seen when their core competencies are examined. Wal-Mart’s core competency is getting products onto store shelves as cheaply as possible and passing those savings onto their customers. Starbucks’ core competencies are nearly the opposite of Wal-Mart’s, as they focus on providing a consistently high-quality product in an environment that is friendly and inviting. It is interesting to note, however, that despite operating in vastly different markets and with vastly different business practices, both companies have similar stated values when it comes to the ethical treatment of employees and sustainable environmental practices.

Despite holding similar values related to green environmental policies and just treatment of employees, there is a big gulf between what Wal-Mart claims is important to them versus their actions. Wal-Mart, for example, claims to want to achieve 100% renewable energy usage (WalMart.com). However, they haven’t set a timeline for how long this goal might take. In reality, they use less than 2% renewable energy, despite other industry leaders in the food market having already achieved this goal.

It is wholly possible for Wal-Mart to have already done so as well (Mitchell 2011). On the other hand, Starbucks sets concrete reduction targets and updates the public on their progress. They have even voluntarily conducted and then publicly released a report on the inventory of their greenhouse gas emissions. They also seek to operate with 100% renewable energy, and currently over 50% of Starbucks’ energy consumption is derived from renewable energy sources (McDermott 2012).

Primarily, Wal-Mart is most famous for neglecting the “people” part of the Triple Bottom Line concept, as they are notorious for mistreating workers. In contrast to these practices, Starbucks adheres to their values of respecting their employees, and consistently ranks as one of the top 100 best places to work for, as voted by Fortune magazine (Fortune Magazine 2012).

Perhaps the most revealing of the core differences between Wal-Mart and Starbucks’ sustainability agendas relates to their motive for sustainability measures to begin with. Wal-Mart seems to pursue sustainability measures for purely selfish reasons, using sustainability measures more as a tool for their public relations department than out of any real attempt at social responsibility. Starbucks, however, shows by the company’s actions that they are in fact truly concerned with operating sustainably. Starbucks makes realistic sustainability goals, and actively strives to meet them, publicly reporting on their progress yearly (Timm 2005).

After analyzing both Wal-Mart and Starbucks’ sustainability strategies, it’s clear that Starbucks’ business model is superior to Wal-Mart’s for several key reasons. First and foremost, because Starbucks adheres to their policies relating to sustainability, they are infused with goodwill. Though an intangible asset, this goodwill was estimated to be valued near to half a billion dollars in 2011 alone (YahooFinance 2012). This public perception is important.

The Harris Interactive survey, for example, found that shoppers consider a company’s labor practices above all other social responsibility issues (Temple 2008). It should be no surprise then, given Wal-Mart’s spotty record relating to the treatment of their workforce, that the Reputation Institute ranked Wal-Mart as being one of the least trusted and respected companies in the U.S., ranking 136th out of 150 of the U.S.’s largest companies, being overshadowed chiefly by oil companies and defense contractors (Temple 2008). According to the same article, “Wal-Mart’s reputation remains the biggest obstacle to the company’s long-term growth potential” (Temple 2008).

In addition to providing a much higher overall experience, Starbucks’ sustainability, specifically in the “people” aspect of the Triple Bottom Line equation, is much more effective than Wal-Mart’s. This can be seen in the low turnover rates that Starbucks enjoys versus the astronomically high turnover rates that Wal-Mart is burdened with. For example, Starbucks enjoys a turnover rate that is less than a fifth of those in similar industries (CNBC Magazine, 2011).

This not only results in a more satisfied workforce, but it is also sound financial policy as well; Starbucks estimates the cost of replacing and retraining a barista at $3,000 each (CNBC Magazine, 2011). Due to their ethical treatment of employees, “Starbucks has far lower turnover than the industry norm by offering good compensation packages, work environments, and career paths” (Rein, 2012).

Conversely, Wal-Mart has a turnover rate of about 70%, which not only indicates the severity of worker dissatisfaction but also costs the company untold sums of money, not only with respect to the cost of hiring and training new employees, but also in lost income from negative perceptions resulting from such a high turnover rate (PBS.org).

One final, though less tangible, aspect that indicates Starbucks’ sustainability practices are superior to Wal-Mart’s is the immeasurable negative effects of operating a company in a socially unethical manner. Though almost impossible to quantify, there are certainly any number of negative effects that permeate a company that encourages management to find reasons to terminate employees with seniority and replace them with younger, healthier workers willing to accept less pay (Albright, 2005).

While cost-saving measures such as this may work in the short term, Wal-Mart likely experiences a number of negative side-effects, from lower worker productivity to significantly reduced appeal for managers and leaders who would not consider working for Wal-Mart as a result of their business practices.

Conclusion

Although the sustainability business models for Starbucks and Wal-Mart share many aesthetic similarities, the primary differences between the two are the level of effort they each put into converting their declared values into reality. Starbucks focuses on quality products, respecting their workforce and their customers, and operating as environmentally sustainable as possible.

Wal-Mart, on the other hand, “operates their stores to get maximum work out of the minimum number of employees they can” (Robinson, 2010) and appears to primarily promote sustainability to counter the negative perception they garner from their treatment of employees and disregard for their communities. While these practices have served Wal-Mart well, in today’s changing world, sustainability is going to have an increasing impact on even the financial bottom line.

Because of this, Starbucks’ sustainability practices are superior to Wal-Mart’s, which experience negative public perception, costly high turnover rates, and ill-will as a result of their frequent socially unethical practices.

Mentions

1. Albright, Mark (2005). “Shed the Unhealthy. Wal-Mart Memo Says.” Tampa Bay Times, October 27, 2005. Retrieved on July 6, 2012 from: http://www.sptimes.com/2005/10/27/Business/Shed_the_unhealthy__W.shtml.
2. CNBC Magazine (2011). “How One Brand Changed The World.” CNBCMagazine.com, January 2011. Retrieved on July 6, 2012 from: http://www.cnbc.com/story/how-one-brand-changed-the-world/1297/1/.
3. Eckmann, Helen and Sarah Frauenzimmer. The Development, Refinement, and Use of Universal Symbols in the Teaching and Application of Ethics and Leadership in the Global Marketplace. Retrieved on July 6, 2012 from: http://brandman.chalkboard.com/webapps/portal/frameset.jsp?tab_id=_2_1&A;url=%2fwebapps%2fblackboard%2fexecute%2flauncher%3ftype%3dCourse%26id%3d_71749_1%26url%3d.
4. Fortune Magazine (2012). “Top 100 Places to Work For.” CNN Cable News Network/Time Warner. Retrieved on July 6, 2012 from: http://money.cnn.com/magazines/fortune/best-companies/2012/full_list/.
5. McDermott, Mat (2012). “Starbucks Sustainability Report Paints Mostly Rosy Picture Of Green Progress.” TreeHugger.com, March 21, 2012. Retrieved on July 6, 2012 from: http://www.treehugger.com/corporate-responsibility/starbucks-2011-sustainability-report-rosy-picture-green-progress.html.
6. Mitchell, Stacy (2011). “Think Wal-Mart Uses 100% Clean Energy? Try 2%.” Grist.org, November 17, 2011. Retrieved on July 6, 2012 from: http://grist.org/business-technology/2011-11-17-walmarts-progress-on-renewables-has-been-very-slow/.
7. PBS.org. Shop Wars: When Wal-Mart Comes To Town. Retrieved on July 6, 2012 from: http://www.pbs.org/itvs/storewars/stores3.html.
8. Rein, Shaun (2012). “Why Starbucks Succeeded in China While Others Haven’t.” USAToday.com, February 12, 2012. Retrieved on July 6, 2012 from: http://www.usatoday.com/money/industries/food/story/2012-02-12/cnbc-starbucks-secrets-of-china-success/53040820/1.
9. Robinson, Kevin (2010). “Working for Wal-Mart: Part Two.” Chicagoist.com, March 12, 2012. Retrieved on July 6, 2012 from: http://chicagoist.com/2010/03/12/wal-mart_from_the_inside_-_part_two.php.
10. Starbucks.com (2012). Retrieved on July 6, 2012 from: http://www.starbucks.com/.
11. Temple, Stacy Lock (2008). “Wal-Mart’s Reputation Problems Continue, Says Wal-Mart Watch.” Reuters.com. July 21, 2008. Retrieved on July 6th, 2012 from: http://www.reuters.com/article/2008/07/21/idUS96423+21-Jul-2008+PRN20080721.
12. Timm, Brenda (2005). “Sustainability: A Success Strategy at Starbucks.” GreenAtWorkMag.com. July/August 2005. Retrieved on July 6th, 2012 from: http://www.greenatworkmag.com/gwsubaccess/05julaug/starbucks.html.
13. Walmart.com (2012). Retrieved on July 6th, 2012 from: http://www.walmart.com/.
14. YahooFinance.com (2012). Starbucks Financial Data. Retrieved on July 6th, 2012 from: http://finance.yahoo.com/;_ylt=A0oGkisAFPpPy3sAdQUQRAUJ;_ylc=X3IDMgRjc3JjcHZpZANfNmpCV1VvR2RURHA2QzRoVHd6YTRnOC5RN3V0SzBfNTdtc0FCbFhfBGZyA3l0ZmYxLXlmZjgwBGZyMgNzZy1nYWMEbl9ncHMDMTAEb3JpZ2luA3l0YgRwb3MDMgRwcXN0cgN5YWhvbyBmaW4EcXVlcnkDeWFob28gZmluBHNhYwMxBHNhbwMxBHZ0ZXN0aWQDU01FMDgw?rnd=5826408589390878191.