Sam Walton started his merchant career in 1945 as proprietor of the second-best variety store in a small rural Arkansas town. From that humble beginning, he built the world's largest retail chain. With close to 2 million "associates," Wal-Mart is by far the largest employer and, for both better and worse, one of the most powerful companies on the globe. More than 90 percent of American households shop at Wal-Mart every year, expecting the company to keep its promise of "always low prices" (Fishman, 2006).
Wal-Mart's impact is both subtle and pervasive, as is illustrated in a story about deodorant packaging. Deodorant containers used to come packed in cardboard boxes until Wal-Mart decision makers concluded in the early 1990s that the boxes were wasteful and costly—about a nickel apiece for something consumers would just throw away. When Wal-Mart told suppliers to kill the cardboard, the boxes disappeared from retail shelves across America. Good enough for Wal-Mart was okay for everyone else. The story is but one of countless examples of the "Wal-Mart effect"—an umbrella term for multiple ways Wal-Mart influences consumers, vendors, employees, communities, and the environment (Fishman, 2006).
Yet, for all its power and influence, Wal-Mart has struggled in recent years with a budding assortment of critics and image problems. The company has been accused of abusing workers, discriminating against women, busting unions, destroying small businesses, and damaging the environment. Circled by enemies, it has mounted major public relations campaigns in defense of its image, with limited success (Bianco, 2007).
Like all organizations, Wal-Mart is both an arena for internal conflict and a political agent or player operating on a field crammed with competitors pursuing parochial interests. As arenas, organizations house an ongoing interplay of players and agendas. As agents, organizations are powerful tools for achieving the purposes of those calling the shots. Wal-Mart's enormous size and power have made its political maneuvers widely visible; almost everyone has strong feelings about Wal-Mart, one way or another. To be sure, the company's historic penchant for secrecy and its secluded location in Bentonville, Arkansas, have sometimes shielded its internal politics from the spotlight, but tales of political skullduggery still emerge. Vintage 2007 scandals included a titillating story of a recently recruited superstar marketing executive who was fired amid rumors of conflict with her conservative bosses and an office romance. The same year also spawned the strange tale of a Wal-Mart techie who claimed he'd been secretly recording the deliberations of the board of directors.
This chapter explores organizations like Wal-Mart as both arenas and political agents. Viewing organizations as political arenas is a way to reframe many organizational processes. Organizational design, for example, can be viewed not as a rational expression of an organization's goals but as a political embodiment of contending claims. In our discussion of organizations as arenas, we examine the political dimensions of organizational change, contrasting directives from the top with pressures from below. As political agents, organizations operate in complex ecosystems—interdependent networks of autonomous organizations engaged in related activities and occupying particular niches. We illustrate several forms ecosystems can take—business itself, public policy, the interface between business and government, and society. Finally, we look at the dark side of organizational power. We explore the concern that large global organizations represent a growing risk to the world because they are too powerful for anyone to control.
From a political view, "happily ever after" exists only in fairy tales. In reality, today's winners may quickly become tomorrow's losers or vice versa. Change and stability are paradoxical: organizations constantly change and yet never change. As in any competitive sport, players come and go, but the game goes on. Jockeying for position is constant, and yesterday's elite may be tomorrow's also-ran. In the annals of organizational politics, few have illustrated these precepts as well as Ross Johnson, who once made the cover of Time magazine as the emblem of corporate greed and insensitivity. In Barbarians at the Gate, Bryan Burrough and John Helyar (1990) explain how.
Political Dimensions of Organizational Processes
As arenas, organizations house contests and set parameters for the players, as well as the stakes and the rules of the game. In this light, every organizational process has a political dimension. Consider the task of shaping and structuring an organization. Most theories built on structural premises (as discussed in preceding chapters) assume that the best design is the one that contributes most to efficient strategy and successful attainment of goals. Pfeffer offers an explicitly political conception as an alternative: "Since organizations are coalitions, and the different participants have varying interests and preferences, the critical question becomes not how organizations should be designed to maximize effectiveness, but rather, whose preferences and interests are to be served by the organization.... What is effective for students may be ineffective for administrators .... Effectiveness as defined by consumers may be ineffectiveness as defined by stockholders. The assessment of organizations is dependent upon one's preferences and one's perspective" (1978, p. 223).
Even though groups have conflicting preferences, they have a shared interest in avoiding incessant conflict. So they agree on ways to distribute power and resources, producing settlements reflected in organizational design. Structures are "the resolution, at a given time, of the contending claims for control, subject to the constraint that the structures permit the organization to survive" (Pfeffer, 1978, p. 224).
An example is a controversial decision made by Ross Johnson when he headed RJR Nabisco. Johnson moved RJR's headquarters from Winston-Salem, where it had been for a century, to Atlanta. Reynolds was the commercial heart of Winston-Salem. It engendered fierce pride and loyalty among the citizenry, many of whom were substantial stockholders. Structural logic suggests putting your headquarters in a location that best serves the business, but Johnson and his key lieutenants saw the small city in the heart of tobacco country as boring and provincial. The move to Atlanta had scant business justification, was unpopular with the RJR board, and made Johnson the most hated man in Winston-Salem. But he headed the dominant coalition. He got what he wanted.
Sources of Political Initiative
Gamson's distinction (1968) between authorities and partisans (see Chapter Nine) implies two major sources of political initiative: bottom-up, relying on mobilization of groups to assert their interests; and top-down, relying on authorities' capacity to influence subordinates. We discuss examples of both to illustrate some of the basic premises of political action.
Bottom-Up Political Action The rise of trade unions, the emergence of the American civil rights movement, the antiwar movement of the 1970s, and environmental activism in recent decades all exemplify the process of bottom-up change. In every case, the impetus for change was a significant disruption in old patterns. Trade unions developed in the context of the industrial revolution, rapid urbanization, and the decline of family farms. The civil rights movement arose after massive occupational and geographic shifts for black citizens. The antiwar movement emerged from the juxtaposition of an unpopular war with a draft lottery that affected every eighteen-year-old male in the United States. "Green" activism developed as the costs of growing prosperity—including pollution, destruction of habitats and species, and global warming—became increasingly visible and hard to discount. In each case, changing conditions intensified dissatisfaction for disenfranchised groups. Each reflected a classic script for revolutions: a period of rising expectations followed by widespread disappointment.
The initial impetus for change came from grassroots mobilizing and organizing—the formation of trade unions, civil rights groups, student movements, or environmental groups. Elites bitterly contested the legitimacy of grassroots action and launched coercive blocking tactics. At various points, employers used everything from lawsuits to violence to resist unions. The civil rights movement, particularly in its early stages, experienced violent repression by whites. Efforts to suppress the antiwar movement reached their apogee at Kent State University, when members of the Ohio National Guard fired on student demonstrators. Greens have been engaged in a long battle against business and political leaders who dispute the significance of environmental threats and resist what they see as the excessive costs of proposed remedies. Despite intense opposition, grassroots groups fought to have their rights embodied in law or policy. Each movement might have failed had it been weaker or its opposition stronger. Each suffered profound setbacks but mobilized enough power to survive and grow.
Compared with many grassroots change efforts, the ones just mentioned were relatively successful. Most such initiatives fail. After the U.S. invasion of Iraq in 2003, for example, another antiwar movement arose. But political conditions were different: The 9/11 terrorist attacks had intensified Americans' fears of dangers from abroad. Equally important, fewer American troops were involved, and no one was being drafted. Particularly on college campuses, the movement never gained the momentum of opposition to the Vietnam War.
Barriers to Control from the Top The difficulties of grassroots political action lead many people to believe that you have to begin at the top to get anything done. Yet research on mandated efforts also catalogues many failures.
Deal and Nutt (1980), for example, conducted a revealing analysis of local school districts that received generous, long-term federal funding to develop experimental programs for comprehensive changes in rural education. A typical scenario for these projects included these phases:
The central administration learned of the opportunity to obtain a sizable chunk of government funding.
A small group of administrators met to develop a proposal for improving some aspect of the educational program. (Tight deadlines meant that the process was usually rushed with only a few people involved.)
When funding was approved, the administration announced with pride and enthusiasm that in a national competition, the district had won an award that would bring substantial funds to support an exciting new project to improve instruction.
Teachers were dismayed to learn that the administration had committed to new teaching approaches without faculty input. Administrators were startled and perplexed when teachers greeted the news with resistance, criticism, and anger.
Caught in the middle between teachers and the funding agency, administrators interpreted teacher resistance as a sign of defensiveness and unwillingness to change.
The new program became a political football, producing more disharmony, mistrust, and conflict than tangible improvement in education.
The programs studied by Deal and Nutt represented examples of top-down change efforts under comparatively favorable circumstances. The districts were not in crisis. The change efforts were well funded and blessed by the federal government. Yet across the board, the new initiatives set off heated political battles. In many cases, administrators found themselves outgunned. Only one superintendent survived over the program's five-year funding cycle.
In most instances, administrators never anticipated a major political battle. They were confident their proposed programs were progressive, effective, and good for everyone. They overlooked the risks in proposing change that someone else was expected to carry out. As a result, they were showered with antagonism instead of the expected huzzahs.
A similar pattern appears repeatedly in other attempts at change from above. Innumerable efforts mounted by chief executives, frustrated managers, hopeful study teams, and high-status management consultants end in failure. The usual mistake is assuming that the right idea (as perceived by the idea's champions) and legitimate authority ensure success. This assumption neglects the agendas and power of the "lowerarchy"—partisans and groups in midlevel and lower-level positions, who devise creative and maddening ways to resist, divert, undermine, ignore, or overthrow innovative plans.
Organizations are lively arenas for internal politics. They are also active political agents in larger arenas, or "ecosystems" (Moore, 1993). Since organizations depend on their environment for resources they need to survive, they are inevitably enmeshed with external constituents whose expectations or demands must be heeded. These constituents often speak with loud but conflicting voices, adding to the challenge of managerial work (Hoskisson, Hitt, Johnson, and Grossman, 2002). As political actors, organizations need to master many of the basic skills of individual managers as politicians: develop an agenda, map the environment, manage relationships with both allies and enemies, and negotiate compacts, accords, and alliances.
Many of an organization's key constituents are other enterprises. Just as frogs, flies, and lily pads co-evolve in a swamp, organizations develop in tandem in a common environment. Moore (1993) illustrates with two ecosystems in the personal computer business, one pioneered by Apple Computer and the other by IBM. Apple's ecosystem dominated the PC industry before IBM's entry. But IBM's ecosystem rapidly surpassed Apple's. IBM had a very powerful brand, and the open architecture of its PC induced new players to flock to it. Some of these players competed head-on (for example, Compaq and Dell in hardware, Microsoft and Lotus in software). Others were related much like bees and flowers, each performing an indispensable service to the other. One symbiotic pairing was particularly fateful. As Microsoft gained control of the operating system and Intel of the microprocessor in the IBM ecosystem, the two increasingly became mutually indispensable. More sophisticated software needed faster microprocessors, and vice versa, so the two had every reason to cheer each other on. "Intel giveth, and Microsoft taketh away," as some cynics put it. Two companies that began as servants to IBM eventually took over what became the "Wintel" ecosystem. Industry terminology changed to reflect the shift in power—what were once called "IBM clones" and proudly advertised as "100-percent IBM compatible!" became simply "Windows PCs."
The same factors that spawn politics inside organizations also create political dynamics within and between ecosystems. Organizations have parochial interests and compete for scarce resources. Ross Johnson again provides an example. After he became CEO of RJR Nabisco, Johnson made a fateful decision to engage in a management craze of the time—a leveraged buyout (LBO). The basic idea of an LBO is to find an undervalued company, buy up shares with someone else's money, fix it up or break it up, and sell it at a profit. It's a high-risk venture.
Johnson's idea was to use a leveraged buyout to take RJR Nabisco private. But once he had announced the LBO, the company was in play; it was open season for anyone to enter the bidding. Anyone in this case meant Henry Kravis and his secretive firm, KKR, with some $45 billion in buying power. Johnson thought Kravis would stay out because the deal was so big, but he underestimated a dangerous adversary. What followed was one of business history's biggest six-week poker games. Huge coalitions formed around both players. Millions of dollars in fees gushed into the laps of bankers, lawyers, and brokers. When the dust cleared, Henry Kravis and KKR had won by a nose. RJR Nabisco was theirs for a cool $25 billion.
The bidding war created a fluid, temporary ecosystem illustrating many of the complexities of such arrangements. Dozens of individuals, groups, and organizations were involved, but the big prize in the contest, RJR Nabisco, was largely a bystander; its board was on the sidelines for most of the game. Johnson and his allies pursued their private interests more than the corporation's. Financial stakes were enormous, yet the game was often driven by issues of power, reputation, and personal animosity. Everyone wanted the prize, but you could win by losing and lose by winning. In the competitive frenzy, both sides bid too much, and the winner was stuck with an overpriced albatross.
The RJR Nabisco LBO ecosystem lasted only until the brutal bidding war was over. But many ecosystems, like Wintel's and Wal-Mart's, are durable, lasting for decades. In such cases, an organization's role in the ecosystem is an important determinant of how it can best balance pursuit of its own interests with the overall well-being of the ecosystem. This may not be a major concern for small players with only marginal influence, but Iansiti and Levien argue that this issue is vital for "keystone" firms like Wal-Mart that sit at the hub of an ecosystem:
Wal-Mart is successful because it figured out how to create, manage and evolve an incredibly powerful business ecosystem. Over the years Wal-Mart took advantage of its ability to gather consumer information to coordinate the distributed assets of its vast network of suppliers. Wal-Mart made a point of tracking demand information in real time. The key was that it decided to share this information with its supplier network. It introduced Retail Link, the system that still delivers the most accurate, real-time sales information in the industry to Wal-Mart partners. Wal-Mart was unique in the retail space in offering this kind of service, turning Retail Link into a critical supply chain hub [2004, pp. 1–2].
Fishman agrees but sees less rosy results:
The ecosystem isn't a metaphor; it is a real place in the global economy where the very metabolism of business is set by Wal-Mart. The fear of Wal-Mart isn't just the fear of losing a big account. It's the fear that the more business you do with Wal-Mart, the deeper you end up inside the Wal-Mart ecosystem, and the less you are actually running your own business. Wal-Mart's leadership virtually never acknowledges this control, but the company clearly understands it, and even takes a sly pride in it [2006, p. 16].
But Wal-Mart's ecosystem is not a gated preserve. Much as it might like to, Wal-Mart has limited ability to exclude other players—including the firm's many competitors and critics—who choose to spend time in its neighborhood, even if uninvited. Wal-Mart initiatives to build new stores are routinely countered by opponents who decry the economic and environmental costs they claim the new outlet would create.
Organizational ecosystems come in many forms and sizes. Some, like Wal-Mart's, are huge and global. Others are small and local (like the ecosystem of laundries in Oslo or policing in Omaha). Next, we examine several significant types of ecosystems to illustrate the dynamics involved.
Public Policy Ecosystems
In the public sector, policy arenas form around virtually every government activity. One example is the air carriers, airplane manufacturers, travelers, legislators, and regulators who are all active participants in the commercial aviation ecosystem. In the United States, the Federal Aviation Administration has been a troubled key player for decades. Charged with divergent goals of defending safety, promoting the economic health of the industry, and keeping its own costs down, the FAA has perennially come under heavy fire from virtually every direction. Feeble oversight permitted marginal carriers to shortcut safety but continue flying. An air traffic modernization plan rang up billions of dollars in bills, but twenty years later had yielded few results:
When Marion C. Blakey took over at the Federal Aviation Administration in 2002, she was determined to fix an air travel system battered by terrorism, antiquated technology, and the ever-turbulent finances of the airline industry. Five years later, as she prepares to step down on Sept. 13, 2007, it's clear she failed. Almost everything about flying is worse than when she arrived. Greater are the risks, the passenger headaches, and the costs in lost productivity. Almost everyone has a horror story about missed connections, lost baggage, and wasted hours on the tarmac [Palmeri and Epstein, 2007, p. 1].
Some of the FAA's troubles were internal. An earlier report from what was then called the General Accounting Office had faulted the agency's lack of a "performance-oriented culture essential to establishing a culture of accountability and coordination" (Dillingham, 2001). But almost every move it made to solve one constituency's problem created trouble for others. Much of the fault lay in its ecosystem: "Nobody is in charge. The various players in the system, including big airlines, small aircraft owners, labor unions, politicians, airplane manufacturers, and executives with their corporate jets, are locked in permanent warfare as they fight to protect their own interests. And the FAA, a weak agency that needs congressional approval for how it raises and spends money, seems incapable of breaking the gridlock" (Palmeri and Epstein, 2007).
Education is another illustration of a complex policy ecosystem. Everyone thinks good schools are important. Families want their children to acquire the ingredients for success. Businesses need well-trained, literate graduates. Economists and policy analysts stress the importance of human capital. Teachers want better pay and working conditions. Taxpayers want to cut frills and keep costs down. Almost no one believes that American schools are as good as they should be, but there is little agreement about how to make them better. One popular remedy, enshrined in federal law in the "No Child Left Behind" Act, emphasizes tests and incentives. Measure how well schools are doing, reward the winners, and penalize the losers. But many teachers and parents argue that overemphasis on metrics and sanctions is crippling teachers and driving out essential learning opportunities.
Another cure for educational ills is granting parents more choice about which schools their children attend. One version of school choice is vouchers, grants that families can use to send their children to private schools. Another is charter schools, publicly funded, quasi-independent educational enterprises. Proponents of choice argue that parents would obviously choose the best school for their children and that the ensuing competition would have an invigorating effect on public schools. But school administrators maintain that vouchers and charter schools drain away resources and exacerbate the challenges of the neediest students. Coalitions have formed on both sides of the choice issue and have lobbied vigorously at the state and national levels. Available research suggests that, on the whole, choice programs enhance student achievement and parent satisfaction (Robinson, 2005), but opponents question the evidence, and the battle goes on. No Child Left Behind has been even more controversial; research evidence is equivocal, and strenuous opposition in many states has forced the federal Department of Education into state-by-state negotiations to modify the requirements, making valid assessments of success even more difficult (Sunderman, 2006). The debates continue.
Business-Government Ecosystems
Government and business inevitably intersect in a multitude of ecosystems. Perrow (1986) discusses one example: pharmaceutical companies, physicians, and government. A major threat to drug companies' profit margins is generic drugs, which sell at a much lower price than brand-name equivalents. In the United States, the industry trade association, an interorganization coalition, successfully lobbied many state legislatures to prohibit the sale of generic drugs, ostensibly to protect consumers. The industry also persuaded the American Medical Association (AMA) to permit drugs to be advertised by brand name in its journals. Consumers normally buy whatever the doctor prescribes, and drug companies wanted doctors to think brands rather than chemical names. As a result of the policy shift, the AMA's advertising income tripled in seven years, and the manufacturers strengthened the position of their respective brands (Perrow, 1986).
The ecosystem shifted with the rapid rise of a newly powerful group of players: insurers and managed care providers. The growing market dominance of a few large insurers dramatically reduced the bargaining power of physicians and drug companies. Insurers used their growing political leverage to push physicians to prescribe less expensive generic drugs. In an effort to save consumers' money, state legislatures began to require pharmacists to offer the generic equivalent when a brand name is prescribed. Pharmaceutical companies fought back with television advertising encouraging patients to ask their doctors for brand name drugs.
Drug companies are not alone in their attention to politics. Firms search feverishly for sources of competitive advantage. One such source is "government policy, which determines the rules of commerce; the structure of markets (through barriers to entry and changes in cost structures due to regulations, subsidies, and taxation); the offerings of goods and services that are permissible; and the sizes of markets based on government subsidies and purchases. Consequently, gaining and maintaining access to those who make public policy may well be a firm's most important political goal" (Schuler, Rehbein, and Cramer, 2002, p. 659).
Schuler's group found that politically active firms use a range of strategies for influencing government agencies. FedEx illustrates the possibilities. In Chapter Seven, we noted the company's sophisticated approach to managing people. FedEx has been equally agile in managing its political environment. The New York Times described it as "one of the most formidable and successful corporate lobbies in the capital" (Lewis, 1996, p. A17). Its CEO, Fred Smith, "spends considerable time in Washington, where he is regarded as Federal Express's chief advocate. It was Mr. Smith who hit a lobbying home run in 1977 when he persuaded Congress to allow the fledgling company to use full-sized jetliners to carry its cargo, rather than the small planes to which it had been restricted. That was the watershed event that allowed the company to grow to its present dominating position with almost $10.3 billion in business" (p. A30).
FedEx's political action committee ranked among the nation's top ten, making generous donations to hundreds of congressional candidates. Its board was adorned with former legislative leaders from both major political parties. Its corporate jets regularly ferried officeholders to events around the country. All this generosity paid off. In October 1996, when FedEx wanted two words inserted into a 1923 law regulating railway express companies, the Senate stayed in session a few extra days to get it done, even with elections only a month away. A first-term senator commented, "I was stunned by the breadth and depth of their clout up here" (Lewis, 1996, p. A17).
A similar co-evolution of business and politics occurs around the world:
No one would dispute that business and politics are closely intertwined in Japan. As one leading financial journalist puts it, "If you don't use politicians, you can't expand business these days in Japan—that's basic." Businessmen provide politicians with funds, politicians provide businessmen with information. If you wish to develop a department store, a hotel or a ski resort, you need licenses and permissions and the cooperation of leading local political figures. And it is always useful to hear that a certain area is slated for development, preferably several years before development starts, when land prices are still low [Downer, 1994, p. 299].
Society as Ecosystem
On a still grander scale, we find society: the massive, swirling ecosystem in which business, government, and the public are embedded. A critical question in this arena is the power relationship between organizations and everyone else. All organizations have power. Large organizations have a lot: "Of the 100 largest economies in the world, 51 are corporations, and only 49 are countries. Wal-Mart is bigger than Israel, Poland or Greece. Mitsubishi is bigger than Indonesia. General Motors is bigger than Denmark. If governments can't set the rules, who will? The corporations? But they're the players. Who's the referee?" (Longworth, 1996, p. 4).
This question is becoming more urgent as big companies get bigger. In 1954, it took more than sixty companies to equal 20 percent of the American economy; in 2005, it took only twenty. "We don't often talk about the concentration of corporate power, but it is almost unfathomable that the men and women who run just 20 companies make decisions every day that steer one-fifth of the U.S. economy" (Fishman, 2006, p. 22). A number of organizational scholars (including Korten, 1995; Perrow, 1986; and Stern and Barley, 1996) emphasize that whoever controls a multibillion-dollar tool wields enormous power. Korten's view is particularly gloomy:
An active propaganda machinery controlled by the world's largest corporations constantly reassures us that consumerism is the path to happiness, government restraint of market excess is the cause of our distress, and economic globalization is both a historical inevitability and a boon to the human species. In fact, these are all myths propagated to justify profligate greed and mask the extent to which the global transformation of human institutions is a consequence of the sophisticated, well-funded, and intentional interventions of a small elite whose money enables them to live in a world of illusion apart from the rest of humanity. These forces have transformed once beneficial corporations and financial institutions into instruments of a market tyranny that is extending its reach across the planet like a cancer, colonizing ever more of the planet's living spaces, destroying livelihoods, displacing people, rendering democratic institutions impotent, and feeding on life in an insatiable quest for money [Korten, 1995, p. 12].
Do sophisticated consumer marketing firms create and control consumer tastes, or do they simply react to needs created by larger social forces? Critics like Korten are convinced that the advantage lies with the corporations, but Pfeffer and Salancik (1978) see it the other way around, as do many proponents of "the marketing concept":
The marketing concept of management is based on the premise that over the longer term all businesses are born and survive or die because people (the market) either want them or don't want them. In short, the market creates, shapes, and defines the demand for all classes of products and services. Almost needless to say, many managers tend to think that they can design goods and services and then create demand. The marketing concept denies this proposition. Instead, the marketing concept emphasizes that the creative aspect of marketing is discovering, defining, and fulfilling what people want or need or what solves their life-style problems [Marshall, 1984, p. 1].
Proponents of this view note that even the most successful marketers have had their share of Edsels—products released with great fanfare and a huge marketing budget that fluttered briefly and then sank like stones.
Are large multinational corporations so powerful that they have become a law unto themselves, or are they strongly shaped by the need to respond to the customers, culture, and governments in the countries where they operate? An ecological view suggests that the answer is some of both. Ecosystems and competitors within them rise and fall. Power relations are never static, and even the most powerful have no guarantee of immortality. Of the top twenty-five U.S. companies at the beginning of the twentieth century, all but one had dropped off the list or vanished altogether when the century came to a close. The lone survivor? General Electric.
Fishman frames both sides of this issue in the case of Wal-Mart:
The easiest response to the Wal-Mart critics comes from people who shrug and say, the United States economy is capitalistic and market-based. Wal-Mart is large and ubiquitous—and powerful—because it does what it does so well. Wal-Mart is winning for no other reason than personal choice: Customers vote for Wal-Mart with their wallets; suppliers vote for Wal-Mart with their products. Any consumer, any businessperson who doesn't care for the way Wal-Mart does business is free to buy and sell products somewhere else.
The problem is that this free choice has become an illusion. In many categories of products it sells, Wal-Mart is now 30 percent or more of the entire market. It sells 31 percent of the pet food used in the United States, 37 percent of the fresh meat, 45 percent of the office and school supplies bought by consumers, and 24 percent of the bottled water. That kind of dominance at both ends of the spectrum—dominance across a huge range of merchandise and dominance of geographic consumer markets—means that market capitalism is being strangled with the kind of slow inexorability of a boa constrictor. It's not free-market capitalism; Wal-Mart is running the market. The newly merged Procter & Gamble and Gillette has sales in excess of $64 billion a year—not only bigger by far than any other consumer products company, but bigger than all but 20 public companies of any kind in the United States. But remember: Wal-Mart isn't just P&G's number-one customer; it's P&G's business. Wal-Mart is bigger than P&G's next nine customers combined. That's why businesspeople are scared of Wal-Mart. They should be. And if a corporation with the scale, vigor, and independence of P&G must bend to Wal-Mart's will, it's easy to imagine the kind of influence Wal-Mart wields over the operators of small factories in developing nations, factories that just want work and have no leverage with Wal-Mart or Wal-Mart's vendors [2006, p. 20].
Wal-Mart's clout remains formidable, but it is hard to predict where it will go from here. It has been caught in an embattled, slow-growth mode in recent years. Will it catch a second wind and accelerate its growth? Or will it follow companies like Sears and General Motors into a long downhill slide from the pinnacle it once commanded? Whatever happens to Wal-Mart, the battle over corporate power will continue on a global scale. Large multinational companies have enormous power but must also cope with the demands of other powerful players: governments, labor unions, investors, and consumers. In a cacophonous global village, this is the biggest political contest of all.
Organizations are both arenas for internal politics and political agents with their own agendas, resources, and strategies. As arenas, they house competition and offer a setting for the ongoing interplay of divergent interests and agendas. An arena's rules and parameters shape the game to be played, the players on the field, and the interests to be pursued. From this perspective, every significant organizational process is inherently political.
As agents, organizations are tools, often very powerful tools, for achieving the purposes of whoever controls them. But they are also inevitably dependent on their environment for needed support and resources. They exist, compete, and co-evolve in business or political ecosystems with clusters of organizations, each pursuing its own interests and seeking a viable niche. As in nature, relationships within and between ecosystems are sometimes fiercely competitive, sometimes collaborative and interdependent.
A particularly urgent and controversial question is the relative power of organizations and society. Giant multinational corporations have achieved scale and resources unprecedented in human history. Critics worry that they are dominating and distorting politics, society, and the environment. Others argue that organizations are inherently dependent on a changing and turbulent environment—they retain their clout only by adapting to larger social forces and responding to the needs and demands of customers and constituents.