2.3 Miles Makes a Giant Difference

Fortune 500 and nationally-known companies are not the only ones who face ethical dilemmas in their decisions. Smaller and lesser-known companies also grapple with the ethical implications of both their day-day and long-term decision-making. In my Paper 2, I will take a look at the strategic decisions behind local grocery store chain, Giant Foods. In this blog post I will give a summarized version of the case and a glossed over version of the results (sort of spoiler alert but not really). Fortunately for me, my dad has a management position in Giant, so most of the information in this post is from using him as a source.

On October 10, 2014, Giant Foods opened its new store located just off of I-81 and Wertzville Road in Enola, Pennsylvania.  A few weeks previous, Giant closed its long-time successful store 2.3 miles away on Wertzville Road located in Pennsboro Commons Shopping Center.

Giant has owned the leasing rights to the land for the new store for ten years.  Approximately three years ago, the real estate developer for the land told Giant that they must do something to develop the land or else they would not be able to renew their lease for the 25-30 acre plot.  Giant was only holding the land to prevent competitors like Wegmans from entering the market, but now they were faced with a difficult decision. It was clear that Giant needed to build a new store on this plot of land, but what should they do with the existing Enola store?

Closing the old Enola store would be a significant blow to the community. That store is the heart of Pennsboro Commons, a shopping center that only exists because of the large number of customers in which Giant brings. The 2.3 miles to the new Giant would be a way bigger issue than most would think. The communities between these two areas are very different, and even more importantly, while the new Giant was technically still in Enola, it now resided in Hampden Township as opposed to the old store which was in East Pennsboro Township.  This was a major loss of tax dollars for East Pennsboro Township.

Giant’s accounting and real estate teams crunched the numbers of their ROI figures and determined that opening a new store at the new location would increase sales because they would have a new facility, closer location to the highway, and closer vicinity to the technology parkway (new local medical and corporate centers).  They also determined that there was no way to keep both stores open; especially since the majority of existing customers would simple drive 2.3 miles to the new store. Spoiler: They were wrong. Old customers were not willing to travel to the new store, and the new customers did not care for the new store. Sales figures missed projections badly (stay tuned for exact figures in Paper 2).

Giant was fully aware of the negative implications that closing the old store would have on East Pennsboro Township. They could have tried to make a compromising plan to appease the community but instead they went with the plan for most profit. Ironically, the strategy did not go as planned and Giant is left with an angry community and a less profitable store. Below are pictures from Google Images of the Pennsboro Commons shopping center layout and a picture of what the parking lot looks like before and after Giant closed its doors.

Lessons in Business from South Park

South Park is a well-known comedy program on Comedy Central intended for mature audiences. The creators of South Park, Matt Stone and Trey Parker, use dark humor, crude language, and a wide-variety of satire in their show which is based off of the adventures of four fourth grade boys who live in a small Colorado town called South Park.

Stone and Parker take pride in their fearlessness to poke fun at any sort of popular topic whether it is a person, place, organization, religion, etc. They have invited disapproval and sometimes courses of legal action from countless entities including the Church of Scientology, the NCAA, the Roman Catholic Church, Canada, Tom Cruise, Martha Stewart, PETA, and the list goes on.

Episode 09 of season 08 is titled “Something Wall Mart This Way Comes.” The “target” of this episode is not surprisingly the multinational retail giant, Wal-Mart Stores, Inc. Stone and Parker have done multiple episodes about corporate America including taking the pro-corporation stance in Season 02, which is controversial considering their studio is located in the overwhelmingly anti-corporation area of Hollywood, California. This episode, however, shows the giant retailer in a more negative light.

The episode begins with excited anticipation from South Park’s citizens as their new Wall Mart is about to open for business. One character says, “It’s like we’re a real town now.” I find this to be one of the most truthful lines of the episode. I have personally measured a town’s “relativity” by how far away they are from the nearest Wal-Mart. I spent my summer playing baseball in a very small town in upstate New York. The town is literally called Boonville. Their nearest Wal-Mart was about 40 miles away which is the first example I would use when trying to convey the middle-of-nowhere-ness to other people.

Continuing with the episode, the people of South Park cannot stop shopping at Wall Mart because of its incredible bargains. One character boasts about having, “Enough bulk Ramen to last 1,000 winters.” One of the boys, Stan Marsh, asks his father, Randy, how Wall Mart is able to sell things for much less than South Park’s local stores. Randy replies, “It’s simple economics son, I don’t understand it at all.” This symbolizes how the average American consumer really does not understand the ins and outs of the corporations at which they shop every day.

Eventually the main street in South Park becomes a ghost-town. All of the local businesses have been forced to close because they cannot compete with the low prices of Wall Mart. The people of South Park, although hopelessly addicted to shopping at the Wall Mart which is now being portrayed with dark, ominous clouds and flashes of lightning combined with typical evil-sounding music, realize that the store needs to be stopped. They have a town meeting and agree to discontinue shopping at Wall Mart; however they cannot resist the calling of wondrous bargains from the Wall Mart which has seemed to develop its own eerie persona. Follow the link to view the clip from the episode to see how the people of South Park just cannot resist shopping at Wall Mart (could not embed video).

“Well where else was I supposed to get a napkin dispenser at 9:30 at night?” This line perfectly sums up how people think of Wal-Mart as well as how Wal-Mart wants to be thought of by people. After the town burns down the Wall Mart, another one is rebuilt and opened the very next day. The boys are determined to stop the powerful retailer and embark on an adventure to Wall Mart’s headquarters in Arkansas. Meanwhile, Randy quit his job as a geologist to become a store clerk at Wall Mart in order to receive the 10% employee discount.

The boys learn from a disheveled and regretful Wall Mart President that only way the Wall Mart can be stopped is to destroy its heart. Many have attempted this feat but no one has ever been able to restrain themselves from the amazing deals long enough to accomplish the task. Determined more than ever, the boys set out to destroy the Wall Mart in South Park. In their journey to find the heart of Wall Mart, they are ambushed with slashed prices and unbelievable deals. Miraculously, the boys find the location of the heart which is just past a huge sale for plasma screen TVs. In a dramatic unveiling process, it is revealed that the heart of the Wall Mart is simply a mirror. The true heart of the Wall Mart is the consumer. It is desire. The Wall Mart can take many forms, whether it be Target, K-mart, or even Amazon, but it is the consumer who ultimately breaths life into the giant retailer.

The message(s) in this episode could not be clearer. Many people do not support large corporations like Wal-Mart because they force smaller local shops out of business. But Wal-Mart could not have become the super power that it is without the average consumer. If they have grown from one store to become the largest retailer in the world, and people continue to flood the store, then they must be doing something right. After all, the true heart of Wal-Mart is the consumer. Their goal is not to bankrupt small businesses across the country. They simply give the consumer what they want which is an opportunity to consume while also being able to stretch their income. At the end of the episode, Randy says, “The Wall Mart is us. If we like our small-town charm more than the big corporate bullies, we all have to be willing to pay a little bit more.” This is essentially a play on Adam Smith’s Invisible Hand as the town is not suggesting government intervention; rather they suggest letting the free market system work and guide itself.

If you are like me and enjoy comedic satire then I strongly suggest watching this episode of South Park if you have not already. For another take on American capitalism, I suggest “Gnomes” which is season 02 episode 17. In this episode, Stone and Parker defend capitalism when a large coffee chain called Harbucks enters the town and threatens to put the local Tweak Bros. coffee shop out of business. For more on the actual application of South Park lessons, visit this link which is an article written by Paul A. Cantor, an English professor at the University of Virginia, who uses South Park in his lectures.

The clip from the episode can be found here

The featured image can be found here

Here is an actual embedded clip (Jordi)

Honesty: The Difference Between Journalism and Art

As I watched the Bucknell Forum production of The Agony and the Ecstasy of Steve Jobs, I considered how the interruptions evaluated elements of Mike Daisey’s original monologue. I enjoyed the explanations of Chinese cultures that various professors brought to the forefront and how these challenged Daisey’s claims. I felt that these rebuttals of sorts made the audience develop their own stance on particular issues, especially regarding the economic implications on factories in China.

The Ethics of Flopping

Upon searching through past blogs, I eventually came across one entitled “Strategy or Ethics”. In it, Kaitlyn discusses ethics and their place in sports, specifically soccer. She struggles with the question of tripping someone on a breakaway before they are in the box. On one hand, it is a proven and widely used strategy. The result is a difficult free kick, as opposed to alternatives, which range from a 1 on 0 with the goalie to ejection from the game via red card. With soccer and ethics in mind, I immediately thought of an ethical issue with tight ties to the sport- flopping. However, due to my lack of knowledge in soccer history, and a thrilling overtime Bulls’ win Tuesday night, I decided to approach flopping from the sport it seems to have affected to a similar extent, basketball.

Forty years ago, before the term “flopping” had been used in the NBA, Dave Cowens was so enraged after an opponent drew a charge on him that he chased the player down the court and tackled him! Cowens viewed the flop as dishonorable, unethical. The public shared a similar mentality. Today, watching five minutes of an NBA game without seeing an embellished fall is less likely than the Patriots getting through a season without a cheating scandal. It has become a part of the game. So, I ask you, is flopping unethical?

LeBron James is the best basketball player alive today. He will likely be remembered as one of the greatest of all time. He is paid incredible amounts of money to entertain the public through his sport. LeBron, the entertainer, also has a tendency to dramatize his performance. Not only is he following an important rule of the industry (no one wants to watch a lazy performance), he is being a competitor. Dan Gilbert, owner of the Cavaliers, brought LeBron to his team because he thought it gave them the best chance of winning. It is here that LeBron must make a choice. Does he unethically “destroy the sanctity of the game” by flopping, or unethically accept Dan Gilbert’s contract offer knowing he won’t employ one of the most effective point-accruing strategies in the league?

I dislike flopping and wish it wasn’t a part of the game, basketball or soccer, but my dislike does not stem from an ethical dilemma. In my opinion, flopping slows down the game and isn’t as impressive as solid defense. I do not find it, however, to be unethical. Over the course of time, societal views shift and ethical boundaries shift with them. Forty years ago, I may have considered it unethical to flop. Today, I have begrudgingly accepted it as part of the game. Because it has become so normal, it is my opinion that players no longer view flopping as a decision of ethics, but instead as just another regulation of the game. Referees are trained to watch for and penalize flops just as they are for any other rule breaking. Nobody accuses a player who receives a reach-in foul of playing unethically, but what is different about a flopping foul when both are clearly defined in the rules and regulations of the sport?

 

Here is a LeBron James flopping compilation. What do you think? Is this unethical? Just a part of the game? An Oscar worthy performance?