Walmart Ethics: Analyzing the Management of Ethical and Compliance Challenges

Walmart was founded in 1962 in Rogers, Arkansas by Sam Walton. Since then, Walmart has exploded from a small chain to having more than eight thousand stores in twenty seven countries around the world. Walton's successful business wasn't always this big and powerful, but it exceeded due to some key aspects of their business that Walton stressed to his employees. One of which was the work ethic that he instilled within his stores. He lived by the motto "why put off until tomorrow what you can do today," and his employees followed in his footsteps.

The other aspect that Walton introduced was what he called the '10-foot rule.' This was if employees were within 10 feet of a customer, they would make eye contact, greet them, and ask if the needed any assistance with anything. With this exceptionally great customer relationship and the incredible work ethic it was no surprise that Walmart grew to where they are today, bringing in 200 million customers a week.

With Walmart being such a large corporation, the actions of the corporation affect a lot of people. Besides their shareholders, Walmart's actions can affect their competitors, suppliers, employees, and the environment around them. Each of these groups play a major role in the way that Walmart runs its daily business and are all affected differently by potential actions. For example, due to Walmart's low price guarantee, it makes it hard for other stores to compete. To do so, those stores must lower the wages for their employees. This has caused people to actual refuse to allow Walmart to build in their city or town. While citizens protesting the addition of a new store is acceptable, other actions are not so ethically sound.

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Our book uses an example where a D.C. City Council chairman tried to pass a law that required stores larger than 75,000 square feet must pay their employees a minimum wage of $11.75 while smaller stores were only required to pay $8.25.(Ferrell) This would give the employees at bigger stores an unfair advantage. Another example of Walmart's relationship with it's stakeholders is it's relationship with their suppliers. Walmart's major advantage is it's 'everyday low prices.' For the prices to stay low, Walmart must work with it's supplier to reduce the cost of packaging and shipping to keep the price low for the consumer. They've work with the Sustainability Consortium to develop a system for measuring and reporting known as the Sustainability Index.

Using the Sustainability Index, Walmart intends to increase the sustainability of their products and create a more efficient supply chain. According to our textbook, CEO Mike Duke added four new sustainability goals to their already existing 'Global Responsible Sourcing Initiative.' These four goals were as follows, (1) purchase 70 percent of merchandise sold in U.S.

Walmart stores and Sam's Clubs from global suppliers that use the Sustainability Index to assess and share information about their products by 2017; (2) use the Sustainability Index as a model for U.S. private brands; (3) apply new evaluative criteria for key sourcing merchants to encourage sustainability to become a more important consideration in buyers' daily jobs; and (4) donate $2 million to fund the Sustainability Consortium. (Ferrell) If these goals were to be met, Walmart believes in would increase the sustainability of the suppliers.

But critics believe that it would create more of a burden for suppliers. This is because if the supplier can't meet these goals, Walmart could possibly drop the suppliers product, or find another supplier to deliver the product. Many companies are dependent on Walmart for a large portion of their business. But with the size of Walmart comes power, the power to negotiate with suppliers for lower prices. Even though these businesses would benefit from Walmart selling their product, to get a lower price they may be forced to outsource their production to a cheaper alternative like China.

Walmart could also be used as an example from many unethical issues ranging from a lack of employee benefits to discrimination. On the topic of benefits, Walmart doesn't offer healthcare coverage to employees who work under 30 hours a week. Another example of Walmart's poor relationship with it's workforce is when they decreased it by 1.4 percent but expanded and increased their amount of stores by 13 percent. Another issue that is brought up is the lack of unions or the lack of ability to unionize. Even though Walmart claims they aren't against unions, they make it extremely difficult to join one.

Our book uses an example of where 7 of 10 Walmart butchers in Jacksonville, Texas, voted to join the United Food Workers Union. Walmart responded by only selling pre cut meats in their stores, eliminating the need for butchers all together. (Ferrell) Besides these two key unethical issues, Walmart has also been the subject of discussion when it comes to poor workplace conditions, leadership issues, and discrimination.Overall, through the utilitarian way of thinking, Walmart is doing a fantastic job for the majority of people. Sure some companies and some people may be affected poorly, but overall the work of Walmart is great for the greatest amount of people overall.

Through the deontological way of thinking there are some problems with Walmart. Our book states that in Deontology, equal respect must be given to all persons. (Ferrell) Walmart definitely does not give equal respect to everyone. They do respect all their consumers equally, as they are known for their excellent customer service. But, they do not respect their competitors when the force them to lower their wages and they don't respect the suppliers when they are forced to outsource their production instead of keeping it in the United States.

Through a relativist perspective, you would have to compare Walmart to other major retail chains to judge if their practices are ethically acceptable. One way that Walmart could better their relationships with their stakeholders is by using methods of procedural justice, such as increasing the visibility of executives and making sure that everyone works well together.

Overall I have learned a lot through studying Walmart and the business actions. Though they have changed exponentially since they were first created in Arkansas, there is still much they could improve on. I believe the only reason that Walmart is in the news often for unethical conduct is because of the size of the retail chain. It is really hard to control and keep an eye on all your employees when you have over eight thousand stores.

If Walmart appointed more people to throughout their stores, maybe it wouldn't be in the news as often because they would be able to prevent it. Walmart still does not have the greatest reputation in the world. In North Miami has disapproved of the plan to build a Walmart in their area. (Dixon) It is because they are unsure if Walmart will be a good fit for their market. If the Walton family wants to see their business titan continue to expand, they will have to work on the issues they have and improve their relationships with their stakeholders.

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