Ethical Issues in Walmart’s History: Analytical Essay

Introduction

Walmart started as a small-scale company with a solo discount store that had the simple idea of selling more products at less prices. Ultimately, it grew into one of the top retailers in over a half-century in the world. In other words, it has around 11,200 stores with approximately 265 million customers under 55 posters in 27 nations and has an electronic Commerce website in 10 countries. Moreover, according to 2018 fiscal year survey, Walmart hires over 2 million sales associates globally. Walmart pursues to become a leader in sustainability, organization opportunities, and employment opportunities. This work outlines the history of the company, role of CSR, ethical issues, and other recommendations to be made. Walmart faces a lot of criticism concerning business ethics which include predatory price, acting inhumane, gender stereotypes, supporting unethical decisions, and policies against the union which can be overcome by working more on corporate social responsibility, sustainability conferences and projects.

Importance of Corporate Social Responsibility

The term Corporate Social Responsibility (CSR) Refers to the influence of any corporation on the stakeholders including employees, customers, suppliers, community (Jiwani, 2019). Regarding to company’s culture, beliefs and values CSR may differ from one to another but in general, it is all about what action is right or wrong (Jiwani, 2019). Each organization to maintain its success in long term should make sure that it has meet the requirements of these groups and make them satisfied since they can harm the corporation if they don’t follow CSR (Jiwani, 2019). Each stakeholder can harm the organization by refusing them and not continuing to support them. Therefore, CSR is a particularly important part of any organization which they should take into their account. Though the existence of profit-based companies is to maximize their profit, it is clear that achieving profit in long term is impossible for firms without behaving socially responsible. As Porter & Kramer (2006) explained nowadays company’s ranking highly depends on how they follow CSR in their activities and this ranking is the center of concentration for the public, so CSR plays a significant role for business owners in every country. As Porter & Kramer (2006) have described who advocate that CSR is important for every company have four arguments:

• Moral obligation: refers to the fact that companies should act as a good citizens and care about their stakeholders and do the right things
• Sustainability: “meeting the needs of the present without compromising the ability of future generations to meet their own needs” (Brundtland, 1980 as cited in Porter & Kramer, 2006). Sustainability has an economic, environmental and social aspect.
• Licence to operate: refers to the fact that every business should perform its operation with the permission of governments, communities and other stakeholders.
• Reputation: CSR should be implemented by companies since it can increase their view in public and provide a good vision for their brand.

In fact, CSR mostly is important in the so-called triple bottom line of environment, economy and society (Porter & Kramer, 2006). To exemplify the environment, we can refer to global warming, an example for economics can be the overuse of natural resources and example of society can be tribe and its custom. Moreover, CSR is important within every organization since it forms individual behavior, as a result, every individual might have a positive or negative impact on communities, the environment and other citizens (Jiwani, 2019).

All in all, CSR play an important par in each and every organization due to its great impact on stakeholders and this is why CSR report has been becoming as important as financial report in many countries and companies without considering CSR in their policy can not maintain their business in a long-term period.

Walmart’s background

Walmart started its business with a small retail store and has kept expanding during 50 years to one of the largest retail stores in the world. On July 2, 1962, Sam Walton opened the first Walmart retail store in Rogers, Arkansas with the mission of lower price and great service. After the firs Walmart store Walton kept opening new stores and in 1967 Walton’s family owns 24 stores. Walmart become public and national in 1970 and Sam Walton associated it with lots of partners. At the beginning of 1980’s Walmart owns 276 stores and employs 21,000 associates. At late 1980’s Walmart opened its first supercentre in Washington, Missouri which was a combination of general merchandise and full-scale supermarket to produce convenience shopping and this made Walmart the nation’s No.1 Retailer. Sam Walton was awarded on 1992 by President George H. W. Bush, shortly before he passed away. Walton family and Walmart stores kept the mission of “Save money, Live better” inherited from Sam during these years. In early 1990’s Walmart Started working in Canada and in 1996 expanded into China. In 2000, Walmart.com was established, giving Walmart’s customer the opportunity to shop online. Moreover, at that time Walmart owned 3,989 stores and clubs together with employing more than 1.1 associates all around the world. In 2000s also, Walmart ranked as the fortune 500 US’s biggest companies. From 2000 to 2010 Walmart opened stores in Japan and India. Now Walmart's official name has changed from Wal-Mart store Inc. to Walmart Inc. Judith McKenna is the president and CEO of Walmart. These days, almost 265 million customers and members visit Walmart in every single week, and it owns more than 11,200 stores in 27 countries. Moreover, it has E-commerce websites in 10 countries and employed 2.2 million associates around the world (Walmart history, n.d).

Ethical Issues in Walmart’s history

Walmart over the many years faces many ethical issues which can be listed below:

1) Predatory Price.

It is an unethical strategy adopted by Walmart since 1993 which means minimizing the prices of its products in order to eliminate the competition in the market. Therefore, various department of agriculture, trade and consumer protection fill a petition against this illegal act and suspects them of violating the state antitrust law. Apparently, Walmart has been using such practices in order to gain a monopoly in the market (Jones, 1993).

For example, in 1995 American pharmacies accused Walmart of selling items at extremely low prices. In a 2000 case study department of agriculture, trade, and consumer protection accused Walmart of selling items like butter, milk and detergent at relatively low prices with the intention of becoming a monopoly on the market and failing other businesses.

However, many countries fight against the malpractices of Walmart. But unfortunately, Walmart has not been proven as guilty or penalized for its strategy of predatory pricing in the face of legal constitution.

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2) Acting inhumanely.

According to New York times (Abrams, 2017) report states that Walmart refuses to accept and grant medical leave for its employees. In this particular case, according to the survey of 1000 employees, they assert Walmart of not following the law related to the Americans with Disabilities Act and the family and medical Leave Act. With this, Walmart has been confronted with a major issue related to employee and labor relations. It includes low wages, poor-quality of working conditions and underprivileged health facilities. As a result, group of Walmart workers also reported their complaints to Equal Employment Opportunity Commission. In this complaint, it states that the company is inequitable against workers and pregnant women. It leads to 70% turnover annually among Walmart workers (Drake, 2013).

3) Gender Stereotypes.

Walmart generally conducts unfair and partial allotment practices towards male and female worker level of job positions. Hiring faculty usually perform unethical practices towards women by replacing them from order-filling positions with comparison to 18 to 25-year-old men workforce in this respective position. It shows how discrimination is held in terms of salary and job position. However, still Walmart is considered as one of the best retailers in the world and has millions of consumers in demand. Most importantly, Walmart employees is well known for various protests and walkouts (even on black Friday) across the country in order to build awareness about the company’s conduct of low wage and poor quality of working conditions (Jacobs, 2016).

Supporting unethical decisions.

Walmart has been accused of supporting managers and supervisors who have been making untrustworthy choices for the organization. For example, when an executive made up a report for Walmart stating that employee wages could be reduced by eliminating unhealthy people from Walmart, hiring more of part-time employees and also reducing the financial build-up for the retirement of employees (401K benefits). All of these changes would have benefited Walmart in monetary terms for up to 1 billion dollars. Walmart did not see any kind of issues with the report provided by the executive and later offered her a position as the head of the human resources department in the following year (Jacobs, 2016).

Walmart against unions.

Walmart is constantly against unions and threatens their employees to fire them if any of the workers attempt to form unions. In addition, if workers in any Walmart store decide to vote for becoming a union, Walmart is not going to support them. Walmart chooses to close down those stores rather than forming unions. For example, in 2000 some employees in Texas’ store from the meat packaging department chose to vote to become a union, but instead, Walmart switched to pre-packed beef in several states and closed down its meat packing divisions. Same thing happened in Quebec in 2005 when Walmart decided to close down stores because of the decision made by workers to vote for unionization (Basker, 2007, p. 186). However, nowadays in more developed countries, if employees want to form unions and Walmart resists to it then there is a fight back from the local, state or government organizations, which in the long run makes a difference in Walmart’s conduct. For example, when Walmart entered Argentina in 1995, they fired two employees who tried to form unions, but after a lot of negotiation, Walmart proceeded onward to adjust to the Argentina culture and did not prevent workers from forming unions (Jacobs, 2016, p. 10).

Changes to be made

In 2017 Walmart introduced its new program Project Gigaton. It is Walmart’s initiative to reduce emissions in the global value chain by 1 billion metric tons – a gigaton of greenhouse gas emissions from global value chains by 2030. Project Gigaton is designed a way that every supplier can participate. The supplier can set a goal in one of six key areas: energy, agriculture, waste, products, deforestation or packaging, or just set a pure emissions reduction target. For example, cut carbon intensity per revenue in half by 2030. The goal is set is up to every supplier. Each year supplier has to submit an impact report. And Walmart will announce total progress annually (“Project Gigaton”, n.d.).

Once a supplier is signed up got Project Gigaton, the supplier becomes Giga Guru. Currently, there are 128 Giga-Gurus and 83 others sparking change who haven’t reached Giga-Guru yet but started taking meaningful steps and reporting those.

Also, Walmart is launching its Walmart Private Brands, its goal is to have a 100% of recyclable packaging by the year 2025.

In the last annual Walmart Sustainability conference, it has been announced that Project Gigaton is launching in Canada. Over 200 suppliers already signed up for Project Gigaton in Canada. Walmart Canada has driven to be a leader in sustainability. In 2018 Walmart Canada diverted 87% of waste away from land field. Walmart Canada is on the way to achieve zero food waste by 2025. In September 2018 Walmart Canada announced its plans to use 100% alternative power for all fleet vehicles by 2028. Since 2016 Walmart Canada reduced use of plastic bags by 50% (“Project Gigaton”, n.d.).

Walmart thinks that it is very important to educate its customers on how to recycle the products they buy. That is why Walmart will start putting “How2Recycle” labels on all their products. By the end of 2021 all the packaging will be labeled.

Conclusion

In conclusion, Walmart has implemented a lot of ethical issues which was not in the best interest of the employees. Since Walmart is a huge organization it unethical practices has affected not only its employees in the work place but it has also impacted the market around it. This has an effect on the company’s image. If companies like Walmart follow ethical practices it can not only build a good reputation but also it can get determined employees who will be happy and willing to work for the company without any hesitation and also be an example for other small organizations to implement and follow their business ethically. Walmart has to keep working on for the betterment of its employees, consumers and itself. They need to come up with various strategies to build up their ethical practices and turn down their unethical practices.

References

1. Abrams, R. (2017). Walmart Is Accused of Punishing Workers for Sick Days. The new york Times. Retrieved from https://www.nytimes.com/2017/06/01/business/walmart-workers-sick-days.html
2. Basker, E. (2007). The Causes and Consequences of Walmart's Growth. Journal of Economic Perspectives, 21(3), 177-198. Retrieved August 9, 2019, from http://search.ebscohost.com.proxy.myasm.ca/login.aspx?direct=true&db=bth&AN=29325202&site=eds-live
3. Drake, G. (2013). Justice In America – Walmart & Gary Drake’s Story. insider exclusive . Retrieved from https://insiderexclusive.com/justice-in-america-walmart-gary-drakes-story/
4. JiWani, Z. (2019). Stakeholder theory, corporate social responsibility and corporate citizenship. Retrieved from https://www.myasm.ca/lms/mod/resource/view.php?id=70218
5. Jones, K. (1993). Wal-Mart on Trial on 'Predatory Pricing' Charges. The new york times. Retrieved from https://www.nytimes.com/1993/08/24/business/wal-mart-on-trial-on-predatory-pricing-charges.html
6. Jacobs, H. (2016, February 7). What are the Consequences of Unethical Behavior on Walmarts Brand? Jacobs branding graphics and website designs, 1-26. Retrieved September 3, 2019, from https://www.academia.edu/37649549/What_are_the_Consequences_of_Unethical_Behavior_on_Walmarts_Brand
7. Porter, M. E., & Kramer, M. R. (2006). The link between competitive advantage and corporate social responsibility. Harvard business review, 84(12), 78-92.
8. (n.d.). Project Gigaton. Retrieved from https://www.walmartsustainabilityhub.com/project-gigaton
9. Walmart history. (n.d). Retrieved September 2, 2019, from Corporate Walmart, Walmart official website, https://corporate.walmart.com/our-story/our-history