Discuss about the Ethical Issues in Marketing Relationships.
Walmart is one of the biggest American international retail company that provides a range of products at the best price for its customers. The company was founded by Sam Walton in the year 1962, in Betonville , Arkansas. At present the company has its stores all over the world with 11,539 stores. Walmart aims at providing the best quality goods to its customers at the cheapest price. Though the company has been on the top list of fortune for many years, yet the company has faced many ethical issues regarding the management of the company (Arnold, Beauchamp and Bowie 2012).
In the case study provided, a brief description regarding the issues of the company and the measures that had been taken by the company has been listed. This report deals with five questions based on the sustainability, ethics, social responsibilities, stakeholders and the measures adopted by Walmart to get rid of the controversies along with some recommendations are considered.
As per the case study, Walmart has done various implementations for sustainability in its organization like improving the health benefit packages to its employees by offering subordinate deductibles as well as implementing a generic prescription plan. Walmart has also improved their ethic standards by creating an ethics department that will help to monitor the observance of suppliers. Walmart had also developed objectives in order to become more environmentally friendly. The greatest environmental concern that is associated with walmart has been urban slump. Walmart is also working to advance the moral reputation along with its status for sustainability and corporate governance. The company has also using solar power as well as wind power in their stores that is located in Colorado and California. Walmart has also reduced the consumption of energy that makes possible the conservation of energy in two major ways (Barney and Peteraf 2014). The company has also managed the consumption of energy by controlling the heating and cooling of us Walmart stores. It is also attempting to reduce the use of fossil fuel to sell more green products. It had tried its best to make its stores more eco-friendly and enhance the benefits of the employees.
The company has created “global responsible sourcing initiative” that are required to be followed by the suppliers to make sure that the suppliers are performing everything possible to go green(Schminke et al. 2014). Walmart anticipates its suppliers to recurrently improve their systems. The company typically works with suppliers in order to decrease costs of wrapping as well as shipping. This will in turn, reduce the costs of the customers. The company has worked with the sustainability consortium in the year 2009, in order to enhance a dimension and reporting system that is termed as the sustainability index.
The most significant ethical issues that Walmart had faced in the past were that they did not pay enough to the employees in the past. The ethical issues that are concerned with the stakeholders comprise charges of discrimination, leadership misbehaviour, corruption as well as safety (Neubert, Wu and Roberts 2013). Most of the ethical issue that is associated with the company deals with the fact that the company has charged of failing to make available health insurance for more than 60 percent of its employees. The company took action in order to improve relation with its stakeholders and to address the significant ethical issues. The company improved health benefit packages that they were not able to provide to the employees. The company also increased the pay that is tied to the performance. Employee displeasure often leads to customer displeasure. The ethical issue was also associated with fewer employees as they were not able to provide excellence customer service that made the customers dissatisfied. Walmart dealt with this issue by placing lowest among discount stores as well as department stores to satisfy the customers.
Another most important ethical issue that was faced by the company is that the company discriminates among the employees. In spite of the fact that women account for more than two-thirds of all Walmart employees, they frame less than 10 percent of store management. It was also found that the company paid less to female store managers as compared to male store managers. Walmart also discriminated amongst them regarding pay, training as well as promotion. Walmart demonstrated a rehabilitated commitment toward guaranteeing the company sticks to ethics as well as conformity standards. Walmart has been trying their best to improve their ethical reputation and as a result, the company released a revised global statement of ethics. The company has also embarked on a health proposal in order to address the increasing issue of obesity in America.
Walmart also faced issue related to discarded stores that were deserted when the company outgrows settings. The large stores of Walmart have been put to disadvantage as they were trying to expand into urban areas. As a result, Walmart commenced testing smaller stores that consists of about 15000 square feet in urban and rural areas. The policy related to smaller stores has already started showing promise. Another most sustainable ethical problem that is faced by Walmart is related to realm of trade practices. The thought of predatory pricing was mainly proposed to drive out competition that can be viewed as ethically uncertain. However, Walmart addressed this issue by stating that this is not as much rapacious as the main objective is to deliver the lowest possible cost to the customers (Mourad, Jaime and Garcia 2014).
According to corporate social responsibility, companies show their responsibilities towards the society on the basis of economic, legal, ethical and philanthropic segments (Martin 2015). The paper is concerned with the organization named Walmart. Walmart has been criticized for its predatory pricing that it does with respect to the local merchants.
Economic responsibilities – Walmart has shown an outstanding performance with respect to its economic performance. It has been noted that Walmart has the largest retailer in the world with a record sales. It has maintained its quality by providing the best products at a low price. It is successful in meeting the requirements of the society and achieving its mission. It has even successful in being the largest grocery chain , and has topped the fortune 500 chart. It has a huge range of 8000 facilities in 27 countries (Walmart.com. 2016).
Legal responsibilities – Walmart has generally shown adherence to the laws of the country, but at some point of time, there had been various issues raised by the employees and other stakeholders that may taint the image of the company. There were some issues regarding bribery of the company, some that are still pending in the court of law. Though not all issues are fair enough to pull down the stability of such a big company, yet various issues raised have put some severe diverse effects against the goodwill of the company.
Ethical responsibilities – ethical responsibility is just met partially by the company. The company has various plan such as “Buy American” and “Environmental Awareness” that are good examples with respect to the company’s ethical responsibility. The company even offers its employees stock options and profit sharing options in order to let the people spend in the company’s wealth. In spite of all the facilities, it forgets to fulfil its duties towards the small merchants, as it puts them out of business and enters the ton with a strong base. Moreover, it has been noted that some of the ethical plans initiated by the company have been mere publicity stunts. Employee dissatisfaction was a big issue in the company (Biong et al. 2015). It was noted that while the company was expanding its scale, it had reduced its employment by 1.4%. Although walmart has supported an open door relation with the managers of the unions, yet, it often seems to fight against them. In order to overcome the ethical issues, walmart has claimed to has donated $35 million t new process procedures, and developed ethical training sessions for more than 19000 associates.
Philanthropic responsibilities – Walmart has fared well in this area. The company has initiated various corporate citizenship initiatives like scholarships, fund raisers and even hefty donations to business schools. They have established the Walton Family Charitable Support Foundation in order to smooth the progress of their corporate philanthropy. It has even got into joint ventures with the government in order to integrate and evaluate efforts in renewable energy (Eagle and Dahl 2015). This venture had been named as “sustainable value networks”. It has joined various projects that helps in the reduction of renewable resources use. Many stores of Walmart have been able to reduce their amount of emissions.
Walmart is an extremely well established and profitable company with a noted philanthropy. However, there are enough areas where the company must improve their legal and ethical responsibilities in order to gain a better CSR. Various barriers have erupt in both the domestic and international expansion of the business, hence, keen interest should be given to rectify the issues prevailing in the environment (Stewart 2014).
According to Mitchell, the normative theory of stakeholders identification is based on three variables – power, legitimacy and urgency. According to power ,it means that the extent to which the stakeholder can access physical, material and normative means to impose their wish on the organization. According to legitimacy, it means the effect of the actions of the group or individual within a constructed system of values, beliefs and definitions, with the organization. Lastly, urgency means the degree to which stakeholders can claim or call for immediate attention to the organization. With respect to these three attributes, stakeholders of an organization could be easily identified and defined ranking according to their importance. A stakeholder who is capable of fulfilling all the three attributes, would be stated as the most important stakeholder.
Figure : Mitchell’s Normative Theory Of Stakeholder
(source : Montano and Kasprzyk 2015 )
By keeping these attributes in mind, stakeholders for Walmart could be described as follows–
Competitive businesses – though Walmart has maintained its ,motive of providing with low quality goods at cheap prices, yet various lawsuits have been filed by the competitors as it has harmed their business. Walmart has used its predatory pricing in order to fulfil its motive, whereas, other companies have suffered from the loss of customers. Various competitors has protested against the opening of Walmart store in their area. This has led to complications for the company to a certain extent. With the government coming into action , Walmart and other big retailers have faced various issues in formulating their business plans (Hughes, McEwan and Bek 2013). The competitive stakeholders have power and legitimacy as an attribute, yet they do not have the attribute of urgency in them. Therefore, it can be stated that these stakeholders are dormant stakeholders.
Suppliers – Walmart works with typical suppliers ij order to reduce its cost of packaging and shipping its goods. This thereby results into a decreased cost for the customers. One of the basic aim of the company is to use the sustainability index from sustainability consortium in order to create a sustainable supply chain for its products. In order to maintain its business, Walmart would approach any supplier to proceed with the business. If any supplier is unable to fulfil the the standards , Walmart can hire other suppler to provide a similar service. Engaged in business with a big retail company like Walmart, the companies would not find it feasible to break ties with the company. Hence , the supplier stakeholders can be listed as a discretionary stakeholder of Walmart as they nor have the power nor the urgency to move the company (Flite and Harman 2013).
Employees – most of the controversies faced by the company have been regarding the issues with its employees. There are various issues raised by the employers as failing to provide health insurance, lesser employment rates that has increased the pressure on existing workers, discouraging unions, discrimination among employees, gender biased employment , increase working hours, low wages, etc. All these issues has raised various complications for the company that had to be addressed currently. If the employees are unsatisfied, they do not serve the customers of the company well, that thereby creates a cyclical reaction of dissatisfaction. Hence, it is seen that employees of the organization has all the three attributes of power, legitimacy and urgency in them. This thereby, makes the employee as a key stakeholder of the organization.
Environment – in 2013, Walmart was held guilty for dumping the hazardous waste materials. It had to pay an amount of $81 million to settle the charges. Walmart has even increased the stress to city’s infrastructure by its own constructions. At city’s where places have been the greatest issues, there has been no room for Walmart stores. In order to portray a better image, Walmart has donated in various plans for the depletions of resources, gave scholarships to students and joined hands with various NGOs. This shows that environment is another key stakeholder for the company as it has all the attributes of power, legitimacy and urgency in it. It is therefore considered as a definitive stakeholder of the company.
According to Joseph and Kuby (2015), with various ethical issues regarding the competitors, employees, unions, bribery scandals, dumping of wastage, Walmart has suffered various ethical issues in the society. For such a big retail company to function smoothly it is quite important for the company to look after its ethical issues and social responsibilities, so that it is able to improve its standard and the opinion others hold for the company.
It formed its global ethics office in 2004, that would spread ethical corporate culture among the global stakeholders. The office provides a guidance on the ethical decision making by initiating a helpline. It had also created an ethical standards team to keep a check on the conformity of supplier factories. the company has contributed in disaster management projects , women empowerment projects and supplier development. This has helped the company to gain good name and freedom from the controversies towards a certain limit. Walmart donated around $1.5 million to the victims of hurricane sandy.
With the issue raised against the company for being biased towards he male gender of the society by providing more employment opportunities to them, Walmart had partnered with 150 companies and 60000 women to teach valuable skills in order to help them to escape poverty. Walmart also created a supplier development program where a partnership with 100 suppliers were made annually with the consent to improve the productivity of the working conditions.
The company has embarked in a health scheme to address the problem of obesity in America. Walmart agreed to lower the price of fruits and vegetables and also reduce the constituents of fats, sugar and salts in the food it sells. It could generate healthier habits among the people by changing the world eating habits.
In spite of all the controversies that the company has undergone, the revenue keep on rising for the company. The company expands its business globally and it has led the company to adopt various social, cultural, regulatory economic and political factors. Despite its difficulties of operating globally, Walmart has achieved success(May 2012 ).
Walmart must focus on achieving healthy relations with its stakeholders with its main focus on the employees and environment. Strategically formulating its plans to ward off the problems prevailing in the company would help Walmart to reach its mission more efficiently. Job securities and facilities to its employees would help the company in return to seek quality services provided. The company must involve itself in various programs initiated by the government in order to help the society. This would help the company to gain its environmental ethics (Heizer, Render and Munson 2016). Maintaining ethics towards the suppliers by helping them to secure the ties with the company. Overseas bribery scandal has tarnished the reputation of Walmart. In future, issues that affect the image and brand of the company must never me overlooked. Importance must be given to each and every matter that erupts as a controversy for the company. These controversies would grow further to pose a serious threat for the organization.
Walmart has been able to secure a high position in the list of big retailing companies both in America domestically and internationally. Issues that prevail in the company would be many, yet the company must never lose its focus to provide the best to its customers.
Conclusion
For a huge retailer like Walmart, there are numerous rsponsibilities and duties that the cmapny must fulfil in order to maintain the popularity of the brand name.. When the company fails to fulfil these responsibilities and duties, complications take over the formulation process of the company. This process leads too severe drawbacks that might affect the revenue of the company. It is important for the company to maintain an ethical background and look after the stakeholders, so that the company has no harm from any of the issues. Along with the goal to provide quality products to the customers, it must also aim at avoiding controversies by maintaining an ideal ethical nature in the organization. This would enable the company to grow further along with a profitable venture.
References
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Barney, J.B. and Peteraf, M.A., 2014. Comment on Hashai and Buckley: Transactions Costs, Capabilities, and Corporate Advantage Considerations in Theories of the Multinational Enterprise. Global Strategy Journal, 4(1), pp.70-73.
Biong, H., Kidwell, R.E., Nygaard, A. and Silkoset, R., 2015. Leading by example; Values-based strategy to instill ethical conduct).
Clark, J.B., 2014. Issues in Labor Markets: Unions, Discrimination, Immigration. Principles of Economics, p.921.
Eagle, L. and Dahl, S., 2015. Ethical Issues in Marketing Relationships.Marketing Ethics & Society, p.75.
Flite, C. and Harman, L.B., 2013. Code of ethics: principles for ethical leadership. Perspectives in Health Information Management, (Winter).
Heizer, J., Render, B. and Munson, C., 2016. Principles of operations management: sustainability and supply chain management. Pearson Higher Ed.
Hughes, A., McEwan, C. and Bek, D., 2013. Retailers, supply networks and changing articulations of ethicality: lessons from Flower Valley in South Africa. Journal of Economic Geography, 13(2), pp.211-230.
Joseph, L. and Kuby, M., 2015. Modeling retail chain expansion and maturity through wave analysis: Theory and application to Walmart and Target.International Journal of Applied Geospatial Research (IJAGR), 6(4), pp.1-26.
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Neubert, M.J., Wu, C. and Roberts, J.A., 2013. The influence of ethical leadership and regulatory focus on employee outcomes. Business Ethics Quarterly, 23(2), pp.269-296.
Schminke, M., Caldwell, J., Ambrose, M.L. and McMahon, S.R., 2014. Better than ever? Employee reactions to ethical failures in organizations, and the ethical recovery paradox. Organizational Behavior and Human Decision Processes, 123(2), pp.206-219.
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Walmart.com. (2016). [online] Available at: https://www.walmart.com/ [Accessed 11 Sep. 2016].
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