Discuss about the Ethics for Multinational Retail Corporation.
Walmart Stores, Inc. is an American based multinational retail corporation. This corporation operates a chain of supermarkets and grocery stores in about 28 countries. According to the list of companies announced by Fortune Global 500 in 2016, Walmart is the largest company in the world from point of view of revenue (Times Inc, 2016). The company has been a target of media and press since its foundation either for its achievements or for its scandals. The company has been received a lot of criticism for its unethical behavior with the employees and suppliers, and economic impact on the society. Several attempts have been made by the company in order to rectify its brand image in the form of charities and promoting healthy food items, sustainability, and environment protection. In this paper, we will analyze and assess the initiatives made by the Walmart in order to rectify its tarnished image in the eyes of investors and other stakeholders.
The objectives of assignment are as follows:
The intentions of the Walmart to achieve its sustainability seem to be satisfactory enough to sustain society and the environment. In order to achieve its sustainability goals, it is providing more emphasis to the utilization of renewable energy sources, applying zero waste techniques, and sale of products made from recycled materials. Walmart has made several efforts and took assistance of various influential supplier companies, NGOs and government and together they have framed Sustainable Value Networks (SVN) in order to analyze the benefits of using renewable energy sources and recycling practices (Stanford University, 2016).
To safeguard environment and to reduce the electricity consumption, Walmart had installed hundreds of rooftop solar panels in seven countries by 2012 and various fuel cell installations in the United States itself. Research is going on for the utilization of various other renewable energy sources such as micro-wind and solar water heater projects on other locations also. The company is getting involved in long-term contract with the companies providing renewable energy. In addition to it, the company has financed renewable energy projects of its own too. Around 22 percent of the electricity requirement of the company is being provided by these projects. The Green Power Partnership Program of the agency of Environmental Protection has ranked the company as the second largest consumer of green power among all its competitors in the U.S. (Stanford University, 2016). It emphasizes on the conservation of energy by including “day lighting” feature in all the new stores and centralized control of temperature in the Walmart stores in the U.S. To reduce the emission of greenhouse gases, the company is attempting to use secondary loop refrigeration system instead of open freezers. The selling of products made from recycled materials has already begun and packaging of products has also reduced. In order to achieve its zero waste goals, Walmart of Mexico has successfully compost thousands of metric tons of organic waste.
In order to sustain society and to enhance an ethical corporate culture in front of all the stakeholders, Walmart is continuously improving its ethical reputation. The company has established its Global Ethics Office and mentioned its Statement of ethics in 2004. Furthermore, the company has its Ethical Standards Team which examines the obedience of the ethical standards by the suppliers and the employees (Walmart, 2014). The company has also made various contributions in the disaster management projects and for the empowerment of women in the society. For providing aid to the victims of Hurricane Sandy, the company provided grants to the employees for repairing their residences. To increase the job opportunities for women, Walmart made partnership contracts with various factories and employed millions of women over there (Walmart, 2015). To improve the productivity of factories, company framed the Supplier Development Program, under which every year the working efficiency of hundred suppliers is to be enhanced (Wisconsin Department of Natural Resources , 2016).
To sustain its employees, the CEO of Walmart has put more emphasis on the reliability in functioning and behavior of employees and rewarded the employees following the order. Assurance was given to the employees and other stakeholders that strict action will be taken for unethical issues such as bribery and that company will provide its full cooperation to the judicial department of the U.S. regarding such kind of unethical issues (Sethi, 2013). Through these efforts made by Walmart towards improving its brand image in the society and among employees, Walmart will most probably become more sustainable in the eyes of the society.
The way of treatment with the employees has been the most controversial aspect of the Walmart since long time. The company has always been criticized for giving less remuneration and benefits to its associates. The company has not been providing health insurance to its employees. The negative publicity of Walmart during the period of 2000 to 2005 in press and media reduced the market value of the company. In response to it, Walmart took actions to improve the situation of the company. It announced the appraisal of employees in around one-third of its stores and improved its health policies also by implementing a standard prescription plan and fewer deductions (Business Practices, 2015).
The other aspect of criticism of Walmart is about reducing its workforce while the company is expanding. Dissatisfaction among the employees of the company leads to the customer dissatisfaction. Quality customer services require an appropriate number of employees and due to reduced staff, various customer complaints had occurred regarding long queues and availability of fewer items on the shelves. Although Walmart refused to accept all these claims and said that customers experiences of their stores were quite good.
The Union formation has been discouraged by Walmart since its foundation on the point that there is no requirement of unions to behave as a bridge between the employees and management. The founder of Walmart believed that unions might create partition in workforce and reduce competitiveness of the company. On the other hand, Walmart claims that it believes in “open-door policy” according to which employees can consult management for the solutions of all the problems and there is no space for third parties. However, the decision of Walmart to prevent unionization had not always continued to be similar for all the countries. In countries such as China, it had become necessary for the Walmart to accept unionization due to formation of labor laws and strength provided to trade unions by the government (Davis, 2007).
A most significant ethical issue that rose over Walmart was the allegation of the employees regarding workplace conditions and discrimination among them. As a result of various class-action lawsuits against the company, Walmart was ordered to pay a huge amount of compensation to its employees in California. In order to settle the allegations by the employees that the company had knowingly altered their time cards to prevent them from earning through overtime as well as denied to provide them meal breaks, Walmart compensated a huge number of employees in various states. Accusations of sex-discrimination against Walmart had been a serious issue in which female employees of the company claimed that Walmart discriminated against them regarding remunerations, promotions, and tasks. The Supreme Court allowed the plaintiffs to sue the company individually on the argument of the company that they decide promotion on an individual basis. Dissatisfaction among the employees led to the formation of the Organization United Respect Walmart (OUR Walmart). OUR Walmart protested against the company for six months with various issues and were funded by the United Food and Commercial Workers International Union (UFCW). In response to it, Walmart sued UFCW and the other Protestants for anti-labor practices and trespassing.
The matter of fraud in Walmart against the vice chairperson of the board Thomas Coughlin was also a topic of discussion in 2006. Although, he was given appropriate punishment for his crimes, the confidence in leadership of the company was lost among the investors. The reputation of the company got another blow after the disclosure of a bribery scandal in Walmex. It has been claimed that a huge amount of bribe was paid by the executives of Walmex in order to acquire license and zoning permits in Mexico. Such allegations not only destroyed the brand image of Walmart, but also had serious impact on other overseas retailers in the country.
Walmart is considered as an active contributor in regulation of the legislation regarding CSR policies and it has been referred as global legislator by various authors. However, Walmart has faced various hindrances in the past. It appears that due to such issues, company took strict actions to frame a code of conduct and display its annual report. In Walmart Stores Inc. v. Dukes et al. the company was alleged to be involved in discrimination on the basis of gender and was paying less to the females than male employees at the similar position (DeWeese & Rumpf, 2011). Another blow was the announcement by the Radio Canada programme Zone Libre that Walmart was utilizing children as labors in Bangladesh (Maquila Solidarity Network, 2005). According to the information, children below the age of 14 years were found to be working in the company at extremely low wages. In response to it, Walmart terminated all its contracts with the factories involved in the misconduct immediately and claimed that it was making serious efforts to implement its code of conduct in all its branches (CBC News, 2005). Instead of all these conflicts, Walmart have stated its commitment towards CSR. In its Global Responsibility Report of 2013, the company stated that it has been committed to accept the ways through which world could lead a better life (Torres et al., 2012).
In order to achieve this target, various initiatives have been made by Walmart which concentrate basically towards its local, social, environmental, and company responsibilities. As its local responsibility, company has framed microloans facility, implemented nutrition programs in schools, contributed in disaster relief programs, and promoted local farming techniques. The Walmart Foundation contributed approximately $1 billion in charity funds all over the world. To fulfill its social responsibilities, Walmart has been continuously promoted economic empowerment of women in society and promoted selling of healthy food items. The company has been providing training to the women in order to enhance career opportunities for them. Walmart put a great emphasis on the utilization of renewable sources of energy and avoiding plastic packaging. The company has been emphasizing on the sale and purchase of local made items (University Alliance, 2013). It has established strict guidelines regarding product sustainability in order to perform its environmental responsibilities. Walmart has been concentrated on promoting ethical values, safe work environment, stakeholder engagement, and proper management. Almost 30% of the staff of company includes women. Therefore, Walmart has already taken its first foot forward to fulfill all its Corporate Social responsibilities.
Stakeholders of a company are the social groups that are considered to be a significant capital resource and possess the power to influence the success of the company. According to Ronald Mitchell, Bradley Agle and Donna Wood, power, legitimacy, and urgency are primary relationship aspects among the stakeholders and managers (Alves et al., 2014). It is the legal and moral responsibility of stakeholders to claim for their welfare according to their value in the company. Stakeholders are the first investors of the company and their welfare must be observed by the managers of the company (Sitaru, 2009).
The stakeholders of Walmart can be classified on the basis of their shared interests in the company and they possess different level of priorities also on the basis of policies and beliefs of the company. Although, in the decision- making of the company, all the stakeholder groups are taken into consideration, investors are considered to be on the highest priority while suppliers possess the lowest priority. The key stakeholders of Walmart are its investors, customers, employees, and suppliers on priority basis.
Investors possess interest in acquiring profit from the company. Moreover, they also take a lot of interest in reducing the company’s operational cost which in turn lead to the higher profits. All the strategies of Walmart provide priority to the investors. Due to this reason, the company is continuously emphasizing on minimizing the costs, for example in the form of minimization of wages (Meyer, 2016). Customers are considered as a stakeholder group in business. In case of Walmart, the key interest of the customers is low prices of goods and good quality of products. The company offers lowest possible prices of the goods in the market maintaining its cost leadership generic strategy. Through this effort, Walmart has effectively succeeded in accomplishing the interests of the customers. The decision-making in the management of the company gives a great importance to the employees also. The company is taking initiatives to fulfill the two basic interests of the employees i.e. job security and higher remunerations. There are various policies and programs being implemented by the company in order to provide a considerable amount of job security to the employees. As a guarantee that Walmart provides to the employees to consider them as a part of their company, the issue of job security gets resolved. However, the company has not succeeded in providing higher salary to the employees. Hence, it can be said that the company only partially succeeded in considering the interests of the employees as its stakeholders. The interests of the suppliers lie in the best-selling of their products in Walmart stores as well as in a profitable manner. Suppliers require the company to sell their items at increased costs so that they can be benefitted. In the priority list of Walmart, suppliers remain at the bottom but they supplies the goods required by the company. Being a biggest retailer all over the world, Walmart possess the power to influence the suppliers. Due to this reason, suppliers do not achieve the amount of benefit according to their expectations. On the contrary, Walmart demands from them to supply their goods at lower costs and the suppliers have to fulfill these demands in order to sell their goods. In this way, it is clear that Walmart has set the priority of the stakeholders according to its advantages.
For the promotion of culture of integrity of Walmart, global ethics is responsible that includes the development of policies for ethical conduct which should be applicable on all the stakeholders in all branches all over the world. Global ethics serves as a guideline for all the companies for the purpose of decision-making and its reporting system is also highly confidential (Walmart, 2016). The Statement of Ethics introduced by Walmart specifies certain policies and principles under which all the major ethical issues can be covered. The Statement of Ethics will be applicable on all the employees and the members as well as the Board of Directors of Walmart. All the stakeholders and service providers of the company are expected to follow the guidelines of the Statement of Ethics. There are certain obligations that are applicable on all the employees or associates of the company such as to follow the legal procedure and never to violate the law as well as to report against any kind of legal violation within the company. It is expected from all the employees that they have gone through the ethical principles and policies of the company and have understood its application in their job. The employees must cooperate in the investigations against violations of Statement of Ethics. Management associates are given the responsibility to monitor the ethics compliance (May, 2012). They are required to become an example for the associates and to give more priority to ethics whenever conflict occurs between ethics and the objectives of the company. It is expected from the management associates that they will praise the associates for raising ethical issues and will never retaliate against them. There is a provision of disciplinary action against those who are found to be involved in unethical behavior or violated the Statement of Ethics. The disciplinary action will include compensating the grieved party and the termination of person who will be proved guilty.
Being a responsible organization, Walmart has ascertained some of the responsibilities to the shareholders as well as on the company itself according to its company policies. The company is committed for the advancement of the benefits of its shareholders and in accordance with the ethical standards and legal conduct in trade and dealings. The company requires fair and accurate disclosure in all the reports and records having financial information and ensures the shareholders to follow the same. Walmart provides all required disclosures in reports and documents filed in the Security and exchange Commission as well as in public communications. Walmart follows a separate Code of Ethics for CEO and Senior Financial Officers of the company (Wal-Mart Ethics Office, 2005). This code of ethics binds these officers regarding their financial reliability. Taken into consideration the Code of Conduct and Statement of Ethics framed by Walmart, it is commendable on the part of the company that it has proved itself as an organization being ethical not only in communication but also in practice (Sethi, 2013).
Walmart should follow the path of sustainability which means to develop in order to meet the requirements of present taking into consideration the ability of the future generations and not to compromise with their requirements in future. In order to follow this path, Walmart should continue to follow CSR policies which comprises of its legal, social, ethical, and environmental responsibilities (Zadek, 2004). To establish consumer confidence, Walmart should focus on accountability and transparency (McConnell & Hughes, 2015). The company should expand its profitability performance indicators. The role of ethics should be enlarged to include modes of production and social impact of daily operations (Daft & Marcic, 2010). The company should set and meet the highest standards of ethical conduct in order to be economically stronger. The company should focus on improving its purchasing and marketing behaviors through sale and purchase of environmentally sustainable or renewable products. It should support social and environmental issues and step forward to safeguard the environment. It should give more emphasis to the charities for social causes, sponsorships, and employee voluntarism (Govindarajan & Gupta, 2002). The company should concentrate on conducting its business operations in a highly responsible manner. It should focus on developing innovative ideas for solving various social and environmental issues. By following these recommendations, Walmart will possibly be emerging as a more ethical organization in future.
Conclusion
The brand image of Walmart has been destroyed due to some scandals and ethical issues. Walmart is continuously making efforts to rectify its tarnished image. The company is implementing CSR policies and has framed the Statement of Ethics to resolve all the ethical issues. After analyzing and assessing the efforts made by Walmart to get hold of its customers and other stakeholders, it can be held that Walmart will proved to be a more ethical organization in future.
References
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