Wal-Mart Stores Inc. Essay Example
Wal-Mart Stores Inc. Essay Example

Wal-Mart Stores Inc. Essay Example

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  • Pages: 8 (2036 words)
  • Published: September 29, 2017
  • Type: Essay
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Wal-Mart, the largest private employer globally with approximately 200,000 employees, operates numerous discount department stores across different countries. With a presence in 15 countries and a total of 8,500 stores, Wal-Mart has become one of the most valuable companies today. The ethical significance of Wal-Mart should not be underestimated due to its extensive reach and impact on various stakeholders such as employees, customers, and suppliers who are directly affected by its daily decisions. Moreover, there are other stakeholders who can also be impacted by Wal-Mart's actions. For instance, when establishing stores in developing nations, Wal-Mart can contribute significantly to local economies by providing employment opportunities and resources to communities. Therefore, it is crucial for Wal-Mart executives to consider the needs of these local communities and government officials when making decisions. Given the significant influence of Wal-Mart's


operations on diverse stakeholders, it is essential to recognize that any ethical choices made can have profound effects on both societal social and economic aspects.Wal-Mart, a family-owned business founded by Sam Walton in 1962, takes pride in its enduring 48% stake held by the Walton family. This strong commitment to ethics and compliance with legal requirements guides their operations and has fostered a robust corporate culture over time. However, as the company expands globally and engages with different entities, conflicts may arise due to variations in ethical standards, potentially conflicting with their core values. To address these concerns, it is essential to refer back to Wal-Mart's original Statement of Ethics. Understanding upper management's goals and objectives is crucial in determining if their actions align with corporate responsibility for ethics. Additionally, considering Wal-Mart's policies for international operations becomes vital due

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to the global scale of their business and specific ethical issues at hand. The Statement of Ethics is based on three key beliefs: respect for individuals, service to customers, and striving for excellence. Establishing principles for ethical decision-making and guiding associates in upholding integrity are significant aspects of this framework. Further analysis will be conducted on these beliefs and moral regulations in relation to the specific components of the ethical dilemma being addressed.Wal-Mart also establishes ethical conduct expectations for employees and third parties associated with the company. Maintaining integrity is highly emphasized during the selection process of providers, contractors, and service providers. The General Counsel in foreign subsidiaries should be consulted for guidance when faced with any issues. However, concerns have arisen regarding potential differences in ethical standards among general counsels in certain countries. To ensure compliance with Wal-Mart's ethical code, a thorough investigation has been initiated.

This ethical issue was triggered by an email received by a senior attorney at Wal-Mart from a former executive of its largest foreign subsidiary, Wal-Mart de Mexico. According to the allegations stated in the email, executives at Wal-Mart de Mexico engaged in bribery schemes as a means of expanding operations, obtaining licenses, and eliminating competition. These illicit actions allowed the company to rapidly grow and become Mexico's leading retail merchant. The bribes amounted to approximately $24 million and were targeted towards various officials such as city managers, council members, and urban planners. Through these corrupt practices, Wal-Mart de Mexico obtained districting approvals and reduced environmental impact fees which facilitated their aggressive expansion within the country.Former executive Sergio Cicero Zapata sent emails exposing acts of corruption at Wal-Mart. The CEO,

Eduardo Castro-Wright, faced no consequences and was even promoted to vice president in 2008. This promotion exemplifies the company's handling of the scandal. Rather than investigating further, upper management chose to conceal secret payments from headquarters. Despite their commitment to high moral standards, Wal-Mart failed to train those involved and concealed a major corruption scandal. The investigation was assigned to the general counsel of Wal-Mart de Mexico, who also authorized the bribes. Consequently, top executives were quickly cleared of any wrongdoing by the general counsel. This negligent approach reflects Wal-Mart's lackadaisical attitude towards complying with ethical standards outlined in their Statement of Ethics. Instead of prioritizing what is right, they focused on minimizing damage and preserving public image and stock value.Two significant ethical dilemmas emerged from this event, which were not addressed by senior executives but came to light through media coverage. One dilemma concerns whether Wal-Mart's actions violated their ethical policies, while the other revolves around whether they prioritized profit over ethics. It is crucial to understand the importance of addressing this issue, taking into account public perception and potential consequences for implicated employees.

Another ethical dilemma arises regarding whether Wal-Mart executives were aware of and concealed this scandal. Once identified, efforts can be focused on resolving the problem. Wal-Mart now faces a decision - they can either continue concealing the scandal and operating as usual or fulfill their ethical duty by making it public, which could have serious consequences for their sales and reputation.

Careful analysis is vital in determining who holds the ethical responsibility in order to safeguard Wal-Mart's image. The undeniable unethical behavior exhibited by top executives at Wal-Mart can be attributed to

five different groups: Associates at Wal-Mart de Mexico, Upper Management at Wal-Mart de Mexico, Top Executives at Wal-Mart central office, Former Executive Sergio Cicero Zapata, and Third parties.

When compared to the company's desired ethical standards outlined in its Statement of Ethics Guiding Principles, the corruption scandal is severe.The principles outlined in the text serve as fundamental values for all associates at Wal-Mart and should guide their actions. The text implies that a lack of enforcement or nonexistence of the code of ethics may be indicated by violations of these principles. The Principles relevant to this ethical issue include obeying the law, being honest and fair, transparently disclosing information without manipulation, and promptly reporting suspected violations. It is uncertain whether associates at Wal-Mart de Mexico breached their Statement of Ethics. This statement consistently advises consulting with the general counsel in each country when facing ethical issues abroad, which is crucial considering Wal-Mart's global presence. However, in the case of Wal-Mart de Mexico, it is possible that the general advocate was corrupt and associates may have been unaware of this fact. If they were aware, it would constitute a clear violation that should have been immediately reported. This problem needs to be addressed in the Statement of Ethics since Wal-Mart has subsidiaries worldwide. Simply advising consultation with local counsel is not enough and can result in similar situations due to varying ethical standards across countries.To prevent future occurrences, Wal-Mart should explicitly specify ethical standards for operations in foreign countries. However, top management at Wal-Mart de Mexico clearly violated the principles outlined in the statement as their actions lacked integrity and honesty while also failing to comply with

laws. The text highlights the illegal and unethical tactics employed by Wal-Mart de Mexico executives in bribing the city's general advocate for licenses and reduced environmental fees. These actions create a conflict of interest as they prioritize personal gains over moral principles, resulting in an unfair advantage over competitors.

Surprisingly, these top executives faced no consequences and were even promoted. This unethical behavior extends not only to Wal-Mart de Mexico but also to its headquarters in Bentonville, Arkansas where alignment with ethical policies is expected from top executives. Failure to hold those involved accountable will set a precedent for similar issues to persist, contradicting Wal-Mart's own Statement of Ethical Mores.

The executives at Wal-Mart were aware of the issue but did not disclose it accurately, violating federal law. Instead of being transparent and maintaining their reputation for high moral standards, Wal-Mart chose to withhold information in order to minimize damage to their stock value. Furthermore, the rapid growth of Wal-Mart de Mexico was supposed to serve as an example for future subsidiaries; however, this case demonstrates a failure on their part to uphold ethical practices across all levels of the organization.If a thorough investigation had been conducted and made public, the positive image of Wal-Mart would have been shattered. Instead, internal investigations were halted and the person responsible for the corruption was promoted. Moreover, there was a failure on the part of executives to provide training for those involved in this misconduct. To prevent similar incidents in the future, it is vital for Wal-Mart to consider implementing internal testing procedures that ensure all associates adhere to the company's ethical values.

The ethics of the former executive at Wal-Mart

de Mexico during the graft scandal may be called into question. Not only did he engage in unethical behavior personally, but it can also be argued that his act of reporting it was unethical as well. While his actions initially seemed morally right, it could also be said that he reported it with self-interest in mind – being aware that the scandal would soon become public knowledge – seeking positive media coverage and good relationships with top executives at Wal-Mart. This presents a conflict of interest that may not be easily detected but could explain his behavior. Nevertheless, his technique used to expose Wal-Mart's ethical lapse may help prevent similar issues in the future.Wal-Mart's Statement of Ethics clearly outlines the expectations for ethical conduct from third-party affiliates, including contractors, suppliers, and service providers. These entities are required to act with integrity and possess a strong moral compass. The involvement of political associates in the bribery scandal, particularly city councils and mayors, is significant in the case of Wal-Mart de Mexico. This emphasizes the importance for all providers to undergo an ethical check to ensure they adhere to the same standards.

Wal-Mart violated this requirement by associating with unethical third parties who accepted bribes. It remains unclear who initiated the bribe; however, engaging in such activity is inherently unethical. This situation highlights that Wal-Mart lacks a proper procedure for selecting third parties and should establish its own Code of Ethics before entering into future partnerships. By doing so, Wal-Mart can ensure that these third parties align with what is considered "proper" rather than following previous unethical practices that led to this bribery scandal.

From an ethical perspective, under

utilitarianism—specifically "Rule Utilitarianism"—an action's rightness can be determined based on whether it brings about the greatest good for the greatest number of people. In relation to this bribery scandal, those involved initially justified their actions using a utilitarian approach from an ethical standpoint.The bribes given by Wal-Mart de Mexico were said to benefit many people. Consumers, for instance, were able to take advantage of the company's low prices due to their efficient practices in obtaining licenses. Furthermore, stockholders experienced benefits as the value of the stock significantly increased after successful expansion. While some competitors suffered, the majority of consumers and stockholders gained advantages.

However, these actions do not align with deontological ethics according to Kant. He would question their motives and argue that Wal-Mart failed in its duty to abide by societal laws. Similarly, John Rawls' Theory of Justice suggests that Wal-Mart's actions did not uphold principles of equal rights since they acquired licenses illicitly through corruption. What's more, these actions did not lead to a situation where everyone benefited as competitors were left behind when establishing a market presence in Mexico. The rules outlined in the 'Theory of Justice' were disregarded during this graft scandal.

An important lesson learned from this case is the significance of fulfilling personal moral responsibility. It is likely that numerous other companies have engaged in forms of corruption similar to Wal-Mart de Mexico's graft scandalIt is crucial for business leaders to remember their legal obligations and ethical responsibilities, despite the need to stay competitive and succeed in the market. Even if fair competition has potential negative impacts on stock prices and profits, companies should prioritize it. The case of Wal-Mart's concealed

bribery investigation in Mexico serves as evidence of the long-term consequences of disregarding these principles. Henry Kravis emphasized that moral and ethical behavior holds more value than money. Relevant sources include David Barstow's article from The New York Times discussing Wal-Mart's covered-up bribery case, CNNMoney's website featuring the 2007 Fortune 500 list, Walmart's own website containing their Statement of Ethics, and RetailingToday.com reporting a Walton Family ownership stake of 48.2% in the company.

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