Business Ethics: Is Wal-Mart Good or Bad?

Background

Wal-Mart is a retail giant. According to walmartfacts.com, Wal-Mart operates over 3,800 facilities in the United States and more than 2,600 facilities overseas. More than 176 million customers per week shop at Wal-Mart. It employs over 1.8 million associates worldwide, making the company the largest private employer in the United States. For the fiscal quarter ending in January 2006, Wal-Mart reported $312.4 billion in sales and $3.8 billion in net profit. In light of all this, Wal-Mart prides itself on its low prices – making products affordable to all, including the less well-off. (Gilpin, 113)

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Is Wal-Mart bad?

Wal-Mart, however, has been the target of criticism. In 2003, for example, the company increased part-time employees from 20 percent to 40 percent. Employees are required to be available 24 hours a day and on weekends. Wal-Mart spent $1.3 billion of its $256 billion in sales in 2003 on employee health care to insure about 45 percent of its workforce (Costco insured 96 percent). Many Wal-Mart employees cannot afford Wal-Mart’s health care package. Finally, according to 2003 statistics, full-time employees make about $1,200 a month or $8 an hour, below the federal poverty level for a family of three (Union grocery workers earn approximately 30 percent more). Full-time Wal-Mart employees who are not self-sufficient are encouraged by the company to go on food stamps. (Gilpin, 115)

Management and owner benefits

Under such conditions it could be stated that ethics are often called upon when making a decision, especially when the choices become a simple matter of right or wrong. In many cases, the easier choice is often the unethical one. So does that, in fact, make it wrong? With so many differing opinions on the subject, it is hard to say for sure. One particular view allows common ethics to be thrown by the wayside in order to achieve happiness for oneself. The view, or way of life for some, is known as Marxist utilitarianism. It is the belief that good is whatever brings the greatest amount of happiness to the largest amount of people, thus meaning that those not included in the ‘largest amount of people’ will more than likely be left with some form of pain. That, in a broader view, is essentially what Marxist utilitarianism is – pleasure versus pain. Actions are right if they encourage contentment and are wrong if they create the reverse of happiness—not just the happiness of the performer of the deed but also that of everyone affected by it. Through the years the theory has been changed to simply “the greatest happiness principle”, (Kotabe, 433-439) so as not to pit one human against another in order to achieve their own personal happiness. However, from this perspective the greatest gainer in this context is the management of the company and not the general employees.

Employees

There is another excellent example of the usage of the term unitary mode where the details of each employee is monitored by the management system without the intervention of any third parties like the trade union or the labor union or any other similar employee beneficial groups. This example of the term unitary mode defines a method where the administration hold the key to any and every employee by treating them a singular number thereby cutting down the enforcement criteria of the individual without hampering the area of that individual’s responsibility towards the organization. In other words the employee would be liable for each and every function that is imposed on him but on the other hand the organization or the administration would hold a limited liability towards that individual. In other words, the company holds little or no responsibility for the employee. (Kirzner, 35-37)

Stakeholders

The Marxist utilitarian view could absolutely affect the way in which a person makes their important decisions. Sometimes it is a matter of who should be happy when all is said and done – the decision-maker, or those affected by the decision? That, as hard as it may be, is up to whoever is dealing with the problem. Whether utilitarianism is ethical or not is a matter of opinion. If the Marxist utilitarian ideas are used by a moral-minded intelligent person, then it could be considered ethical, and even just. The bottom line is that it is extremely important to have ethical judgment in all decision making processes. No matter what views are taken, an ethical side to it can always be found. As seen with Marxist utilitarianism, some acts can be deemed unethical, while others are ethical because they do what is best for all involved. Utilitarian decision making means that the happiness of the greatest amount of people involved will be the reason for the final outcome. That, paired with moral thinking, creates ethical decision making. Under such conditions it could be stated that the influence of ethics is very relevant in decision making in this modern world of business environment. The company moves in that direction and this is way to satisfy its stakeholders. However, the satisfaction of its stakeholder maybe the ultimate goal of Wal-Mart but from an ethical point of view this ideology of stakeholders hardly stands a change of ethical justification and thus the company is not able to prove itself clean and good. (Kotabe, 433-439)

Suppliers

However, it should be remembered and it is an extremely notable point that under these circumstances of the Wal-Mart there was a significant change in another sector of suppliers. It is found and has been reported that within this time frame the agreement of suppliers under the head of individual contract has risen in a considerable number. This suggests that there is a considerable rise in the context of pay per performances and there is rather a utilitarian perspective in the context of suppliers. That way this method of contact system with an individual has given birth to a system that evolved on greater and direct communication system or method with the top management and the suppliers an again it can be termed as birch of business ethics. (Kirzner, 35-37)

Customers

Furthermore, it should be added in the context of the above mentioned formulation and implementation of the utilitarian perspective, that while the individual is regularly judged by the dint of individual feedback process and assessment of individual customer attitude, it should be remembered that in the same context and under the same time frame the programs like joint decision making declined in a struck contrast but all in all it should be taken into account that all these approach are in the direction towards a better formation of utilitarian perspective and the Wal-Mart managers are highly successful in this regard. (Henrekson, 165)

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Local population

Technological progress can be viewed as a continuous process and capitalism continually demands better value of products reflecting in a way the customer’s requirements for cheaper but better products. In a way, the essence of capitalism is establishing a mode of change in terms of economy that can never termed as stationary. This character of capitalism is not simply because economic life keeps on moving in its natural and social environment. The desire that keeps the rapidity of capitalistic economy operational and moving is due to novel clientele, process of creation and transportation, merchandise, configuration of manufacturing organizations and promote these goods in order to create a market and it is created by the capitalistic enterprises. The opening of new markets and the continuous destruction of the older one to create the new one have revolutionized the economic structure of a nation. Thus, this process of creative destruction is important in capitalism. In a capitalistic environment the kind of competition is not what matters but the competition faced from a new product, technology, organization or resource is what is significant. However, there is another significant aspect of business in this context and it the involvement of local population and Wal-Mart is not at all interested in involving the local population in the management or second administration sections. This is another unethical aspect of the company. (Hindmoor, 492-508)

Discussion

Therefore it is obvious that steps relating to Marxist utilitarianism are sometimes obvious and these obvious steps are taken into account by the industry and its managers to the extreme by transforming them into well defined criteria of formulated principals. Thus, in a way, the statement made by several studies confirming that Wal-Mart managers generally hold to a strongly utilitarianism perspective on employment relations in the Wal-Mart workplace is basically true but at the same context it should be stated that as calculated measures the outlook of utilitarianism perspective on employment relations is a result out of need and it does not quantify with Marxist views.

However, it should be mentioned that this perspective is quite inappropriate for an understanding of relations between employers and the workforce in contemporary US workplaces as this principal of Marxist utilitarianism perspective on employment relations is the usual norm and it is latently backed by the government. In conclusion it should be stated in this context that Utilitarianism represents all ethical theories where the goal is maximization of some measure of goodness. These are outcome-oriented ethics where goodness is measured by its results. Commandments of God are ethical theories that accept some higher power as their source. It is self-evident that a major stronghold of these theories is agreement about just what it is that God has commanded and it is in favour of the good of the general, in this case the employees. In this context it could be stated that to sum it up- it would be very relevant to state that in our all utilitarian materialistic market economy driven needs of urban life the advertisements play a vital role and salary structure and Wal-Mart payment methods are an integral part of it but this should not have happened in a company as big as Wal-Mart. (Gilpin, 117-119)

However it should be state that labour has been a major sector of problem in many industries over a long period of time and measures had been taken in behalf of this variable by the dint of different means and it could be ascertained that utilitarian perspective is one such method to solve this problem. It should be remembered that this technique of utilitarian perspective was implemented in the Wal-Mart scenario as a calculated move and this remains as a philosophy and a principal in the Wal-Mart context of the business plan.

Companies that had in the past dominated and revolutionized new industries, like Polaroid in case of instant photos or Xerox in copiers, have witnessed fall in their profits margins and their dominance fade away when rival companies launched their improved and superior designs or reduced their manufacturing costs. One example of a company, which has achieved a strong hold in the market, is Wal-Mart. Through its application of fresh techniques of personnel management, inventory management and marketing, Wal-Mart has lowered its prices in order to compete with the smaller and older companies in the line of retail consumer products. But Wal-Mart faces the threat of being crushed by nimbler and innovative contemporaries just like other giants, Sears, Kmart and Montgomery Ward. By this process of creative destruction the apparently dominant Wal-Mart may find itself obsolete in the near future as it cannot establish itself as an ethical company in the long run. (Henrekson, 67)

Conclusion

Thus the method taken by Wal-Mart can always be stated as a non-ethical company and it has obligation to raise the payment in favour of the workers among other issues. It would be right to address the company as ‘simply an ethically legit business operating within a capitalistic society’ (Gilpin, 118) because though under capitalist economy every dollar saved is every dollar earned and not dollar ever come cheap, it should be noted that human values are more important than dollars and business ethics is more valuable then business success. Thus Wal-Mart can raise the pay if it wishes but if there is no hike of payment the company would be responsible and should be charged with ethical obligation as per as Marxist utilitarian materialistic point of view is concerned.

Works Cited

Gilpin, Robert. Global Political Economy: Understanding the International Economic Order. Wellington: Orient Blackswan, 2009.

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Henrekson, Magnus. Where Schumpeter was Nearly Right: The Swedish Model and Capitalism, Socialism and Democracy. Auckland: Research Institute of Industrial Economics, 2007.

Hindmoor, Andrew. ‘Policy Innovation and the Dynamics of Party Competition: A Schumpeterian Account of British Electoral Politics’. British Journal of Politics & International Relations. 10.3, (2008): 492-508.

Kirzner, Israel. ‘Must Capitalism Yield to Socialism?’ Economic Affairs 5.3, (2007): 35-37.

Kotabe, Masaaki. ‘Revisiting the essence of capitalism and its role on economic growth’. Thunderbird International Business Review 40.4, (2008): 433-439.

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