Walmart was founded by Sam Walton in Arkansas United State in 1962 as a grocery store. The company which operates a chain of over 8,000 stores in fifteen countries is estimated to employ over two million employees from diverse backgrounds. Wal-Mart was incorporated in 1969 and started trading in the New York Stock Exchange in 1972. The company has grown from a local company to an international company with more than 176 million customer’s turn out per year (Fraedrich, Ferrell & Ferrell 438).
Problems Faced by Wal-Mart
Although the company is able to leave its consumers with a saving due to its low price policy, it has faced a number of sharp criticisms over how it treats its employees and other stakeholders. Wal-Mart boasts of its ability to save its customers’ money, an average of $950 per year. This, however, has been criticized as having a negative impact on the community. Also, the feminists’ activists have focused on Walmart’s misconducts in order to be able to offer low prices. (Fraedrich, Ferrell & Ferrell 440)
Walmart has faced various ethical issues and criticism from the public, employees and competitors. However, the greatest complaint comes from its competitors who blame the company for the predatory activities. These factors make it hard for local stores to compete with it (Fraedrich, Ferrell & Ferrell 441). It is claimed to be responsible for the closure of some businesses in the areas in which Walmart operates. The company is also censured for low wages, which it uses to pay its employees. Walmart has been challenged in court on several occasions. However, it defends itself on the ground of the saving it leaves for the consumer through the provision of high quality low priced products.
In regard to its suppliers and other stakeholders, Walmart always tries to continuously improve on the services and products offered in order to reflect its philosophy. In trying to keep costs low, it has worked with the suppliers to reduce the cost of packaging by 5%. According to this arrangement, the manufacturer is expected to comply with all regulations set by the governments of the areas in which they operate. The manufacturers are also to eliminate the chances of delivering defective items to the Walmart stores. All these aims at increasing the sustainability of the company’s suppliers. This move has been criticized on the ground that it transfers substantial costs to the suppliers. (Fraedrich, Ferrell & Ferrell, 450).The Company is said to use its power to withdraw its orders from companies that fail to comply, in order to intimidate them. The organization has such a great power over its suppliers due to the volume of purchase its makes, thus some smaller firms depend on the company’s bulk buying. The regular price reductions by Walmart have forced many companies to transfer their business from the United States to less expensive countries in Asia.
The company also draws harsh criticism on the way it treats its employees or associates, as it calls them. Walmart is proud of itself as the largest employer (Mooney 256). However, the company has been accused of its low wage policy as well as its discrimination in the provision of the employment benefits, such as insurance, which is denied to over 60% of the organization’s employees. However, to clear its name from these allegations, Walmart has tried to increase its personnel’s payment based on the performance of its stores (Fraedrich, Ferrell & Ferrell, 460). The emphasis is also laid on the employment of more permanent staff that would have the necessary benefits, such as medical insurance cover.
Due to his views on the labour unions as being divisive, Sam Walton never allowed Walmart’s employees to join them (Mooney 267). However, the lack of labour unions to represent employees’ needs and wishes has resulted in poor employees’ welfares. Walmart has also been blamed for providing its workers with poor workplace conditions and sometimes contributing to discrimination. For example, the company was forced to compensate about 100,000 of its employees for denying them their lunch breaks routinely. Other accusations in this case involved management, denying payment for overtime hours and rest breaks to its employees (Mooney 268).The company has also been accused of discrimination against women who although are the majority of its employees, are rarely considered for managerial positions. The company has faced regal challenges on discrimination against women in promotion, training and assignment of duties.
Other ethical challenges Walmart has been subjected to include the employment of illegal immigrants as cleaning crews. The company accepted this accusation and claimed to have cooperated with the federal government in this. Walmart has also been criticized for the violation of environmental safety guidelines (Mooney 269). This includes issues relating to the way the company receives, handle, recycle, treat, store and dispose of particular products considered to be hazardous. Walmart has taken a number of steps to improve its image.
Description of the Case Study
Walmart has tried to solve ethical challenges through a number of ways. On the issue of discrimination against gender, Wal mart has introduced a policy that opens promotion opportunities to all based on their performance. It has also decided to come up with a policy that will allow employment of staffs on a permanent basis so as to include them in the insurance plan (Mooney 271).
On the issue of predation, the company has stated that its main aim is to provide goods affordably to consumers. It has also encouraged the stocking of USA manufactured goods in all its stores. Wal mart has also established an open-door policy to address the issues on employment. This, therefore, has done away with the need for labour unions. The company has also employed green company policy aimed at conservation of the environment. This is achieved through reduction of green house gases.
Fraedrich, John, Ferrell, O.C. & Linda Ferrell. Ethical decision making for business. 8th ed. (International Edition). Mason, OH: South-Western Cengage, 2012. Print.
Mooney, Linda A. Understanding Social Problems. Canada: Cengage Learning, 2011. Print.