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MEMORANDUM

TO: Kelly Anderson, Senior Manager

FROM: Jonathon Fitzgerald, US Regional Manager

DATE: March 27, 2017

SUBJECT: Addressing Ethical Issues across Walmart

Introduction

In order to address the ethical situation at Walmart, the company needs to establish a framework that can provide guidance to practices and enhance the adherence to business ethics. The framework would provide an outline of activities that would enhance the understanding of ethical business practice. Additionally, the outline provided would help Walmart to establish ways to avoid engaging in unethical business practices. The most suitable framework would be hold the task to guide the employees and company decision makers to understand the actual aspects that need to be addressed, which standards to consider when making decisions and the best way to apply the framework. The framework will be a good approach because it will give the best and reasonable practices to base ethical thinking and decisions on.

Situation Overview

Walmart has faced numerous claims that it has been violating the general ethics of operations in business. Complaints have been presented by employees, their families, government bodies and clients among others. It has not been clear how true the allegations of the codes of practice are, but they have had numerous negative impact on the company’s reputation. Customers have shown a reduced preference for Walmart’s products since the allegations started spreading (Wadhwa, 1). For instance, on the side of employees, the company faces claims of violating the labor rights of its employees. Walmart’s employees have been caught up in situations that were concluded as the consequences of being overworked. Active employees have also been witnessed claiming that they have been, and are still being overworked, complaining about the prevailing wage rates and the general treatment the company gives them. Further employee related complaints have extended to workers safety with allegations stating that Walmart exposes employees to dangerous situations that could endanger their health and lives (Bowen, 22).

In addition to claims of violating the rights of employees, Walmart faces legal issues. There have been rumored allegations originating from several government bodies claiming that Walmart has been engaging in practices that imply a violation of business ethics. The allegations claim that Walmart has been engaging in corruption activities by bribing its way through thorough competition. It is claimed to have bribed government officials evade business responsibilities and gain advantages over its competitors. In the case of Mexico, for instance, Walmart is alleged to have had its way by bribing Mexican officials to allow its workers to sneak prohibited goods into the country. It was also alleged that bribery has been the order for Walmart which saw a great extent of unrest from its stakeholders.

Walmart has further been accused of breaching its contracts with employees by withholding their healthcare benefits (Wadhwa, 2). Walmart’s history appears to be clouded by lawsuits filed by employees or their families claiming that the company violated the medical agreements made during employment. Regarding employee healthcare benefits, Walmart was accused of being overly insensitive to humanity for suing an employee who suffered a brain injury while on duty. The allegations resulted in a negative impact on the company’s sales for the financial year (Wadhwa, 1). Walmart has also faced allegations of unfair competition from its competitors. The company is accused of lowering their prices to extreme levels to manipulate customer choices and get an advantage over its competitors. In the case of Mexico, Walmart is accused of bribing its way out of environmental damage and violating the labor laws in foreign countries.

Ethical Issues and Implications

For the past several years, Walmart has been facing a wide range of claims against its operations. The claims on a more precise description, point at Walmart’s violation of ethical practices in business operation. As a result, the company’s top stakeholders have been questioning its integrity, which has not been good for the business (Bowen, 22). The company has been revealed to lose economic privileges following the rise of the said claims. Complainants have ranged from employees to competitors to government bodies claiming a violation of the set ethics of operation by the company. Additionally, the company faces the possibility of an unpleasant economic time in the future if it does not get the issues addressed following the continuous accusation of violating the general ethics of business practice.

Walmart faces the threat of losing its unsettled stakeholders to Amazon, which appears to be following its path closely enough, and could take over the market (Wadhwa, 1). Amazon, being its biggest competitors could use the allegations to gain a market and competitive advantages over Walmart. Consumers have been witnessed to drift off following the allegations of unfair and unsafe practices undertaken by Walmart (Wadhwa, 1). Losing consumers for its products would lead to market shortage for Walmart which would be a big blow for its prosperity. Additionally, potential employees would fear for their lives while working at Walmart which would possibly result to labor and human resource shortage at Walmart. In the long run, it would lead to reduced productivity. Increased legal issues would lead in closure and increased fines that would highly affect the levels of Walmart (Wadhwa, 2). In an overall consideration, both the short and long term implications would lead to deteriorating performance of the business, which would most likely lead to closure or bankruptcy.

Framework Proposition

Although most claims that have been made against Walmart have not been proven in any way, they have had a major impact on the company’s reputation (Bowen, 59). Further, the few accusations that are true make it easier for the public to believe that Walmart engaged in the rumored malpractices. It should, therefore, be in the system of Walmart to ensure that it avoid all the possibilities that could lead to such incidences and tarnish the company’s name (Elbeltagi and Gomaa, 2). If a few allegations turn out to be true, it would be easier for the public, stakeholders and government officials to believe that even the false ones were valid. As a result, Walmart would lack the privilege to operate peacefully without being watched and overregulated by the authorities, which would result in possible losses, reduced profits, and eventually slow the company’s growth rate.

Therefore, there is the need to establish a regulatory framework to strengthen the core values of Walmart and avoid future scenarios similar to those that have occurred in the past. All operations should be in accordance with the company’s vision to become the best retailer to its consumers and employees (Markkula Center for Applied Ethics, 3). It would also need to focus on its mission to save people money while ensuring that they live better. It would be against the business’ mission if it offered goods at low costs but pollute the environment the people live in, resulting in infections and increased costs of living. It would be ironical to claim to help people live better by offering products at low costs while in a real sense, their lives are endangered by a pollution that the company causes. In the effect of the vision, there would be no way the company earns an outstanding reputation from its consumers and employees when it engages in violating employees’ rights (Crane and Dirk, 8). The employees also make part of the company’s customers through their families and friends and betraying them would make it impossible to retain the initial customer loyalty.

To achieve a practice that is according to the company’s initial plan, there is a need to operate under the influence of meeting the expectations of different stakeholders. Each stakeholder, however, holds their own opinion and interest regarding various issues at the company (DesJardins and John, 43). Suppliers would want to sell their products at high prices while consumers would prefer buying goods at low prices. The interests of the two groups highly contradict which leaves Walmart to make the final decisions. It would not be ethical to consider the interest of one party and ignore the other, while the two interests cannot be served by a one-way policy. It would, therefore, require the company to establish the fair decisions that would serve part of the interest that each stakeholder has. For a maximum positive impact, it would be advisable for Walmart to focus on the preferences that are more pressing that those that are just aimed at serving a purpose of satisfying less important interests (Crane and Dirk, 13). Walmart’s framework needs to be focused on necessities and not interests so that it addresses the most crucial aspects of the business stakeholders.

Ethical Considerations for Framework

Practice at Walmart needs to focus on duties, rights, commitments and the best business practices (DesJardins and John, 39). Although there cannot be a single way to determine all the aspects of best business practice, the company should establish guides to help employees reach uniform decisions that would be favorable to all stakeholders. Decisions should not benefit one part of the team while implicating another but should facilitate business prosperity for all directions. Employees tasked with decision making should, however, consider actions that are consistent with their basic duties that the company expected them to perform (DesJardins and John, 39). They should ensure that all the decisions they make fulfill part of their respective tasks. It should operate in accordance with Walmart’s intensive strategies for growth. They should aim at maintaining existing markets, securing new markets and coming up with new products as well as service techniques (Jones, 8).

Additionally, employees should respect the claims of other affected parties when making decisions (Markkula Center for Applied Ethics, 2). Performing their duties would not be more important than keeping customers and suppliers for continuity of business. Finally, workers should focus on decisions that result in the best result possible. Efficient decision-making would require employees to be briefed on decision-making techniques to enable them to evaluate the best choices at their disposal. However, employees should also be encouraged to operate under their own principles of commitment. In the case of personal principles, however, it is important to limit the extent to which they can be applied to make sure that they do not contradict with the company’s key objectives (Jones, 8). It is essential to get all the employees to hold their principles towards the same direction as the company.

Applying the Framework

Although coming up with a framework to achieve ethical practice could be a beginning point towards meeting the required ethical considerations, applying it would be the most challenging part. In order to understand make a successful application of the framework, some key requirements need to be present:

i) A clear understanding of the entire situation - There cannot be a better application of a solution framework than in one which a person understands what they are up for or against. It would be a waste of resources to engage in solving something that is not clear as there would not be anything clear to achieve. More importantly, one would need to deeply understand the framework such that they are aware of the possible outcomes, inclusive of benefits and consequences (Paine, 4).

ii) Identification of the relevant standards - It is possible to come up with all the codes of practice that need to be applied to situations, but pointing out which apply to what situations is a greater task. Any framework needs to have a background that supports the maximum benefits (Paine, 4). Maximum benefits are established by considering the involved parties and their interests to determine which ones are more pressing. It is important to establish if the key concern of the framework should lie in property, transparency, reliability, fairness, responsiveness, or in dignity. These considerations provide the best approach to apply the proposed model.

iii) Objectivity - In determining the outcome of a framework, one needs to establish what objective they are trying to, and what it is likely to accomplish. Identifying the objectivity of a framework enables one to choose between generality, visibility, and personal legacy (Paine, 4).

General Conclusion

Walmart needs to evade the consequences of a ruined reputation, which would possibly result in loss of customers, business partners, suppliers, and profits. On occasions where a company experiences accusation like exploiting employees, committing environmental crimes among others, it easily loses its business privileges and competitive position. Following the rising claims against Walmart, it could possibly suffer such plight if the accusations are not handled. It needs to reevaluate its workforce and decision-making groups to ensure that it has control over all operations it is associated with. Decisions should be made to contribute towards upholding the company’s vision and mission so that it can attain the expected performance while moving towards achieving the set goals and objectives. To remain in line with its stakeholders, the company should consider all possible standards to ensure that it achieves the best practice for all of them. In so doing, the company would hold its position in the market by showing that it values its customers, employees, suppliers and other business stakeholders.

Works Cited

Bowen, Howard R. Social responsibilities of the businessman. University of Iowa Press, 2013.

Crane, Andrew, and Dirk Matten. Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press, 2016.

DesJardins, Joseph R., and John J. McCall. Contemporary issues in business ethics. Cengage Learning, 2014.

Elbeltagi, Ibrahim, and Gomaa Agag. "E-retailing ethics and its impact on customer satisfaction and repurchase intention: a cultural and commitment-trust theory perspective." Internet Research 26.1 (2016): 288-310.

Jones, Thomas M. "Ethical decision making by individuals in organizations: An issue-contingent model." Academy of management review 16.2 (1991): 366-395.

Markkula Center for Applied Ethics. A Framework for Ethical Decision Making. Santa Clara University. (2017).

Paine, Lynn Sharp. Ethics: A basic framework. Harvard Business School, 2007.

Wadhwa, Vivek. What students should learn from Uber’s recent troubles. The Washington Post. (2017).