Knowledge Sharing in the Decision-Making Process

Running head: SUSTAINABILITY PRINCIPLES 1

SUSTAINABILITY PRINCIPLES 5

Student Name: RAWIA Al MADANI

Course Code: MGT-630/ 21140

Student Id: 160020468


Course Name: Business Ethics and Sustainability

Assignment: (Module 06: Critical Thinking)

Instructor Name: Victoria Figiel  

Introduction

In contemporary times that we live in environmental conservation efforts and initiatives has become a necessary practice for every human activity. Researchers and environmental conservation advocates are at the forefront of ensuring that all stakeholders and businesses are keen to go about their activities in a way that poses the least harm to the environment. Due to the push by advocates and researchers, governments worldwide have hearkened to the sustainability call and are now formulating and enforcing legislation that necessitates every business entity to reduce on their carbon footprint by embracing sustainability measures in every possible way. Strides have been made in finding ways in which technological advancements, industrial and other mainstream consumer products can be done with the least impact on the environment. The one area that is however still lagging is businesses that deal in small consumer products like food, clothing, home appliances and a myriad of other products that are essential for daily living. Consequently, businesses operating in this sector are often lagging in embracing sustainability practices and hence, still cause significant environmental degradation. One such company is Walmart Inc., an American company with a vast network of operations around the world and just recently, in Saudi Arabia.

Walmart Saudi Arabia

Walmart Inc. is an American company that has been in business in America for more than five decades and over the time that it has been operational, has entered into other markets in various parts of the world (Niblock, 2015). One of those areas is Saudi Arabia where the retail giant has a couple of stores in the Middle Eastern region. Walmart in Saudi Arabia is one of the largest retail stores in the region, and it handles a vast array of products ranging from personal to small industrial items. The giant retail store moves much merchandise in the region. Walmart’s operations cause significant pollution in the environment. The company is aware of the damage that its business practices have on the environment and for a while, has been trying to adopt more sustainable practices (McGee, 2018). Nevertheless, the large scale of operations requires massive amounts of petroleum fuel which is needed to move merchandise from one place to another and the energy expenditure needed to produce a large number of items sold by the retail giant have dire consequences to the environment. Therefore, the giant retailer is still lagging behind other businesses in terms of environmental sustainability practices.

Walmart Inc.’s value proposition has always been based on the fact that it is doing its best to reduce its carbon footprint and also provide the best quality products at an affordable price. The company prides itself in being able to deliver quality products to its customers for the lowest prices in comparison to its competitors (Niblock, 2015). To achieve the lowest prices on all their goods, Walmart praises its supply chain which is optimized to facilitate bulk procurement and shipping to designated warehouses. The products in these warehouses can then be delivered to the various stores across Saudi Arabia and other regions in the Middle East to the customers who need them. From a sustainability perspective, the efforts done by Walmart Inc. seem to be environmentally conscious (Kip, 2015). However, there are some loopholes in the company’s value proposition. For the business to turn profit and yet still be able to provide quality products at lower prices, something has to give. To remain afloat by selling its products cheaply and yet maintain its market niche of being affordable, Walmart Inc. produces lower quality products that are cheaper to manufacture (Tucci, Afuah & Viscusi, 2018). These products may seem like they are of good quality, but they have a short lifespan, and sooner than later, they will be headed to a landfill after a consumer discards them. The practice of buying products that wear out easily means that waste is generated at a quicker interval and since the retailer does not have a recycling plant to reproduce most of its products, their practices are detrimental to the environment. On analysis of the total value proposition of Walmart Inc., a couple of use and non-use values for the business’ green products were discovered. The company is conscious of its large supply chain where it has to order various merchandise from diverse geographical locations, and since shipping consumes a lot of petroleum fuel, the company strives to do bulk procurement to reduce on the number of trips a ship has to do to meet the consumers’ needs. It, however, has some non-use value in a variety of ways. With regards to value surplus, the principle of the company of doing bulk procurement sometimes leads to excess products which consumers may not buy and thus have to be shipped to a different location leading to further environmental pollution. Value surplus is present in that the company should have recycling plants for most of its recyclable products, but it does not and hence, most of the consumers who do not bother with environmental conservation dump used products which end up in landfills and become environmental pollutants. Furthermore, inadequate penetration into the Middle East causes the business to lose on potential clients who would be a ready market for its surplus goods which it stays in the warehouse until it has to be shipped to another geographical location. The other non-use value is value missed where the company has failed to use its substantial revenue to build more efficient business models that will reduce its carbon footprint (Yang, Vladimirova & Evans, 2017).

From the analysis above, the business is trying to achieve environmental conservation through the implementation of sustainable practices. Although Walmart Inc. in Saudi Arabia has made several efforts to ensure sustainable practices, it still lacks in some significant areas that can enable it to have a further reduction on its carbon footprint. The next procedure in ensuring environmental conservation through sustainable practices is by involving consumers, and this is where willingness to accept (WTA), willingness to purchase (WTP) and consumer surplus come in play. WTA is the minimum amount of money that a consumer is willing to accept to forfeit a product in order to conserve the environment while WTP is the maximum amount that the consumer can sacrifice the added cost in order to conserve the environment. The difference between the two brings about the social surplus which is a measure of the willingness of a consumer to abandon inhibitions about the price of a commodity in favor of environmental conservation. WTP is very important for policy makers because of its huge importance in providing information related to the economic value of environmental assets, estimating the environmental damages that result in losses which in case Walmart employed it, will bring high value to the environment and the society. In the other hand, the WTA measuring of economic value for environmental losses are rarely employed. For example: the willingness to pay for a dishwasher at Walmart that will reduce the carbon footprint and energy efficiency will add a huge value and increase sustainability, mean while the willingness to accept compensation of the risk from not implementing saving energy and carbon footprint products .Consumer surplus, on the other hand, is a construct of market forces that determine how much more a consumer is willing to buy a product even when the price is above the usual one that they usually purchase the product or service at (Luchs & Kumar, 2015). With this regard, Walmart Inc. the retail giant should analyze the things it needs to do and put in place to reduce the carbon footprint of its practices and how the three factors mentioned above come in play. Scholars conducted studies which show that consumers are willing to abandon all the other inhibitions with regards to the price of a product in favor of environmental conservation. Walmart Inc. in Saudi Arabia would do well if it decided to focus more on sustainability principles and involve its consumers in the process.

Conclusion

Walmart Inc. in Saudi Arabia can join the bandwagon of environmental sustainability by doing more to streamline its practices by aligning them to sustainability practices. These practices would mean structural, economic and political changes within the organizational framework of the company but at the end of it all, the company will be doing its best in ensuring that its consumers and the processes taken to get them merchandise are environmentally conscious. If Walmart decided to adopt and practice sustainability principles in even a few of its departments; like with household appliances which it can set up a recycling plant which customers can trade in their old models for new ones, it will certainly attract more environmentally conscious individuals. The demonstration of the business choice between WTP and WTA, and the bias by employing WTP which eventually will bring a huge value in preserving the environment and the society is another important measure the Walmart can use to ensure being competitive in the market and proactive in addressing economic and environmental issues. In addition, by employing WTP the gains and losses will be measured. Adopting these practices will not only be good for the environment but it will also place Walmart Inc. among the businesses that reap huge revenue from customers who prefer to buy products that are manufactured through sustainable means and preserve the eco systems and maintenance of environmental equality.

References

Kip, Viscusi, W. (2015). Reference-Dependence Effects in Benefit Assessment: Beyond the WTA–WTP Dichotomy and WTA–WTP Ratios. Journal of Benefit-Cost Analysis, 6(01), 187-206. doi:10.1017/bca.2015.3

Luchs, M. G., & Kumar, M. (2015). “Yes, but this Other One Looks Better/Works Better”: How do Consumers Respond to Trade-offs Between Sustainability and Other Valued Attributes? Journal of Business Ethics, 140(3), 567-584. doi:10.1007/s10551-015-2695-0

McGee, R. W. (2018). How Large is Walmart? A Comparison of Walmart Sales to Nationss GDP. SSRN Electronic Journal. doi:10.2139/ssrn.3102735

Niblock, T. (2015). State, Society and Economy in Saudi Arabia (RLE Saudi Arabia). doi:10.4324/9781315727455

Tucci, C. L., Afuah, A., & Viscusi, G. (2018). Introduction to Creating and Capturing Value Through Crowdsourcing. Oxford Scholarship Online. doi:10.1093/oso/9780198816225.003.0001

Yang, M., Vladimirova, D., & Evans, S. (2017). Creating and Capturing Value Through Sustainability. Research-Technology Management, 60(3), 30-39. doi:10.1080/08956308.2017.1301001