Review of Ethics of Wal-Mart

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Table of Contents

Introduction
Ethical issues in Wal-Mart’s stores
Ethical issues in the distribution department
Ethical issues in the production department
Ethical issues in the purchasing department
Conclusion
References

Introduction

Ethics involve the morals that govern the conduct of individuals. It is a question of what is right or wrong. Business ethics involve the components of good or bad in the character of the employees or a business. Businesses have ethical policies that govern the relationship among the various business associates.

For instance, if it is right or wrong for a cashier to fail to refund balances to customers (Shaw, 2008). Another business ethical issue is if it is right or wrong for a business person to defraud a customer. The aim of this paper is to analyze the ethical situations in Wal-Mart Incorporation using three ethical theories.

Consequentialist theory states that the morality of an action depends on its results. If the results are good, then the action is right and if the results are bad, then the action is wrong. Consequentialists determine the right action by weighing the ratio of good to bad outcome that an act will create.

There are two consequentialist theories. These are egoism and utilitarianism. Egoism advocates for self interest as its rule. It considers the effects of an action on an individual. On the other hand, utilitarianism advocates that a person must consider the effects of an action on other people.

Both egoism and utilitarianism use facts and data to determine the morality of a situation. They do not rely on logic or reason to analyze an outcome. Nonconsequentialist (deontological) theory states that the morality of an act is determined by more than just the consequences of an action.

They believe that other factors are important in analyzing an action. On the other hand, Immanuel Kant’s theory does not rely on contingencies and defines actions as right or wrong other than a particular situation. He advocated that moral principles can be as a result of plain reason and cannot be reliant on plain observation. Kant believed that only reason can result to morality. According to him, an ideal moral truth has to be logically reliable or consistent and without any deliberate contradiction (Shaw, 2008).

Ethical issues in Wal-Mart’s stores

Wal-Mart makes use of the RFID technology. This helps in management of its inventory. It ensures that products can be tracked easily and accurate information about the levels of stock can be obtained. RFID technology does not need any person to operate it. The device scans the products as they roll through its reader portal (“Legal and Ethical Issues Concerning RFID”, 2007).

Therefore, this technology can assist Wal-Mart to know when there the stocks are insufficient and can help save up to $I billion of the firm’s costs. As a result, the cost of labor is minimized. This means that employment is reduced and retrenchment is very possible to occur. This is unethical because employees risk losing their source of income. Immanuel Kant would view such an act as logically right.

This is because it is reasonable for a company to advance its technology in order to remain competitive. For instance, when Wal-Mart introduced the RFID technology, its inventory costs reduced. As a result, it is able to sell its products at very affordable prices. A utilitarianist would view this situation as ethically wrong as it affects the employees.

For instance, as result of the RFID technology many employees are likely to lose their jobs. This means that the unemployment rate will rise. A nonconsequentialist would see this act as ethically right. This is because Wal-Mart’s employees could actually be retained but their salaries could be reduced. Therefore, facts are not sufficient to analyze the effects of Wal-Marts new technology.

Ethical issues in the distribution department

Wal-Mart has more power in the supply chain than its suppliers. Since Wal-Mart has ability to market its products, the suppliers have to abide by Wal-Mart’s requests or risk running out of business (Sage Publications, 2011). For instance, Rubbermaid had become famous because it produced quality products.

Therefore, it raised the prices of its products. This strategy was acceptable to many retailers apart from Wal-Mart. Later on, Wal-Mart went out of business with Rubbermaid. Rubbermaid lost a lot from this because Wal-Mart was their largest retailer. Eventually, Rubbermaid had to sell its business to a competitor (Watts, 2009, par. 1).

Immanuel Kant would see this act as ethically wrong. This is because logically, the two businesses were partners who were supposed to cooperate and benefit from each other. It was not reasonable that Wal-Mart should eliminate a supplier because it had increased prices of its high quality products.

A utilitarianist would also see this act as morally wrong. This is because many people were affected when Rubbermaid went out of business. For instance, there was loss of jobs and the general status of the owners dropped. On the other hand, a nonconsequentialist would see this act as morally right.

This is because the available facts should not be enough to determine the state of an outcome. Other factors like the impact that increase in price would have on Wal-Mart should be considered. For instance, when Rubbermaid increased its prices, Wal-Mart would also have to increase the price of its products. Consequently, this could lower demand for Wal-Mart’s products.

Ethical issues in the production department

Wal-Mart has been opening up many liquor stores in various places. It obtains these liquors from Diageo Plc. It is able to sell these products at a lower cost than its competitors because it buys the liquors in bulks. The retailer’s production department has surpassed its competitors by opting to buy from a distributor rather than producing its own liquors. This has helped Wal-Mart to cut costs of production.

This is unethical because its competitors may not have the capacity to buy from a distributor (“Plunkett Food Industry Almanac”, 2008). Immanuel Kant would see this act as ethically right. This is because it is logical for a business to look for alternative ways of cutting costs.

Therefore, Wal-Mart is able to achieve a competitive advantage because it can sell its products cheaply. A utilitarianist would see this act as ethically wrong. This is because other businesses’ profits are affected by Wal-Mart’s strategy. They are unable to compete and may risk running out of business. A nonconsequentialist would see this act as ethically wrong.

This is because as a result of Wal-Mart’s production strategy, competitors may benefit from the retailer’s publicity. Since many customers will buy Wal-Mart’s liquor, some customers may decide to buy from the neighboring businesses. As a result, Wal-Mart will have attracted customers to the liquor joints. It is therefore necessary to use both facts and logic in order to analyse this situation.

Ethical issues in the purchasing department

Wal-Mart is known to have high levels of influence on the companies that it purchases its foods from. It requires that the products are packaged in particular ways. For instance, in 2006, Coca-Cola had decided to introduce a soft drink by the name Coke Zero. However, Wal-Mart wanted a drink that could be sweetened with Splenda instead of Coke Zero whose sweetener was aspartame.

Therefore, under the persuasion of Wal-Mart, Coca-Cola ended up producing a Diet Coke containing Splenda and afterwards, it was allowed to produce Coke Zero. This shows that Wal-Mart can influence the kind of products to purchase from its suppliers. This is unethical because it denies other businesses the chance to make the right choices in production (“Plunkett Food Industry Almanac”, 2008).

Immanuel Kant would view this act as ethically right. This is because it is logical for companies to exercise influence in order to achieve a competitive advantage. Wal-Mart knew that the coke with Splenda sweetener sold a lot. It therefore made a clever move in order to ensure that it didn’t lose its customers.

A utilitarianist would view this as a wrong act because it affects the operations of other businesses. For instance, Coca-Cola’s sales must have been affected since it was influenced to change its production plans. It could have already established clients for the product. A nonconsequentialist would see this as a right act because it Coca-Cola could have benefited more from this deal.

Relying on facts alone can be deceiving. It is necessary to reason that Coca-Cola could have realized that the Splenda sweetened coke was selling better than Coke Zero. As a result, the influence by Wal-Mart could have worked in favor of Coca-Cola Company.

Wal-Mart is being faced with accusations of sexual discrimination. It is said that the biggest sexual discrimination law suit in the history U.S. was between Dukes and Wal-Mart. The court agreed to have action upon seven women that claimed that the firm was unfair in pay and promotion of women.

15 million women that had worked for the firm’s U.S. stores from 1998 were entitled for this hearing (Weiss, 2008). This is unethical because all genders are supposed to be treated equally. Employees should not be discriminated under the basis of gender, race or even ethnicity.

This form of discrimination is unethical in any business. Immanuel Kant would see this act as ethically wrong. This is because it is not reasonable to ask people of different races and gender to apply for a job and then discriminate them later. It is not logical because if the company wanted employees from specific places and with specific features, it should not have recruited people who are otherwise. A utilitarianist would see this act as ethically wrong.

This is because it would affect the level of self-esteem and motivation of the employees. If the employees feel unappreciated, they can lack trust in themselves and therefore fail to perform their duties as required. This could eventually affect the organization’s performance. A nonconsequentialist would see this act as ethically right.

This is because despite the fact that Wal-Mart exercises gender discrimination against women, there could be an underlying good reason behind the act. For instance, it could be that the company was experiencing a lot of women taking leaves in order to cater for family matters.

Conclusion

Ethical policies are important to an organization. They can be interpreted differently under the three ethical theories. Utilitarianism, nonconsequentialism and Immanuel Kant’s theories are some of the theories used to interpret ethical behaviors. Given the ethical issues that are facing Wal-Mart Incorporation, I would grade it C on a grading scale of A to F. This is a neutral grade because apart from Wal-Mart’s having its own share of problems, it also has numerous benefits to the society.

References

Legal and Ethical Issues Concerning RFID, (2007). In T, Blecker & G. Huang (Ed.) RFID in Operations and Supply Chain Management Research and Applications (pp. 487). Berlin, Germany: Erich Schmidt Verlag Gmbh & Co.

Plunkett Food Industry Almanac, (2008). In J, Plunkett (Ed.) The Only Comprehensive Guide to Food Companies and Trends. Santa Fe, New Mexico: Plunkett Research, Ltd.

Sage Publications. (2011). Sage Brief Guide to Marketing Ethics. California, United States: Sage.

Shaw, W. H. (2008). Business Ethic: A Textbook with Cases (6th ed.). Boston, MA: Cengage Learning.

Watts, J (2009). Is Wal-Mart Good for America: Review. Web.

Weiss, J. (2008). Business Ethics: A Stakeholder and Issues Management Approach. Connecticut, U.S.: Cengage Learning.

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