Here is a paper i recently wrote for my Business Ethics class on the Sustainability of Wal-Mart. Written by Tony Jefferson at Colorado Technical University.
Wal-Mart: The Future Is
Sustainability
Do you think Wal-Mart is doing enough
to become more sustainable?
Wal-Mart over the years has had many
image problems. Their approach to sustainability, however, is certainly helping
repair its image around the world. They work with their suppliers to reduce
packaging and shipping. Wal-Mart plans to reduce packaging by 5% by 2013,
reflecting its desire to improve sustainability.(Ferrell, Fraedrich, &
Ferrell, 2013, p. 329) Manufactures working with Wal-Mart must certify
compliance with laws and regulations where they operate, as well as rigorous
social and environmental standards set by government agencies. In 2009,
suppliers in China began the process of compliance and other Wal-Mart suppliers
followed. By 2012, suppliers must work with Wal-Mart to make a 20% improvement
in energy efficiency and create a plan to eliminate defective merchandise from
reaching the Wal-Mart supply chain.(Ferrell et al., 2013, p. 329) Also by 2012
all of Wal-Mart suppliers must source 95% of their production from factories
receiving the highest ratings on environmental and social practices.(Ferrell et
al., 2013, p. 330) Many critics, however, state that Wal-Mart will not be able
to carry out many of its goals because of the many suppliers required to keep
Wal-Mart functioning. With Wal-Mart’s size and power it wields it can force suppliers to play by
its rules.
1.
What
are the problems that Wal-Mart has faced, and what has the company done to
address them?
Wal-Mart, as many other large companies, faces many problems and issues
that would take many books to review and analyze. I’ll focus on two in this
question: The employees of Wal-Mart and the effect of Wal-Mart on communities.
Wal-Mart has a long history of employee disenfranchisement, from pay, health
benefits, low wages, discrimination and employment of illegal immigrants the
list can drag on and on. Wal-Mart discourages unions and has done so since the
days of founder Sam Walton. (Ferrell et al., 2013, p. 331)This may be a
contributing factor to why the employees get treated so poorly. Recently Wal-Mart recognizes its failures and
is trying to better its relationship with employees. Wal-Mart has been accused
of failing to provide health insurance for more than 60% of its employees, when
the public caught wind of this injustice, shares for the company plummeted by 27%. (Ferrell et al., 2013, p. 330). In
lieu of bad press received from the treatment of employees Wal-Mart raised pay
tied to performance and improved its health benefits package by lowering
deductibles and implementing a generic prescription drug plan estimated to save
employees $25 million. (Ferrell et al., 2013, p. 331). In any organization of
the size and employee population of Wal-Mart issues of discrimination and poor
workplace conditions will abound. In December of 2005, Wal-Mart was ordered to
pay $172 million to more than 100,000 California employees in a class-action
lawsuit claiming that Wal-Mart routinely denied meal breaks, rest breaks and
altered time cards to prevent overtime (Ferrell et al., 2013, p. 331). As far
as communities go many local stores fear the effects of bringing a Wal-Mart to their
neighborhoods. Wal-Mart is known for causing local businesses to close because
of the constant threat of having to compete with the low price guarantee of
Wal-Mart. Many local companies aren’t on the same level financially as Wal-Mart
and are forced to close because they can’t match the low prices and
availability that Wal-Mart provides. Wal-Mart has tried to counter this
negative image by having more local suppliers and trying to better the
community they occupy. This is a good effort but not enough to save the local
community from the effects of Wal-Mart.
Why has Wal-Mart tended to improve
performance while other retail outlets have been suffering financially?
As previously stated the Wal-Mart
mantra is everyday low prices and most times competitors can’t compete with the
money and power that Wal-Mart wields. Wal-Mart is a very aggressive company and
will price check similar products from rivals to make sure they are giving
customers the lowest price. Recession shoppers appreciate the marketing ploy
and will ignore other stores because of the low price guarantee. In turn other
stores suffer in sales and eventually either play second fiddle or close all
together.
References
Ferrell, O.,
Fraedrich, J., & Ferrell, L. (2013). Business
ethics: Ethical decision making and cases (9th ed.). Mason, OH:
South-Western.
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