Business Ethics at Wal-Mart - Assignment Example

 In today’s corporate business environment business ethics has become more important than ever. Customers and other stakeholders groups expect companies to behave in a proper manner. A lack of ethics can lead to public relation problems. Prior to the turn of the century Nike corporation lost a lot of clientele due to the unethical behavior associated with running sweatshops in developing nations. A lack of ethics in the business world can hurt the reputation of a company (Johnson, 2009). The managers and leaders of corporations must comply with high ethical standards in order to gain the respect of their workers. This paper summarizes and analysis the article Wal-Mart Brazil Thinks Green written by Andrew Winston. Wal-Mart in the discussion of the article act as a good corporate citizen that is trying to bring change to the business practices in South America. The article in general describes a good event. Wal-Mart is the largest retailer in the world and the biggest private employer worldwide with over 2 million employees on payroll. Due to the coercive power the company has it can influence the practices of its vendors and suppliers. The company faced quality control problem in China which forced the company to become stricter with its Chinese suppliers. Wal-Mart wants to raise the operating standards of their company and its suppliers. The company believes in the value of sustainability and environmental protection. Due to the success of the new sustainability agenda in China the president of Wal-Mart in Brazil, Hector Nuñez, wanted to implement a similar sustainability agenda in South America. Corporate greed can at times affect the decision making of businesses due to fact they don’t to incur in any added costs. The position Wal-Mart is taking on the subject can be considered altruistic. It can also be considered a utilitarian move because it places emphasis on the environment over business costs. Brazil is one of the richest countries in the world in term of natural resources. The Amazon jungle is the biggest tropical rainforest in the world. Deforestation is a huge problem that is putting in danger the wildlife and plants of the region. The cattle industry and the soy crops are two of the major causes of deforestation in the region. In order to raise awareness Hector Nuñez created a summit for Wal-Mart suppliers to discuss sustainability practices. At the summit Wal-Mart announced significant goals and mandates to tackle a wide variety of environmental and social problems. Three mandates that Wal-Mart suppliers must now follow if they want to continue to do business with Wal-Mart are: zero employment of slave labor, no soybean sourced from illegal deforested areas, and no beef sourced from any newly cleared Amazon land (Winston, 2010). Along with these mandates there were other environmental goals that the company established. Wal-Mart established two goals for its suppliers which were a 70% reduction in phosphates in detergents by 2013 and a 50% reduction in plastic bags by 2013 (Winston, 2010). After the summit the company was able to get an immediate commitment from 20 of its major suppliers. The LMX leadership theory could be applied to the relationship between Wal-Mart and its suppliers to improve the relationship between the parties. The article questions whether these initiatives by Wal-Mart which forced suppliers to change their behavior were a fad or a trend. If it became a trend it could lead to more pacts being signed between companies in order to improve the environment. The fact that Wal-Mart holds so much power made it possible for them to force other companies to change their behavior. The author of the article believed that these types of arrangements are something that can be accomplish easily. In business every company operates their companies independent of what other do. I believe that the author’s assumption that these types of environmental pacts can be easily achieved is erroneous. It would be very hard for the private industry to regulate the practices of other privately owned enterprises. If Wal-Mart wasn’t such a large player it would be hard for them to influence the behavior of others. Small companies cannot risk losing clients by imposing on them environmental rules and policies. The governments of developing nations are sometimes biased against nature and they seek short term benefits instead of emphasizing in long term environmental sustainability. I liked the content of the article because it provided insight about the initiatives of major companies concerning our environment. During the last 100 years mankind has been polluting the environment and depleting natural resources at an alarming rate. The government has been inefficient at establishing environmental policies to protect the environment. Part of the problem is that different countries had different environmental standards. If an American company cannot comply with EPA requirements it can cheat the system by establishing a subsidiary in a developing country. These types of egoist acts show a lack of transactional leadership from the part of the corporation. It is good to know that Wal-Mart has is putting pressures on its suppliers to raise their sustainability standards. I recently went to a Wal-Mart store near my home and they have completely eliminated the use of plastic bags. Clients can only use the recyclable eco-bags sold at the store. Plastic is a petroleum derivative that hurts our environment. Wal-Mart is using situational control in order to reduce or eliminate the plastic bags from circulation. The article was very educational because it helped raise awareness about the environmental problems corporations are facing. The initiatives Wal-Mart implemented are a matter of business ethics. Ethics can be defined as a decision between right and wrong. The leadership exerted by Wal-Mart can be classified as a type of transformational leadership. Transformational leadership occurs when leaders motivate others to look beyond their own interest for the good of others (Northouse, 2007). Referent power was used by Wal-Mart to influence the actions of its suppliers. More companies should follow the example set by Wal-Mart in order to improve quality of life of our society. References Johnson, C. (2009). Meeting the Ethical Challenges of Leadership (3rd ed.). Thousands Oaks: Sage Publications. Northouse, P. (2007). Leadership, Theory, and Practice (5th ed.). Thousands Oaks: Sage Publication. Winston, A, (2010). Wal-Mart Brazil Thinks Green. BusinesWeek. 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