CSR Initiatives of Wal-Mart - Case Study Example

WAL-MART CSR INITIATIVES Multinational enterprises (MNEs) have been greatly criticized for behaving unethically in somesituations. This study explores the ethics and also presents an analysis of the Corporate Social Responsibility (CSR) initiatives taken by the firm Wal-Mart, which is a popular and world’s largest American retail corporation operating a chain of warehouse stores and discount department stores in the global market. The firm has carried out several unethical practices, which have inflicted harms on their stakeholder but instead provides them with opportunities to earn huge profit. A brief introduction to business ethics and social responsibility is undertaken. The importance of CSR initiatives is also discussed. The results indicate that Wal-Mart is well perceived by many customers despite few criticisms leveled against it due to its low and affordable prices. Candid CSR initiatives emerged as a very crucial factor. Table of contents Cover page………………………………………………………………………………………..1 Abstract……………………………………………………………………………….…….…….2 Introduction…………………………………………………………………………………...…..4 Analysis……………………………………………………………………………..………..…..5 Evaluation of the CSR initiatives……………………………………………….……………...….6 Recommendation………………………………………………………………………………… 7 Conclusions…………………………………………………………………………………..……7 References………………………………………………………………………………...……….9 Introduction Corporations today have to pay much attention to the needs as well as preferences of many interest groups. Corporations are not required to behave as if their profit making goal is more important that the interests of their stakeholders. Stakeholder theory maintains that management’s role is to create value for their non-shareholder stakeholders such as consumers, the community, creditors, employees and suppliers (Lii, 2011). However, Wal-Mart has been greatly criticized for going against this theory. Areas of criticisms include treatment of suppliers, foreign products sourcing of the corporation, environmental practices, employee compensations as well as working conditions, the corporation’s security policies, the use of public subsidies and slavery (Yuan, Bao, & Verbeke, 2011). They have sought to inflict harms on their stakeholders for profit seeking in a number of ways. However, the MNE has a number of CSR initiatives to help in leading as well as providing them with an opportunity to make differences on the big issues that matter to everyone. The corporation noted that they are committed to using their big size as well as scale in helping the world live better. Through such initiatives, Wal-Mart has been able to empower women, contribute to energy efficiency and assisting with disaster relief (News & Brothers, 2005). The aim of this paper is to identify the harms Wal-Mart inflict on their stakeholders while they make profit and the CSR initiatives it has adopted as well as their motives. In addition, the paper evaluates the results of such CSR initiatives and makes recommendations to improve the CSR initiatives. Analysis Wal-Mart has been subjected to intense criticisms due to the fact that in seeking profits, they have harmed their stakeholders. For instance, Wal-Mart has ignored the oppressive working conditions of their workers as well as the abuse of the basic human rights of their workers abroad in countries such as China and Bangladesh (Neumark, Zhang, & Ciccarella, 2008). Secondly, it has been notoriously known for offering their workers low wages which often forces their workers to rely on food stamps as well as other public assistance so as to make ends meet. Wal-Mart has strongly opposed the controversial living wage bill that would require them to pay their employees in Washington D.C. at least $12.50 per hour. This unethical labour behavior of the company inflicts harms on their workers as they are not willing to compensate them maximally though they make huge profits. Thirdly, Wal-Mart has been criticized for strong anti-union policies within the US and inadequate health care for their workers (Hays, 2004). The National Labor Relations board (NLRB) announced in November 2013 that the company illegally disciplined employees who engaged in strikes. Even though it is the single largest as well as most profitable corporation in the world, Wal-Mart has refused to offer adequate health care for their employees who generate huge profits. Their health plan only covers 47 percent of their employees, while nationally over 68 percent of employees in firms like Wal-Mart receive health benefits from their respective employers. Finally, Wal-Mart has constantly been accused of environmental violations. it is socially dangerous to inflict harm of the general public by polluting the environment for profit seeking. It has violated Clean Water Act and Clean air act thus damaging the global environment (de Roeck & Delobbe, 2012). Wal-Mart has adopted several Corporate Social Responsibility initiatives to help in leading as well as providing them with an opportunity to make differences on the big issues that matter to everyone. First, there is energy initiative that entails spending $500 million per year increasing fuel efficiency in their trucks fleet by 25 percent (Hays, 2004). The main motive for implementing this environmental measure is to increase energy efficiency as well as decreasing the emission of greenhouse gas and cutting solid waste. The second CSR initiative is the women’s empowerment (Yuan et al., 2011). This initiative aims at promoting the economic development of women by providing training as well as career opportunities for them with the help of Wal-Mart Foundation. The company also adopted agriculture initiatives aimed at supporting small, local farms by simplifying their supply chain to eliminate some middlemen so as to deal directly with farmers. Finally, the company has adopted waste initiative aimed at turning their garbage into an asset (Lii, 2011). This initiative helps in eliminating plastic shopping bag waste and landfill waste thereby resulting in a clean environment. Evaluation of the CSR initiatives The women empowerment initiative has resulted in the provision of training as well as career opportunities to more than one million women worldwide. This has created economic opportunity for all women as evidenced by the corporate officers of Wal-Mart, where women account for close to 28 percent, about twice the average percentage for Fortune 500 companies (Neumark et al., 2008). The initiative has influenced the corporate image as well as the reputation of the company as being a promoter of basic values as well as a supporter of gender equality. The energy and waste initiatives have resulted in lower prices thus saving customers around $ one billion per year. By saving customers millions of dollars yearly, Wal-Mart increases their disposable income making them able to purchase other essential goods thus improving their standards of living. Every week, over 200 million members and customers visit Wal-Mart stores due to their cheap prices. In addition, the initiative gives customers great bargains (Lii, 2011). This enabled them to make $24.3 billion of profits in 2014 (News & Brothers, 2005). This has gone a long way in the eyes of the public thus creating good reputation for the company. It has helped more people save money and live better. Reduction of waste through reduction of plastic shopping bag use and elimination of landfill waste has created an image of an environmentally responsible company (de Roeck & Delobbe, 2012). The company has also been seen by the public as being more concerned about greenhouse gases and global warming. Recommendations I would recommend that the company adopt corporate compliance as well as governance to be able to act more ethically thus being able to take care of all the interests of their stakeholders. They should also adopt stricter product sustainability guidelines to ensure that they provide healthier foods to their customers. This will help in eliminating excess salts, fats and sugars. In order to overcome new challenges brought about by globalization regarding CSR, Wal-Mart should have greater commitment, courage and adaptability (Hays, 2004). This will help in leading as well as making huge differences on the big issues that matter to everyone. Wal-Mart should increase their focus on their business, customers and communities surrounding them so as to deliver on their commitment of operating responsibly. They should also put much emphasis on being a leader in corporate philanthropy, sustainability and employment opportunity so as to foster a positive working environment for their workers thus reducing the strikes. Conclusion MNEs are required to pay much attention to the needs and preferences of their stakeholders so as to create value for their non-shareholder stakeholders rather than just making profit. Wal-Mart has received much criticism for failing to create value for all their stakeholders. Areas of criticisms include treatment of suppliers, foreign products sourcing of the corporation, environmental practices, employee compensations as well as working conditions, the corporation’s security policies, the use of public subsidies and slavery. However, the company has adopted CSR initiatives such energy, women empowerment, agriculture and waste initiatives to address such criticisms. The initiatives have influenced the corporate image as well as the reputation of the company thus changing the initial perception. Wal-Mart should have greater commitment, courage and adaptability so as to improve their CSR initiatives. References De Roeck, K., & Delobbe, N. (2012). Do Environmental CSR Initiatives Serve Organizations’ Legitimacy in the Oil Industry? Exploring Employees Reactions Through Organizational Identification Theory. Journal of Business Ethics, 110, 397–412. doi:10.1007/s10551-012-1489-x Hays, C. (2004). What Wal-Mart knows about customers’ habits. The New York Times, 1–6. Retrieved from http://www.laisumedu.org/DESIN_Ibarra/salon/si2/wm-59.pdf Lii, Y.-S. (2011). The effect of Corporate Social Responsibility (CSR) initiatives on consumers’ identification with companies. AFRICAN JOURNAL OF BUSINESS MANAGEMENT, 5, 1642–1649. doi:10.5897/AJBM10.508 Neumark, D., Zhang, J., & Ciccarella, S. (2008). The effects of Wal-Mart on local labor markets. Journal of Urban Economics, 63, 405–430. doi:10.1016/j.jue.2007.07.004 News, F. L., & Brothers, R. S. (2005). Wal-Mart Stores, Inc. Mergents Dividend Achievers, 2, 280–280. doi:10.1002/div.2070 Yuan, W., Bao, Y., & Verbeke, A. (2011). Integrating CSR Initiatives in Business: An Organizing Framework. Journal of Business Ethics, 101, 75–92. doi:10.1007/s10551-010-0710-z  Read More