Sustainable Management Futures: Wal-Mart Case - Assignment Example

?Sustainable Management Futures Table of Contents Table of Contents 2 Introduction 3 of Ethics 3 Ethics in Business and Management 4 Sustainability Principles 5 Ethical Theories 7 Analysis of Wal-Mart’s Ethical Foundation 11 Business Ethics Reporting 12 Safe Workplace 12 Harassment 12 Retaliation 13 Work Hour and Wages 13 Relationships with Suppliers and Other Associates 13 Environmental Protection 14 Fair Competition 14 Analysis of Ethical Violation of Wal-Mart 15 Violation for Work Hour and Wages 15 Violation of Suppliers and Employees Relationships 15 Violation of Environmental Protection 16 Violation of Fair Competition 16 Possible Ethical Strategies for Wal-Mart 16 Conclusion 18 References 19 Introduction Ethical foundation has become an important aspect for every company to conduct business in today’s ever changing world. Several companies believe that performing ethically is worthy for effective business performance and its impact can be enjoyed in the long run. An organisation which wishes to develop a positive image must be concerned about its customers’ requirements, society’s requirements, suppliers’ requirements, and requirements of employees’. Companies which are concerned about those above aspects should act ethically. In order to ensure good ethical practices, organisations need to implement ‘code of ethics’ and abide by them appropriately. Code of ethics helps organisations to notify their employees about the vision, brand image and objectives (Friedman, 2000). Code of Ethics Code of ethics is one of the major components for strong ethical foundation. It helps new employees to learn significant aspects about how to perform their tasks and how to behave in workplace. A strong code of ethics addresses general standards on which an organisation stands and specific principles for daily business operations. Certain code of ethics put emphasis on complete disclosure of the capabilities, while certain codes can focus more on safety of employees, and others can concentrate on full recognition of concern for the quality of product (Pike, 2001). Ethics in Business and Management Business corporations in present days are likely to satisfy the ethics of responsible business manner. Business should not only be viewed as production, employment and revenue, instead it is also a part of community. The pursuit of revenue and economic development should not be accomplished by violating the community’s rules, ethics, morals, respects, honesty and quality. Improved business performances, incomes and financial developments can occur if organisations successfully and proficiently raise and satisfy the rational expectations of the primary stakeholders. Success of any organisation is eventually measured by revenues and losses, communally responsible organisation can produce the wealth and the revenue essential to run business effectively and stay in the market over long run. A publicly responsible organisation must produce adequate revenue to fulfil the actual cost of wealth. The publicly irresponsible organisations, however fail to fulfil those costs because they are unable to satisfy the reasonable expectations of the stakeholders (U.S. Department of Commerce, 2004). A responsible organisation creates profit through satisfying the requirements of customers. It creates more wealth by fulfilling investors’ prospects for higher return on investment. Responsible organisations raise the efficiency by motivating and retaining the best workers. It decreases the operating expenses by minimising the rate of errors, misconducts and confusions (U.S. Department of Commerce, 2004). As the economy is becoming more global, organisations are viewing that the best method for raising wealth is through making prospects for people particularly in the developing countries. It is a challenge for every organisation to maintain steadiness between evolving international customs, morals, ethics, cultures, business practices and social requirements. In international market, organisations perform several unethical practices such as giving or accepting bribes, providing lower wages to employees and performing unapproved conduct in local tradition among others which are not permitted by any society. Until organisations focus on managing regular challenges rather than struggling to rise beyond them, they will gradually become the part of the ethical problems. For instance, in certain scenarios, giving a little amount of bribe can help to do away with certain taxes. Instead of avoiding, organisations that perform this kind of act only because of being influenced by others but also to generally make the economy more challenging (U.S. Department of Commerce, 2004). A responsible commercial organisation has numerous roles and duties in the society which includes the stakeholders. It can add value to the organisation through creativity, flexibility, and sensitivity in regular operations. The good ethical practices for a responsible organisation are: Satisfying the significant requirements of customers Providing lucrative benefits to employees so that they can support their families and become a good resident Providing satisfactory profit to the investors Encouraging fair competition in the market Establishing strategic partnerships and associations to generate new business prospects Supporting social arrangement though paying adequate taxes and duties Contributing in the political progression to recover market disorders Valuing the environment (U.S. Department of Commerce, 2004) Sustainability Principles Nowadays, organisations around the globe are strained with new role of business which aims to fulfil the requirements of new generation of consumers without reducing the capability for satisfying organisational requirements. Business enterprises are called upon to take additional duty for the methods of operations which affect the community and the environment. They are required to apply the sustainability principles in their operations. Sustainability principles denote the organisational practices which validate the presence of social and environmental concerns in business and good relations with stakeholders. In present days, organisations must concentrate on increasing the revenue as well as being a responsible corporation. Keeping up-to-date with international tendencies and remaining dedicated to economic responsibilities to provide private as well as civic welfares have enforced organisations to reform their structures, guidelines and business models. The strong association with stakeholders has become critical for success in this competitive environment. The transformation of business structure needs sustainable development which addresses business ethics, corporate social responsibility, stakeholder management and international business citizenship. Organisations have established ranges of strategies to manage social requirements, natural environment protection requirements, and corresponding business necessities. Organisations also consider developmental field regarding deep and cohesive social responsibility and day-to-day operations globally (Amato & Et. Al., 2009). The responsibilities of business corporations can be divided into two ways. One is the manner in which the organisation performs business and other one is the welfare activities for the shareholders, employees, customers, and society. The following table will describe the role of organisation towards stakeholders: Responsibility Shareholder Care for their security Become more transparent regarding financial disclosure Involve shareholders in decision making Provide appropriate dividends or interests Employees Provide appropriate salaries Provide good working environment Establish reasonable work criteria and customs Provide benefits to employees Educate by training and developmental activities Identify and appreciate the efforts of employees Manage grievances of employees equitably Include employees in decision making Customers Set reasonable price for products/services Provide better after sales service Focus on research and development to satisfy the needs of customers Strengthen the distribution system Provide adequate and real information about any product Society Protect the environment and preserve natural balance Help society to develop the standard of living Improve effectiveness in commercial activities Contribute for making a better society Source: (Thenmozhi, n.d.). Ethical Theories Ethics can be demarcated as the logical reflection of morality. Morality can be identified as views, decisions and activities by which people express their thinking. Ethics is not a guidebook to learn good act, rather it is a pursuit for right type of morality. There are numerous ethical theories in business. The ethical theories can be classified by three ways which are described below: Source: (Brown, 2001). Relativism Relativism theory depicts that morality is connected with the customs of one’s values. Whether an activity is correct or immoral depends on the ethical customs of the society in which it has occurred. Relativists believe that there are no universal ethical principles which are useful in business at all times. Under this theory, it is assumed that no universal outline exists for solving ethical arguments or reaching to a settlement on ethical issues among people of different communities (Velasquez & Et. Al., 2010). Absolutism Absolutism is also termed as universalism which tells that rules and principles are universally applicable for people all the times, in all places. There is no exception in absolutism; only aspect considered in this theory is the rule. According to this theory, every rule and principle contradicts with each other in a certain condition (Aerostudents, n.d.). Utilitarianism Utilitarianism theory is based on the capability to foresee the significances of an activity. Utilitarian believe that decision which provides utmost benefits to maximum people is ethically correct. This theory compares and contrasts similar anticipated solutions and application of point system to decide which decision is more useful for majority of people. The point system helps to develop a reasonable and rationale argument for every choice and lets individuals to apply it on the basis of situation (Rainbow, 2002). Kantian Theory Kantian theory believes that a person must have an ethical rule to follow, which is his duty. According to this theory, activities performed for the aim of duty can have ethical value. By putting a rule upon oneself that fulfils the unconditional imperatives, a person can be able to understand which activity is ethically correct (PLE, 2009). Virtue Ethics Unlike other ethical theories, virtue ethics does not focus on rules, outcomes or specific activities; rather it focuses on the characteristic of the individual. In virtual ethics, aspects such as right or wrong objective, correct or incorrect rule, good or bad outcomes are not important. The important factor is whether the person has good ethical virtues or not. According to this theory, only a virtuous individual can act ethically (Garrett, 2005). Egoism Egoism principle says that an ethical activity is the one which increases the long-standing fulfilment of own happiness. Unlike other theories, Egoism principle focuses on the welfares and the desires of oneself only (University of Wisconsin System, 2008). Analysis of Wal-Mart’s Ethical Foundation Every business segment operated by Wal-Mart has comprehensive set of rules which deliver the regulation to associate for operating under specific country rules. The value of Wal-Mart which helps to make decisions for the company is based on three basic principles, which are: 1. Respect for people 2. Providing good service to the customers, and 3. Doing the best for quality (Wal-Mart Stores, n.d.). These above principles are developed for assisting the organisation to make correct choices and perform with honesty. Wal-Mart assumes their dealers, advisors, public relation corporations, workers and other service providers to act ethically and in a custom which satisfies the code of ethics. As Wal-Mart operates in several nations, its business performances are subject to several different regulations, customs, and principles. The increased number of rules and principles impact on the performance of Wal-Mart each year (Wal-Mart Stores, n.d.). The ethical foundation of Wal-Mart says that it should take every reported ethical concern seriously and inspect any charges to decide if any rule, policy or ethical principles have been violated or not. It is the duty of Wal-Mart to keep the identity of the informer reserved and keep information regarding enquiry safe (Wal-Mart Stores, n.d.). Business Ethics Reporting Wal-Mart provides ranges of methods in case of any enquiry about ethical concern. The ‘Open Door Communication’ practice of Wal-Mart helps people to talk directly about ethical concern to the managers. Wall-Mart also provides ‘Global Ethics Helpline’, which helps people to report any ethical case and it is also available in several languages. ‘Global Ethics Office’ of Wal-Mart maintains the privacy of people as a part of ethical concern (Wal-Mart Stores, n.d.). Safe Workplace Wal-Mart is dedicated to provide a safe and vigorous work environment for employees and employers. The possession, solicitation, and use of alcohol, drug, and other toxic components in workplace are unlawful and strictly forbidden. The use of alcohol is permitted only in certain conditions such as sponsored events of Wal-Mart or celebrations, but under appropriate supervision and within certain level. Wal-Mart respects collective business practices where reasonable consumption of alcohol is common, but without compromising the level of performance due to it (Wal-Mart Stores, n.d.). Harassment Harassment of any kind in workplace is an unethical act and Wal-Mart has faith in treating every person from co-workers to customers with respect. Any kind of irritation whether oral, pictorial or physical conduct is offensive in the workplace. The code of conduct of Wal-Mart says that it should maintain a safe and secure work environment which is free from violence in the form of incorrect use of languages, signs, intimidations, and physical threats (Wal-Mart Stores, n.d.). Retaliation People who raise any issue of ethical concern against any act play significant part in maintaining healthy, polite and industrious workplace which can secure the stakeholders’ expectations. It is vital for Wal-Mart to maintain an environment which is free from threat of retaliation on those persons who raise any issue against unethical act. In order to deal with retaliation issues, Wal-Mart lets employees to use the services of ‘Global Ethics Office’ where any retaliation issue can be debated (Wal-Mart Stores, n.d.). Work Hour and Wages Wal-Mart is dedicated to follow appropriate rules and principles regarding working hours and wages of employees which includes ‘off-the-clock-work’, lunch and recreation breaks, overtime wages, termination pay, minimum wages, salaries for juveniles, and other issues that relate to work hour and wages. Wal-Mart is liable to obey completely with every valid central, national and regional rules and protocols concerning work times and wages. It is a violation of ethics for Wal-Mart, if anyone of the company requests for work without pay, or requests additional work time (Wal-Mart Stores, n.d.). Relationships with Suppliers and Other Associates It is the responsibility of Wal-Mart not to engage in any kind of unethical relationships with the suppliers and other associates who can impact reasonable, effectual and legal business practices. The selection of suppliers must be based on honesty, product quality, product price, distribution, timetables, product aptness and process. There is also need to treat suppliers with respect, equality and morality. The conflicts arise in working environment when personal relationships affect the decision, which can damage the self-esteem and interrupt the efficiency of employees. There is need to keep the personal relationships away in employment and Wal-Mart strives to abolish private associations which can interfere with the healthy working environment (Wal-Mart Stores, n.d.). Environmental Protection Wal-Mart is dedicated to protect environment and reserve the natural resources. The company is liable for obeying every relevant environmental laws and principles. It is one of the core ethical foundations of ecological sustainability obligation. It is the rule of the company to perform business practices in publicly responsible and ethical ways which protects the environment of the communities (Wal-Mart Stores, n.d.). Fair Competition The rules of “Fair Competition” help to defend competitors by certifying dynamic competition and prohibit actions which restrain business. The rules of “Fair Competition” vary from one country to other country and these regulations prohibit and control unethical business practices which can result in increase of costs of products and services and limiting the numbers of substitutes among others. For instance, in several countries, price fixing between two competitors is illegal and restricted by law of Fair Competition. Wal-Mart is dedicated to abide by the rules of Fair Competition to ensure a legal competitive environment. The company struggles for maintaining high level of honesty, and evading any kind of misleading, deceitful and fraudulent activities in business. In order to maintain fair competition, organisations need to keep a satisfactory level of transparency in business (Wal-Mart Stores, n.d.). Analysis of Ethical Violation of Wal-Mart There are several charges of ethical violations against Wal-Mart. Majority of the controversies against violation of ethics are based on work hours and wages. Violation for Work Hour and Wages Wal-Mart is highly criticised for providing inappropriate wages to the employees. The company administrators have failed to recompense employees for overtime. There have been almost 80 complaints against the company regarding wages and overtime hour abuses, for example, work during break time has been a crucial issue. It had been said that the living wage which Wal-Mart provides to the employees was 26% to 37% less compared to national standard for equivalent jobs in other retail companies. It had been alleged that Wal-Mart maltreated the juveniles by making them work late at night, work during lunch time, and at times not permitted them to leave till morning (Mesa Community College, 2009). Violation of Suppliers and Employees Relationships It is argued that Wal-Mart conducted unethical behaviours with the suppliers. The company had made the Chinese employees to work for whole days without any leave, and requested them to work with dangerous chemicals without informing them which was unethical. Wal-Mart discriminated against female employees due to personal relationships and provided them with earnings of 37 cents more in an hour compared to male employees (Mesa Community College, 2009). Violation of Environmental Protection Wal-Mart was also found guilty for damaging environment by disobeying the “Clean Water Act” in 12 states which costs for 5 million USD. In the year 2004, the company had received penalty of 3.1 million USD in the USA for violating the “Clean Water Act” (Mesa Community College, 2009). Violation of Fair Competition Wal-Mart had ethically violated the laws of Fair Competition. The actions of Wal-Mart had put the small organisations out of competition in order to gain competitive advantage. The company had also ethically misled customers through advertisements. Wal-Mart appealed that it provided inexpensive products, but actually it came through compromising the company profits to attract more customers and hamper the business of small organisations. Wal-Mart had also received aids of 1 billion USD which the other competitors have not been provided (Mesa Community College, 2009). Possible Ethical Strategies for Wal-Mart In order to improve the ethical behaviour, Wal-Mart needs to improve the relationships with the stakeholders. Wal-Mart needs to abide by the minimum wages of employees to foster workplace equality. If employees are not treated equally, it can result in decrease in productivity, lower customer service, and higher rate of mistakes, slower operation procedures, more sick time and ultimately, higher complaints. Wal-Mart faced certain criticisms from the communities for violating the environmental laws. The company can use charitable contribution as a part of good ethical behaviour for helping communities and improving the economic environment. Serving communities can help to decrease the probability of litigation and ensure higher overhead to abide by all regulations. The executives of Wal-Mart need to be more accountable regarding pay. There were several allegations of unfair pay against Wal-Mart for female and male employees which can decrease loyalty. Fair pay can help to increase the employee satisfaction and motivate them to perform better. However, Wal-Mart can increase the benefits of employees through unionism. Wal-Mart has followed strategy to avoid union in the workplace as it can hamper the company and can render it to become unproductive. Conclusion Maintaining ethics in business is critical for every successful organisation. It not only preserves generosity of an organisation but its affect can also be enjoyed in the long run. An organisation which has sound business ethics has more probability of success compared to organisations which are involved in corrupted business activities. A sustainable company can draw the attention of potential investors and it can be achieved with sound ethical performances. From the above analysis, it can be observed that Wal-Mart violated many appropriate practices in lieu with standard ethical framework. As a result, the brand image of the company has been harmed critically. The unethical practices can impact effective work environment and market share of Wal-Mart. Every person has individual viewpoints towards an organisation about how it treats its stakeholders and conducts the business relations, and moral business practices that reflect the ethical foundation of that organisation. References Amato, A. D. & Et. Al., 2009. Corporate Social Responsibility and Sustainable Business. Center for Creative Leadership. [Online] Available at: http://www.ccl.org/leadership/pdf/research/CorporateSocialResponsibility.pdf [Accessed November 28, 2011]. Aerostudents, No Date. Ethical Theories. Ethics. [Online] Available at: http://aerostudents.com/files/ethics/ethicalTheories.pdf [Accessed November 28, 2011]. Brown, C., 2001. Ethical Theories Compared. 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[Online] Available at: http://www.scu.edu/ethics/practicing/decision/ethicalrelativism.html [Accessed November 28, 2011]. Wal-Mart Stores, No Date. Our 3 Basic Beliefs. Statement of Ethics. [Online] Available at: http://walmartstores.com/media/cdnpull/statementofethics/pdf/U.S_SOE.pdf [Accessed November 28, 2011]. Read More