Managing Business Ethics At Wal Mart Management Essay

With globalization taking the world by storm and consumers worldwide buying similar products providing a pool of revenues for multinational corporations supplying products to millions of consumers of worldwide, however in order to be able to supply such a huge number MNCs have made use of foreign labor in order to lower costs, however the ways in which these labourers are treated has led to the increase in unethical labor practices. Huge and well established international brands Such as H&M, Nike have all been accused of unethical labor practices leaving them to dwell under the realm of criticism from the general public , however one of the largest retailers Wal-mart and its un ethical lab our practices is what is to be looked at in this report.

The employment of unethical labor practices by organizations in order to lower costs and reap huge profits has created headlines around the world, these organizations and international businesses which in today’s globalized era provides a major chunk of the world’s businesses tend to thrive at the cost of torturing these laborers by working them long hours in inhumane conditions and at the same time providing them with low wages.

However there are certain ethical dilemmas these MNCs have to face such as when deciding the pay of these labourers especially in a country with no minimum wage or a comprehensive labor law , what factors should decide the payment of these workers, another issue is that although these workers are overworked they are sourced from poverty-stricken areas where unemployment is rampant hence at least the foreign organization provides them with a job.

However one of the most unethical labor practices is the use of child labor and many large multinational corporations are accused of doing so by buying goods from subcontractors produced by child labor, millions of children in India, Bangladesh, Brazil and China work hard for miniscule payment in order to support their families.

However in order to help such oversee such situations organizations such as Human rights watch help look at labor standards and this is what it said about Wal- Mart “When the largest private employer in the United States seems to be able to violate U.S. labor law with virtual impunity, that’s a very serious cause for concern, both with respect to its impact on its employees, but also on the conduct by other employers in the United States” ( Greenhouse S, 2007)

Background

“Wal-Mart Stores, Inc. was founded by American retail legend Mr. Sam Walton in Arkansas in 1962. Over forty years later, it has become the world’s largest private employer and retailer, on the top of the Fortune 500 list and has been among the most valuable brands for many years”. (Wal-mart, 2009)”Today, with over 2.1 million associates worldwide, Wal-Mart operates more than 8,400 units in 15 countries under 55 different banners, and serves more than 200 million customers per week” (Wal-mart, 2009). “In China, as elsewhere, Wal-Mart follow the three core values of respect for the individual, service to the customer, and striving for excellence, and stick to the Wal-Mart tradition of building their business one store and one customer at a time, so as to fulfill their core mission – save people money, so they can live better, and continue to make a difference in the lives of their customers, members and associates”. (Wal-mart, 2009)

The Wal-Mart’s main purpose is save people money, so they can live better, and there are some reasons to support this purpose, an important reason is that the cheap labor in China. Wal-Mart is similar to Carrefour, the laborer treatment has been the major problem, from it own Chinese staff, to factory in shop representative, even for the worker of industrial chain, they are all struggling in minimum wage line. At the same time, face to the giant order form the Wal-Mart, fewer factories has the enterprise to be able to resist its enticement. However, the supplier faces the pressure is, Wal-Mart reduces the cost continuous, the result is worker’s long time practical training, the low wages and the bad working condition.

Case and infact

As the world’s largest retailer, Wal-Mart’s scale is 3 times of Carrefour, the employment of the employees are the two major automobile companies GM and Ford combined. Retail areas in the world, as long as the name “Wal-Mart,” the industry usually think of two words, that is, “cheap” and “Stingy.” According to the Introduction of U.S. “Business Week”, Wal-Mart’s business philosophy is “keep the prices down, keep the prices down, and then keep the prices down,” to search to provide the lowest purchase price of the supplier in the world, to make the minimum profits of the manufacturer. In order to achieve the purpose of to provide the lowest price product for customers, the way Wal-Mart used commonly are reduced labor costs, such as the extension of working time, improve the goals of work, open shop in developing countries. Wal-Mart not only Stingy for their own staff, also very stingy in outside. Many shipping companies have complained that their drivers shipping to Wal-Mart, and want to use the toilet, Wal-Mart rejected. But rely on these incredible “measures to save money,” Wal-Mart can from small to large gradually, and chain stores are more and more, then become the world’s oldest.

Further more, to shopping in the centers like Wal-Mart to buy cheap goods, do you have the original sin? To spend our own money in the mall, at the same time we need to remember the workers who produce these goods and endure the low level of working conditions. The “commercial dinosaur” Wal-Mart attacks by the global media recently. As the media revealed that one supplier of Wal-Mart in China named Electronic Arts and plastic factory in Dongguan City, all workers have been treated so badly. In reporters’ mind that Wal-Mart builds their own huge profits on labor. Even the local government was startled by these reports; Dongguan’s Municipal Labor Bureau has already begun to investigate this incident. This criticism is correct undoubtedly, Wal-Mart also says like this by itself. It got a dazzling success in past many years depend on low-cost strategy. Currently, at the Wal-Mart’s global supply network there are more than 10,000 suppliers; they must continue to reduce costs in order not to be eliminated by the Wal-Mart.

If an enterprise needs to obtain high profits, there are two ways, one is to keep the purchase price; the other is raising retail prices. Normal shopping mall like taking the second strategy which is purchase high level goods and merchandise purchased at high prices, then to sell in higher prices. However, so many supermarkets and warehouse type store use the strategy of low-cost to buy, low-priced to sell, Wal-Mart use this strategy to an extreme. This seems to be an inevitable choice, it faces to normal consumers, and they are very sensitive about the price. This reason makes Wal-Mart to drive down the prices, in fact is the consumer, also including the poor workers. Furthermore, to satisfy the consumer’s desire of cheap price to buy good products, this kind of business activities is a continuous activity. Wal-Mart faces to consumers directly, and it feels and tries to meet this desire. For this reason, Wal-Mart must to give pressure to suppliers and importers to get lower prices. Then the importers to factories in China will keep the prices down, and the plants will apply pressure to the workers. It is said that workers work 300 hours per month and earned only 400 Yuan which change to dollar in 58 in many Chinese factories. To maintain low prices is a complete chain which is consumer – Wal-Mart – Importer – Chinese Factory, and even the factory can continue to extend upstream factory. (Dayoo 2004)

The labor issue

The Wal-Mart has total 146 manufactories in China. The local labor given a name to Wal-Mart called “Sweatshop”. “To satisfy Wal-Mart’s low price requirements, most supplier’s factory choose to harm workers interests to maintaining their profits.” ( Wal-mart wages 2010 ) Wal-Mart supply factories in China, it is very often to damaging workers interests. There are four labor issues to discuss how supplier factory harm the labor.

First of all, is working hour issue. Official say: “Normal works from Monday to Friday, after work, never work overtime. Company will including food, accommodation, do not deduct any fees’ ( Wal-mart 2009). In fact, the labors normally work 11 hours per day, and 7days per week. As long as demand orders, the overtimes working did not stop, no matter is weekend or not. “White class production department 11hours, night shift to 11.5 hours, goods and more workers when the department of transport on the situation 16 hours there.” ( ccvic 2009) Han Tai shoe factory to pay overtime in order to save the weekend twice the wage often forcing the factory on weekdays and 5hours of overtime, works work 12hours a day. (ccvic 2009 ) this is not ethical, and also illegal behavior. In China, the labor Law said, everyday labor working hours is 8hours, if overtimes the companies need to pay addition money. ( Labor in China 2010).

The second labor issue is wages. Wal-wart’s average wage is below retail industry standards. The basic wages is from1450 Yuan RMB per month, around 800DHS. (This number is not fixed, different city will be different.)The official say the company wages are daily wages, the minimum basic wage per person is 43.21yuan per day, but in fact, the company pay wages basic on “piece wage system’, according to how many pieces you have finished, the wages is 2.5 per hours. Wal-mark Company also not inducing eating, so labor need to pay addition for daily spends. So end of every month labor did not left too much pock money. This is one of important reason why Wal-Mart offer low price, and by press labor’s wages. From the social point view, it is not ethical; labor got lowest wages and working long time. If Wal-Mart wants to have long working time, they need to pay for overtime wages otherwise is illegal. On the other hand, from the labor point view, they did not think this is unethical, because of Wal-Wart they have works and wages even if a little bit. Without Wal-Mart maybe they don’t have work, they don’t have money for food, so even if Wal-Mart offer bad condition but they still working for it. And also that is why Wal-Mart pressing labor too much.

The third labor issue is working environment. The working environment in Wal-Mart is so bad. Most product material is plastic, and produces by hot machine, the temperature around 200 degrees. The company wants to save the costs, so many alliances usually not paid to labors, many workers work without protective equipment. Some of labor working condition full of the dust and they did not have mask cover their face. Some of labor work close to big machine, the temperature so high and difficult to breath, and in summer the temperature will be higher. It is not ethical for labor working in this environment.

The last labor issue is gender discrimination. In Wal-mart factories more than 90% are woman labors. The manager believes the woman easier to control. This is not ethical. The Wal-Mart discriminates between genders.

Wal-Mart VS Target

Comparing Wal-mart to similar stores such as Target would bring out some key aspects. Wal-mart is the world’s largest retailer and six times the size of Target which is the 4th largest. Since Wal-mart is six times bigger, it has gained more negative publicity by various critics. Also with the massive number of employees of about 1.6 million it is bound to have massive issues. Wal-mart has low prices as always and Target has reasonable prices. A coffee maker in Wal-mart is $9.43 where as in Target it is $9.99. Wal-mart is meant for rural communities where as Target is meant for urban communities. Target is a more refined and a classy version of Wal-mart. Wal-mart ofcourse earned its reputation of offering low prices against its competitor and Target earned its reputation by offering trendier merchandise, cleaner environment and better service than its competitor. Target pays an entry-level of $6.25 to $8 an hour where as Wal-mart offers $9 to $10 an hour (Minneapolis Star-Tribune, 2005). Income level in Wal-mart is $35,000 and below whereas in Target it is $30,000 and up (CorpWatch, 2006). Even though, the income level in Wal-mart is higher than Target, employees working in Target are much happier with the treatment and pressure than the employees in Wal-mart. Ofcourse due to the pressure and treatment of employees, it gets reflected in the employees attitude towards customers and the working atmosphere. Some of the customer’s comments about these stores are “Wal-mart has cashiers who look like they’d rather shoot you than serve you, Everyone smiles in Target”, “You know why Target is so clean? No one shops there, so there’s no one to mess things up”, “Where Wal-mart has that dollar-store vibe, Target makes you feel as though you are shopping at some sleek, upscale city shop” etc. Target has more than 1,400 and employing more than 300,000 people but not one as a union (CorpWatch, 2006). Reviewing the three approaches are Consequentialist, Deontological and Integrity. Consequentialist focuses on the greater good and the overall result. Deontological is to not break the law no matter how it is going to benefit others or the society and Integrity is based on an individual’s character. In terms of Integrity, it is up to the consumer preference to choose which store would be better. Both stores are unethical in terms of paying low income to employees compared to the number of hours worked according to a 2005 survey done by United Food and Commercial Workers. One of the comments from customers who have shopped both stores say “Target is just corrupt; Walmart is downright evil”. Since boycotting both the stores would be drastic and difficult but a boycott of one store would be more effective. It is not ethical to blame Target or any other store for treating their employees harshly, but to find the source of the problem, which is still Wal-mart.

Recommendations

The Wal-Mart need to be more ethical when they are treat labors, and also Wal-Mart should provide a detailed code of conduct which is based on ethical practices and act by it: first, Wal-Mart should treat its workers humanely and with integrity by providing a minimum wage which is at least not below the minimum wage in the respective country to follow the labor law accordingly and if in a particular country there is no strict labor law it should provide the workers with a decent wage allowing them to have an acceptable standard of living. Second, working hours should not exceed 10 hours a day and a minimum of a day off a week is compulsory any extra hour should be considered as overtime. If have overtime work, so the Wal-Mart need to pay for overtime wages, then it is ethical for both. And the last one is the Wal-Mart should not discriminate between genders and provides acceptable working conditions and stick to equivalent product and worker safety standards.

Conclusion:

Labor issues have been a major concern with regard to ethics in international business with international businesses outsourcing manufacturing overseas to make use of cheap labor, however these organizations exploit the laborers and treat them unethically and such organizations should be fined and their products stopped by the concerned bodies. Wal-mart has had its share of unethical labor practices by employing its workers without regards to product and worker safety standards by working them long hours in extremely harsh conditions, however the organization has tried to improve its workers conditions after receiving criticism for its wrongdoings, however more has to be done in order to stop such demeaning practices and be more ethical when treating such laborers in order for the global community as a whole to prosper.