Walmart Case Study

Case Study

Part I: Introduction

Walmart has been one of the greatest companies which has been in many years dedicated in offering customers seamless shopping experience whether they are in store or online. The company has faced ethical issues because it started out without having any formal ethics program in place. In most cases Mr. Walton relied on his own personal ethics to run the company something that created ethical issues within the company (Hicks, 2019). Due to ethical issues within the company every year has seen the company brand continuing to lose its value. For instance, at the beginning of 2021, Walmart has had a total of 4,743 stores in the United States. The amount of jobs Walmart produces in the United States is very large and because of this, many problems with their stakeholders have arisen.  The main stakeholders of Walmart are their suppliers. Walmart has suppliers from all around the world that rely on Walmart using their products to be profitable. Another stakeholder of Walmart is their employees, in Walmart’s history it has been hostile towards unions and other sorts of unethical business practices. With all of Walmart’s various ethical issues, such as, supplier relationships, its employee stakeholders, and safety issues, Walmart responds to its stakeholders with unethical behavior and questionable business practices. In addition, the ethical issues Walmart is facing has made the company not to have enough employees to fit their customers’ needs thus making it hard for the organization to have best customer services. Therefore, this paper aims to evaluate various ethical issue that has affected Walmart and the company has been responding to the stakeholders.

Part II: Supplier Relationships

How do you think they fill all the shelves and back stock at Walmart? Walmart has a series of relationships with local suppliers for each of their stores. Because of the volume that these suppliers are moving for Walmart, you would have to think that these suppliers are making a ton of money. In contrast, these suppliers make very little because of Walmart’s harsh and aggressive prices for these suppliers (Dicker, 2002). Walmart offers these suppliers a low cost compared to what the correct profit margin should be which leads to Walmart getting these goods for cheaper than what they are supposed to cost. Walmart can get away with ripping off their suppliers because of the size of the marketplace that Walmart provides. Ripping off your suppliers is an unethical business practice that Walmart does so that they can maximize their profits.

Because Walmart is such a large marketplace for these suppliers to sell their items in, Walmart’s sustainability index is used to make sure that these items are fit to sell to their customers. The problem with this sustainability index Walmart uses for each of its suppliers, is that when you have a Walmart in a third world country, the suppliers in that area are unable to fund their business to fit the sustainability index. (Bloom,2015). Because Walmart is a worldwide company, their business practices with their suppliers needs to be changed. If Walmart wants to implement a sustainability index or any other sort of requirements for their suppliers, the amount that Walmart pays their suppliers must increase. Walmart is cheap with their suppliers to a fault, soon enough because of their unethical practices their supplies will flock elsewhere.

Part III: Employee Relationships

Employees at Walmart have had poor work conditions and disputes with management that have led the employees to want to unionize and get better pay and benefits. Along with better pay, these employees have been wanting equality in the workplace after a series of gender-based discrimination accusations from employees. With the employees wanting all these things for many years, Walmart has fought against it the whole time. Walmart employees are often the most underpaid people for the work that they do. When Walmart enters a new community for the first time, the job market changes for the worse. In a study conducted in 2012 by Carlena Cochi Ficano she found that “withing 15 months of a new Wal-Mart store entry, between 4.4 and 14.2 existing retail establishments close, while at most 3.5 new retail establishments open.” (Ficano, 2013). This study confirms that a new Walmart in a town will lead to a loss of jobs. In the study there was a difference of about 10.9 establishments closing when the new Walmart came into town.

Walmart have always been against any sort of employee union with fear that they will have to pay large amounts of benefits and other types of financial compensations. Walmart takes unionizing so seriously in their stores, they have a hotline for managers to dial if there are rumors of a union forming in their store. (Dicker 2). Walmart is so against the better benefits and pay that come with unions that they tell their managers to dial a hotline if a union forms.

Gender discrimination is one of the most unethical things that Walmart has done to its employees. In 2013, a woman working at Walmart was three months pregnant and worked in the deli and bakery section of her local Walmart. Every day she would load up 50-pound trays of chickens into industrial ovens when one day she started bleeding and went to the emergency room and was told she was at risk of a miscarriage due to her job. The next day she went back to work and asked for a light load at work and was denied by her manager (Grandey Gabriel & King, 2020). This story about Walmart’s procedures with pregnant employees is a perfect example of how inconsiderate and unethical Walmart is with their employees. Along with unethical practices with pregnant employees, Walmart has been accused of paying male managers a higher wage compared to the women managers. Walmart has responded to its employee stakeholder in recent years by being one of the companies to raise their starting wages higher than minimum wage. This wage increase for its employees is a good thing for Walmart but their original intentions behind the wage increase was to try to increase profits.

Part IV: Supplier Safety

In the past, Walmart didn’t regulate the suppliers’ standards of production, and this is something that Walmart is improving upon in recent years. In 2012, a Walmart supplier company in Bangladesh had a fire in its building which killed 112 workers. This tragedy made Walmart implement “tougher rules on fire safety” and would “have zero tolerance for suppliers that used unauthorized subcontractors.” (Greenhouse 1). Although that Walmart has now ensured that their suppliers must adhere to a certain quality of business, there was plenty of criticism towards Walmart’s lack of supplier safety. Because of this criticism, Walmart implemented a three-strike policy for its suppliers to ensure that the suppliers stay safe on the job. Along with Walmart’s lack of presence in international suppliers’ safety, they have had a lack of domestic employees’ safety in warehouses and stores. In recent years, Walmart has faced accusations of having harsh and unsafe working conditions in their warehouses. Due to these accusations Walmart has had to work through ways to make sure that each of their stores and warehouses stay safe and clean for the workers to stay safe in.

References

Bloom, D. J. (2015, June). Rural Sociology. Standards for Development: Food Safety and Sustainability in Wal- Mart's

Dicker, J. (2002, September 8). Nation. Union Blues at Wal-Mart. Retrieved September 30, 2021, from http://aurarialibrary.idm.oclc.org/login?url=https%3A%2F%2Fsearch.ebscohost.com%2Flogin.aspx%3Fdirect&db=f5h&AN=6873246. 

Ficano, C. C. (2013, March). Social Science Quarterly. Business Churn and the Retail Giant: Establishment Birth and Death from Wal- Mart's Entry*. Retrieved September 30, 2021, from http://aurarialibrary.idm.oclc.org/login?url=https%3A%2F%2Fsearch.ebscohost.com%2Flogin.aspx%3Fdirect&db=aph&AN=85280093. 

Grandey, A. A., Gabriel, A. S., & King, E. B. (2020). Tackling taboo topics: a review of the three M s in working women’s lives. Journal of Management, 46(1), 7-35.

Greenhouse, S. B. (2013, January 23). New York Times. Wal-Mart Toughens Fire Safety Rules for Suppliers After Bangladesh Blaze. Retrieved September 30, 2021, from https://web-b-ebscohost-com.aurarialibrary.idm.oclc.org/ehost/detail/detail?vid=0&sid=4770fd35-4655-4621-b15d-7fcb2de3139a%40sessionmgr101&bdata=#AN=85001831&db=f5h. 

Hicks, M. J. (2019). Review of Regional Studies Wal-Mart and small business: Boon or Bane?  Retrieved September 30, 2021, from https://web-a-ebscohost-com.aurarialibrary.idm.oclc.org/ehost/detail/detail?vid=0&sid=05989677-af6d-48a3-9743-e0161c97377e%40sessionmgr4008&bdata=#AN=59373876&db=aph.

Honduran Produce Supply Chains. Retrieved October 1, 2021, from https://web-b-ebscohost-com.aurarialibrary.idm.oclc.org/ehost/detail/detail?vid=0&sid=b603a91f-33b4-4130-b229-a54e788f4873%40sessionmgr101&bdata=#AN=103002799&db=aph.