Corporate Social Responsibility / Human Resources / International Business / Organizational Strategy

Unethical Acts in Wal-Mart Corporation

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Wal-Mart has been getting away with unethical and illegal acts for many years now. Considered the world’s largest employer with over 2.1 million employees worldwide in 2010 (Sethi, 2013), they have certainly had their fair share of opportunities to commit fraud, acts of bribery, and mistreatment of employees with their powerful market status. They have been accused of underpaying overtime workers, and to add insult to injury, withholding healthcare benefits from them as well. Constantly facing lawsuits from employees, Wal-Mart implements a strategic predatory pricing tactic in that they drop prices too low and drive away competition, thus gaining a monopoly. This is an unethical and aggressive way to conduct one of the world’s largest corporations. Wal-Mart’s suppliers remain stuck, however, as they depend on Wal-Mart’s business. Wal-Mart knows this, and takes advantage of them by pressuring them to sell goods below costs or at lower prices than they would get anywhere else. In addition to controlling suppliers, Wal-Mart is known for manipulating other countries with which they do business, with their market power and control to get away with committing environmental damage and a violation of foreign countries’ labor laws. If these acts of manipulation and aggressive, unethical behavior weren’t enough, Wal-Mart has been caught in scandals of bribery, one example occurring in Mexico in 2012. According to an article in the New York Times, it was revealed that there were suspicious payments to Mexican officials that racked up to $24 million. They paid off workers to sneak around things their laws prohibited. Wal-Mart receives complaints of bribery on a yearly basis, but is unaffected by charges and fines brought against them because they are so powerful that they barely create a dent in the business. Lastly, the most serious ethical disasters are the deaths in Bangladesh due to improper hiring, training, and workplace safety, resulting in thousands of casualties. These examples make it clear that Wal-Mart is flooding with unethical behaviors in many different directions.

The Wall Street Journal segment titled, “Here’s What Would Get More Companies to Self-Disclose Bribery,” written by Rachel Louise Ensign on November 4, 2014, touches upon foreign bribery reporting and the implementation of a leniency program. The leniency program encourages companies to self-disclose participation in illegal bribery so they can avoid prosecution from the antitrust division. Another solution, as mentioned in the WSJ segment, is to lower the severity of fines. Squire Patton Boggs partner Robert Luskin noted that, “some of these foreign companies might be more comfortable voluntarily disclosing” (Ensign, 2014), if the fines were lowered. While this seems like a valid solution, I do not personally think the leniency program would work with Wal-Mart, a corporation I believe to be “too big to fail.” However, it is a good plan with effective incentives for companies nonetheless.

The immoral and unethical acts of Wal-Mart relate to many Managerial Ethics class themes. First and foremost is the obvious Foreign Corrupt Practices Act of 1977, which forbids bribing a policymaking official, consequences resulting in being criminally liable. This relates to Wal-Mart in that they have a long-standing record of bribery charges, in which they have had to pay fines. Additionally, Wal-Mart’s unethical actions prove that they do not implement corporate social responsibility well. CSR requires following laws, behaving ethically, and complying with international customs. These are three things Wal-Mart has blatantly violated. They focus more on productivity and profitability than anything else. Another example discussed in class that relates to Wal-Mart’s situation is that of Howard Lutnick at Cantor Fitzgerald. In both corporations, profitability is the first priority, and it is achieved in aggressive ways. Similarities exist in that employees have died in each corporation, one due to a horrible terrorist act, and the other due to a variety of poor management faults. However, in each instance, sympathy for the deceased and their families came second to making money. Lastly, Kirk French came to speak to class and mentioned that the key idea to why corporations commit fraud is because they can. In Wal-Mart’s case, due to their incredible market power and wealthy corporation, they are able to get away with many unethical acts.

Management in Wal-Mart could be improved with an ethical leader who chooses to put the good of employees, retailers, and customers ahead of anything else. Currently, it is evident that the management style contains greed and the desire to succeed at almost any cost. Perhaps with greater penalties for acts of bribery, fairer treatment and training of company employees and an overall ethics-oriented management style, Wal-Mart will become a more ethical and legal corporation that does not use high status to get away with illegal and immoral acts. Right now, however, Wal-Mart’s power makes them a dangerous corporation for getting away with almost anything they want.

Katherine Stavros


Sources:

Ensign, Rachel L. (2014, November 4). “Here’s What Would Get More Companies to Self-Disclose Bribery.” Wall Street Journal. Retrieved from

http://blogs.wsj.com/riskandcompliance/2014/11/04/heres-what-would-get-more-companies-to-self-disclose-bribery/?KEYWORDS=Bribery

Sethi, S. Prakesh. (2013, May 8). “The World of Walmart.” Carnegie Council for Ethics in International Affairs. Retrieved from

http://www.carnegiecouncil.org/publications/ethics_online/0081

Barstow, David and von Bertrab, Alejandra X. (2012, December 17). “The Bribery Aisle: How Wal-Mart Got Its Way in Mexico.” The New York Times. Retrieved from

http://www.nytimes.com/2012/12/18/business/walmart-bribes-teotihuacan.html?pagewanted=all&_r=0

4 thoughts on “Unethical Acts in Wal-Mart Corporation

  1. Pingback: Ethical and Unethical Business | Business Ethics MGT 7312

  2. Pingback: Marketing Ethics Within Wal-Mart | Contemporary Marketing

  3. I work for a Walmart and have been subject to a conserted effort by four of their top managers. Their actions are clearly harassing and have interfered with my established career path. Could l engage with you on this subject.

    Like

  4. Pingback: Leadership and Ethics | 站点标题

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