Walmart Doing the Right Thing

4/23/2012 Table of Content

Executive Summary...... page 2

History of Walmart...... page 3

Defining the Issue...... page 5

Analyzing the Case Data...... page 10

Generating Alternatives...... page 12

Key Decision Criteria...... page 15

Evaluating the Alternatives...... page 19

Recommendation...... page 21

Action and the Implementation Plan...... page 22

References...... page 25

2 Executive Summary

Where would the world be without Walmart? Walmart is a store that is well known, and well shopped at, by the average person. Between the low prices and ease of products, it is difficult to find a reason to not go and fill your cart at Walmart. However, through a more thorough study of this corporation, a series of unethical issue became clear.

Employees of Walmart have been discriminated against, as seen in two different court cases. Up to about $500,000 has been stolen from the corporation. The part that makes this worse is that it was stolen by an executive of Walmart. Working overtime and having mealtimes would seem normal for employees of other places, but for Walmart’s, there have been mishaps despite it being part of the law. When a Walmart is introduced into a community, disruption in traffic, parking, and road systems can be found. This is not to mention that one Walmart

Supercenter takes between 20 to 30 acres of green. The suppliers of Walmart face harsh standards and sometimes have to either lose business with Walmart or move overseas to keep their prices cheap. All over the country there are empty store buildings that were abandoned once a better location was sought. The company makes sure that these stores stay abandoned, taking up that room of emptiness. Like every store, there are defective products at Walmart.

The unethical part would be the high numbers of the deficiency, as well as the continuation of the selling of the product. Finally, unions are scarce at Walmart, and the employees demand that there are some.

What is seen and what lies beneath the surface of this corporation that is used every day by millions of people is completely different. The normal consumer would never have guessed the unethicalness that has gone behind closed doors at Walmart. If these issues were brought to their attention, sales would drop rapidly. In order to fix these problems, there are a series of

3 steps for Walmart to take. These recommendations include equity pay, separation of powers, obeying the law, setting distances, loosening requirements of suppliers, seeking out buyers for old buildings, quality control internally, and a company-wide based union.

History of Walmart

Sam Walton founded Walmart in 1962 when he opened his first discount store in Rogers,

Arkansas (Ferrell, 2008). Sam was committed to customer satisfaction and hard work. Sam introduced the “Sundown Rule,” which asks one simple question. “Why put off until tomorrow what you can get done today?” He also instated the “Ten-Foot Rule” which made associates contact customers in the store with a friendly greeting if the customer was to come within ten feet of where the associate was standing (Ferrell, 2008). Walmart focuses on keeping costs low with “EDLPs” or “everyday low prices” (Ferrell, 2008). Sam also believed that he could personally guarantee each of the products sold in his store. He started the company based on a two word slogan “Satisfaction Guaranteed.”

In 1969, Walmart officially incorporated as Walmart Stores, Inc. (Walmart Corporate;

2012). The following year was filled with promise for the future. At this time, the company had

1500 associates in 38 different stores with sales of more than 44.2 million (Walmart Corporate;

2012). Also in 1970, the company stock was opened to the public who could buy over the counter shares. 1971 brought Walmart its first 100 percent split in stock at a market price of $47 per share (Walmart Corporate; 2012). By 1975, the company employed more than 7500 associates in 125 stores across 9 different states (Walmart Corporate; 2012). The company recorded sales of $340.3 million that year (Walmart Corporate; 2012)! In the year 1983 Forbes magazine ranked Walmart number one in general retailers for the eighth straight year. Five years later, the company opened its first Supercenter in Washington, Missouri. By 1990, the company

4 was the nation’s leading retailer. In 1991, Walmart went international, opening its first international store in Mexico. One year later Walmart’s founder Sam Walton passed away.

Following his death, Sam’s son S. Robson Walton was named Chairman of the Board. In 1995,

Walmart’s cofounder James “Bud” Walton died. By the time 1999 rolled around Walmart was the largest private employer in the world with 1.14 million employees (Walmart Corporate;

2012). By 2003, Walmart was considered the world’s largest grocery chain. In that same year

Fortune 500 named Walmart the world’s “most admired company” (Ferrell, 2008).

In 2004, Walmart suffered a major setback. Women who worked for Walmart claimed the company had discriminated against them on the basis of promotions, pay, and training and job assignments. A federal judge in San Francisco awarded the 1.6 million women who filed the class-action suit (Ferrel, 2008). Again in 2005, another class action lawsuit was filed against the company by more than 100,000 employees from California claiming Walmart routinely denied them meal breaks. There was even more trouble on the way. Walmart was faced with another major court case where they allotted over $640 million to settle 63 different claims against them

(Ferrel, 2008). In 2011, Walmart was faced with yet another class-action law suit filed against them by more of their own female employees. During this case more than 1.5 million women were represented. This time the Supreme Court would side in favor of Walmart. Supreme Court

Justice Antonin Scalia wrote about the case saying it involved “literally millions of employment decisions, and he pointed to the lack of finding, “some glue holding the alleged reasons for all those decisions together.” (The New York Times, 2011)

In 2008, the company opened its 3000th international store (Ferrell, 2008). Only Exxon

Mobil made more revenue in 2008 than Walmart (Ferrell, 2008). Sales in that year were over

$405.6 billion and the company contained more than 2 million employees worldwide making it

5 the largest retailer in the world (Ferrell, 2008). These days Walmart serves over 176 million customers per year. (Ferrell, 2008) Today there are more than 7000 facilities in 13 different countries (Walmart Corporate; 2012). Each of Walmart’s customers saves on average $3200 annually. As of March 2, 2011, Walmart’s stock price sits at $58.96 per share (Walmart

Corporate; 2012). Net sales for the full year were $419 billion, an increase of 3.4 percent from

2010 (Walmart Corporate; 2012).

“The two most important words I ever wrote were on that very first sign, ‘Satisfaction

Guaranteed’. They’re still up there and they have made all the difference,” as assured by Sam

Walton, founder of Walmart.

Defining the Issue

Gender Discrimination

Although, two-thirds of all Walmart employees are women, they only make up ten percent of the store management (Ferrell 2011). In addition, internal studies have also shown that the company paid female managers less than males in the same position (Ferrell2011). A woman named Betty Dukes took a class-action discrimination case all the way to the Supreme Court that concerned the lack of raises and promotions given to female employees (Foxnews 2011). This case involved around 1.6 million current and former female Walmart employees (Ferrell, 2011).

One of the justices on the case Ruth Bader Ginsburg stated, that she “disqualifies the class at the starting gate” for putting too much of a burden on the plaintiffs to show how their individual claims are sufficiently similar to form a class-action suit (Fox News, 2011). Walmart argued against the class-action suit, claiming that promotions were made on an individual bases by each store (Ferrell, 2011).

6 Leadership and Power

Many distinguished people have been associated with Walmart and stood aside founder

Sam Walton among the board of directors. Unfortunately, one of the former boards vice chair

Thomas Coughlin caused a very public corporate scandal in 2005 (Ferrell, 2011). Coughlin was a hunting buddy of Sam Walton’s and traveled along with Walton to expand many of the SAM’s

CLUB locations (Ferrell, 2011). Thomas Coughlin was forced to resign from the board of directors for stealing as much as $500,000 from Walmart in the form of bogus expenses, reimbursements and the unauthorized use of gift cards (Ferrell, 2011). He also had been using

Walmart funds to pay for his personal expenses (Ferrell, 2011). Some of these expenses were hunting vacations, $2ooo dog enclosure and a pair of specialty made alligator boots (Ferrell,

2011). Coughlin was found out when he asked a subordinate to approve $2000 in expense payments without receipts (Ferrell, 2011). He was sentenced to 27 months of home confinement,

$440,000 in fines, and 1,500 hours of community service (Ferrell, 2011).

Treatment of Employees

Sam Walton, founder of Wal-Mart, established his own “code of ethics” that the employees followed like the Sundown Rule that says, “Why put off tomorrow what you can do today?” It means the employees work from when they clock in until their task is finished and then they can clock out but that could mean working more than an eight-hour shift. Another problem associated with the sundown rule was the lawsuit against Wal-Mart when the company denied meal breaks and fifteen minute breaks to the employees of California in December 2005 and the managers altered their time cards to prevent overtime.

7 Urban Sprawl

Despite how useful or convenient Walmarts may seem to the average consumer, there are negative effects on the communities as a whole. One of these effects could be the roads, parking, and traffic flow being distorted. Another worry among the community would be the decrease in nature a Walmart can cause. One Walmart takes approximately twenty to thirty acres of green.

There are more than 10, 130 stores throughout the U.S. which accumulates to more than 202, 600 acres (Walmart).

Suppliers

In order to achieve the low prices for the millions of things on Wal-Mart’s shelves, there’s a cost burden on the suppliers. Sometimes, this causes Wal-Mart to look to other companies to get their supply. Other times, it causes the supplier to move their company overseas to another country, leaving America with an increase of unemployed workers.

Suppliers depend on the Wal-Mart for its large orders, a huge part of their business is with Wal-

Mart, and it is one of the benefits for supplying. On the other hand, according to “The Wal-Mart

Effect: How the World’s Most Powerful Company Really Works” by Charles Fishman (2006), suppliers who depend on Walmart have poor financial performance compared to suppliers to do business with other companies (Fisherman, 2006). Despite this, suppliers may keep holding on to their business with Wal-Mart in hopes of “expanding their market share.” Another issue arises when in 2010 Wal-Mart planned to decrease their costs by taking over the delivery of their vendors to its distribution centers. Andrew Wolf, managing director for BB&T Capital Markets,

Richmond, Va., was quoted in Supermarket News by Elliot Zweibach (2010) as saying, “Wal-

Mart would see this as a way to bring down the costs of its own transportation and logistics and

8 potentially raise those costs for everyone else, and vendors will probably fight it" (Zweibach,

2010).

Abandoned Walmarts

Walmart has an incomparable amount of resources, as it has shown throughout the years.

And the common American does not find any reason to question how these resources are used, so long as they still have that low price to go back too. Americans should take more of an interest into where Wal-Mart uses their resources so that they can truly know how they get that “low price”. One of the most unethical misuses of Wal-Mart's resources is pushing business out of cities and then leaving a shell of their existence in a city. These shells being the equivalent to 4 football fields (205,000 sq. ft.) worth of an abandoned Wal-Mart. (Supercenters, 2010)

Walmart often decides that instead of remodeling an in-use store/supercenter they will rebuild a bigger and more adept store/supercenter right across town or down the road. They see this as an opportunity for growth and development; however communities see this as a destructive misuse of corporate power. Truth be told, Walmart has a special, undercover, team who goes and scouts out potential new locations of Walmart in communities. With a process like this; going into a community and planning on a location to build, all without the community being aware is unethical and sneaky unto itself. Another reason Wal-Mart employs this special team is to seek out plots of land that would ideally be centralized in an area of businesses so that when opened the store could maximize the stolen business from the surrounding area. When the surrounding businesses cannot compete they sell out and leave. At this point Walmart will have two or three Wal-Mart supercenters in this city, and will close down one leaving it abandoned.

(Monsterfodder, 2005)

9 The land that the unoccupied Walmart sits on often times goes unsold for the life of the building. It has been shown that whenever a buyer of the property comes along that Wal-Mart actually keeps the buyer from buying. If Walmart is holding on to these properties, which they have the right to do, the building is decreasing in value and the amount of potential buyers for that property will drop. By holding onto the building Walmart is not making money and the money that they have invested in the property is tied up.

Recalls

Walmart seems to have a problem with a high number of recalls. The Consumer Products

Safety Commission or CPSC shows that Walmart has had over 245 recalls since 1984 (US

CPSC, 2012). Recalls are caused by deficient or sometimes even dangerous products being sold in the stores. When a customer finds a product’s deficiency they usually either discard or they can bring it back to the store and get their money back. If a large number of customers are dissatisfied with a product then manufacturers may have the product recalled. The issue here lies within Walmart’s willingness to sell these products even if they could potentially harm someone.

This could cause Walmart to be sued, fined, or even shut down depending on the severity of the deficiency. Consumers could lose trust in Walmart if something is not done about this issue.

Why would anyone buy from a retail or grocery store when they were unsure about product safety?

Unions

Due to popular demand many international companies have been forced to adapt some sort of union for their workers. Walmart’s founder Sam Walton did not see a need for unions in his corporation. He thought they were divisive to a workplace. Trying to cut out what he thought was an unnecessary third party; Mr. Walton counteracted talks of unions in his company with an

10 “open door” policy, where associates could take their problems straight to the manager.

Although Wal-Mart has officially stated the company is not opposed to unions, and do nothing to prevent them from initiating, they do not do anything to support associates in a union. In 2006, employees announced the first formation of a Walmart union. The company responded by threatening to not renew the contracts of unionized workers. However, later that year the pressure from stakeholders mounted and Walmart signed the All-China Federation of Trade

Unions or ACFTU. Today, Walmart does not have a single, company-wide union system for its workers.

Analyzing the Case Data

Annual sales growth for Walmart was fairly constant, between 10 and 13 percent, until approximately 2008 when things started to decline, yet with a positive growth rate. For the same-store sales, there started to be a negative percentage rate in 2010, meaning there was no growth at all, and continued into 2011. However, there was a positive growth rate in 2012 of

1.5%. The data can accurately be shown in the bar graph provided below.

Retrieved fromhttp://retailsails.com/monthly-sales- summary/wmt/annual

11 Although Walmart has seen a decline over the past ten years, especially the sharp decline in 2010, it is making a comeback and has positive growth rates once more.

In 1989, Walmart’s sales were about 0.37% of the United States’ GDP. Since 1991, when Walmart first became an international store, the percentage has steadily increased. Just considering sales made in the U.S., it was about 2.20% in 2011. This means that for every $45 spent in the U.S., approximately one dollar was spent at Walmart. Including the international stores, the corporation’s sales make up about 3% U.S. GDP for 2011. This can be demonstrated in the following line graph, with the red lines representing the total sales and blue for the U.S. stores’ sales.

Http://www.econmatters.com/2011/07/10-things-you-might- now-know-about.html

Since 1989, the store has been demanding attention as it rises to take over more and more of the GDP for the United States. For 2011, the total sales were approximately 3%, while just the U.S. stores raked in 2.20%.

12 Generating Alternatives

Gender Discrimination

We believe there are two solutions for this issue. The first solution would be to create a pay equity for the employees for each position. This way no matter the gender everyone in that position should be paid the same amount. The second solution would be to simply consider more women for more promotions. A district or regional manager would need to routinely monitor each of these solutions to insure progress against this type of discrimination. Also, if another class-action suit should arise again, the employees should consider selecting a smaller group of plaintiffs. In doing this they may be able to better show how their individual claims could form a class-action case. These types of solutions would benefit the stakeholders by boosting the employee’s moral to work harder and succeed more. Less of the long time female employees would quit due to the discrimination, this would waste less time and work training someone new.

Leadership and Power

Issues with top executive leaders are very important and need to be maintained for an overall good ethical culture within the entire company. Our first solution for this issue would be to create a more strict separation of powers for even the executives of the company. For example, the person responsible for purchasing should not also be responsible for its payment (business dictionary). Also one person should be responsible for authorization of transactions and another person should be responsible for recording the transaction. This is what Thomas Coughlin obviously failed to do on many occasions and how his deceit was discovered. Another possible solution would be to have more extensive background checks on all executives. Sam Walton was

13 betrayed by one of hunting buddies. All executives need to think twice before hiring a friend for a top position.

Treatment of Employees

Depending on what state the Walmart is located, the state law requires the company to allow rest and meal breaks based on how many hours an employee works. For example, in the state of California it is required for the Walmart employee to have rest and meal breaks.

Walmart needs to make a policy that allows overtime or not. If the company allows overtime then the tampering of time cards needs to be a crime/punishment and if caught then the manager should either be fired or dropped to a sales associate. A second option would be to create a system to make a projected over time report. It will show all scheduled associates projected overtime by the end of the week. if an associate works over their scheduled 40 hours then the report will show associates who will be in over time by the end of the scheduled week.

A projected over time report will eliminate associates working overtime by weeks end. Associate appears on the report then they will be informed and they will work peak hours

Urban Sprawl

There are two possible courses of action Walmart can take in order to resolve this issue.

One includes planning a farther distance between each Walmart and limiting how many stores could be in one city limit. Another option could be for Walmart to pay for a better road system and a replacement to the acres of green used. Between these two options, the former is the better choice. This choice is less costly for Walmart, easy to start implementing right away, and will solve the problems addressed.

14 Supplier

To solve this unethical issue, one of the options Walmart can take is to lessen the restrictions on their suppliers, increase their prices enough to keep paying for the suppliers they are loyal to and keep the companies inside the country, and perhaps not try to take over the delivery. Another option is to stop switching suppliers once they choose them. The first option is the more specific and although it might cost Walmart more money in the long run, it would help their suppliers, the ones that provide business for Walmart.

Abandoned Walmarts

One alternative would be to instead of using a team to steal business from others, a team could be put to better use by using them to seek out buyers for the properties. Abandoned Wal-

Mart's make great locations for schools, large hardware stores, warehouses, and have potential for just about any kind of investor. Or, in the case of a store being abandoned in the tornado alley area the site and parts of the original building could be a vital part in a tornado shelter. The community usually already has a road system to the site of any Walmart and the site itself is almost always located in the middle of a community. As part of a philanthropic effort Walmart should invest into making these locations safe havens for these communities since Walmart worked so hard to gain their business in the first place.

Recalls

There are two alternatives that Walmart could choose to take on these issues. I believe they could either increase Quality Control on all of their own products or require an increase on

Quality Assurance from their suppliers. Increasing Quality Control could directly have an effect on the number of recalls. The more research, time, and attention you devote to a product the less likely it is to hit the market with the ability to hurt someone. If you demand an increase of

15 Quality Assurance standards from all suppliers it will have a direct effect on recalls as well. If

Walmart were to cut out suppliers with greedy intentions the company could have safer more efficient products that are not risky to sell in stores.

Unions

Two different solutions could solve Walmart’s issue with unions. A new committee could be set up to either control the negotiations made with unions that Walmart has let come in and mediate or they could just set up their own company-wide union. The latter is the better option for Walmart. Both alternatives could lead to better negotiations through mediation between employees and management. There wouldn’t be as much unhappiness coming from employees if they felt like they were being represented by a third party looking out for their best interest instead of feeling like their employer is taking advantage of their labor.

Key Decision Criteria

Gender Discrimination

By creating a pay equity we will be increasing employee morale. This will cause less female employees to quit, saving time and money to hire someone new for the position. Boosting employee morale and the importance of their job encourages each employee to work harder and succeed more. This in turn will benefit the overall corporation.

Suggesting more women for more promotions is within our present (or future) resources and capabilities. If more women were in higher leadership roles it would encourage future women to work harder to achieve the same goals. Also, giving women more promotions can be implemented with ease and with a considerable amount of speed. The managers just have to be more open to new leadership styles.

16 Leadership and Power

Developing a strict separation of powers among the leaders of our company would improve (or at least maintain) profitability. Making the executives and financial personnel more responsible for which jobs they do will decrease the amount of fraud within the company. In addition, the separation of powers would be consistent with the corporate mission or strategy, which is to do the right thing. If everyone did their job there would no longer be an issue.

Conducting extensive background checks is within the company’s present (or future) resources and capabilities. Corporations can run several background checks and give multiple interviews to ensure they are getting the best candidates for the executive positions. Hiring friends should be thought through carefully and be acceptable to the other executives.

Treatment of employees

By creating a projected overtime report, Walmart will improve or at least maintain profitability because the con of overtime is that it is expensive for the company and it will decrease the productivity and lower morale if permitted in the company. The employees would be exhausted from constantly working overtime and the cost of demands would be higher.

Creating a policy for overtime in the company will be within our present or future resources and capabilities because it can be changed if the company wants to allow the employees to have overtime.

State law requires that companies allow a set amount of breaks depending on how many hours the employees work. With the state law requirement, Walmart will maintain customer satisfaction and their corporate image because the employees will be energetic, in a good mood, and also will provide a good store experience for the customers since they have to interact with

17 the customers. The corporate image will stay the same or will gradually get better if the employees assist the customers with a good attitude and treat them with respect and kindness.

This solution would be consistent with the corporate mission and strategy because

Walmart wants to abide by the rules and do the right things as far as the company go.

Urban Sprawl

Changing their policies to take into consideration this course will have negative/positive effects on the stakeholder. By reducing the amount of Walmarts in a given area, there’s less revenue to earn. Although this will also decrease the amount of jobs for the given area, however, on the other hand, this will benefit the community as a whole, the traffic, parking, and nature in a community would all be improved by going with the plan to limiting the amount of Walmarts.

To make Walmart try to pay for the disruption of infrastructure would only hurt the company’s profits, and thus would not be in the stakeholder’s best interest. The community may be alright with this decision in the short run, but in the long run, over the couple of years to follow, the people would start to be restless and demand more.

Suppliers

Although there is the benefit of decreasing costs for Walmart by taking over the deliveries, it would be an unfair decision for the vendors, possibly ruining their relationship with the vendors as well. Keeping the suppliers inside the country helps keep jobs in America, this in turn, benefits the nation. Increasing the prices of certain items in order to keep paying suppliers, instead of making suppliers be cheaper and cheaper, might hurt the customer pool, but would overall give more quality goods and benefit the suppliers.

18 If the company were to go with the option of not switching the company after signing a contract, the problem of low quality goods or high costs might occur. This would become detrimental to Walmart and stakeholders might feel like it was too risky to do so.

Abandoned Walmarts

By finding a buyer for the abandoned Walmart the company will be minimizing their environmental impact. Not only does this work because the building will no longer be Walmart’s property, but it will also minimize the impact because the building won’t sit and become overgrown as time goes on.

By converting abandoned stores into Tornado shelters Walmart will increase their corporate image. Customers are an important part of any stores business. Well if Walmart creates a Tornado shelter they will be protecting their customers. And even if there never comes a day that the facility needs to be used for shelter people will know who built the shelter and will support Walmart because Walmart supports its customers.

Recalls

Following the Key Decision Criteria, Walmart’s best alternative would be to increase their own Quality Control. This could lead to a better corporate image and could increase customer satisfaction. With a better image and higher rates of customer satisfaction, Walmart could see improvements as far as profitability is concerned. This could easily be done, Walmart definitely has the resources to do it. The only risk involved would be putting a strain on suppliers by forcing them to make better, safer products. Some products would not make it to the shelves due to lack of safety or quality. They could install a stricter policy immediately. Unlike the second alternative, this could all be done internally. Walmart could handle this within the company which is a big advantage.

19 If they would implement and enforce a new Quality Control policy, the best possible outcome would be a noticeable percentage decrease. The worst possible outcome would be suppliers losing interest in doing business with Walmart due to their Quality Control policy standards being too high. The most likely outcome is that Walmart would see a drop in the number of recalls but it is unlikely that Walmart would seize to have products recalled.

Unions

Using Key Decision Criteria, a company-wide union could be the best alternative for

Walmart. They could have their hands in all dealings with employees. Instead of choosing the other alternative where Walmart let other formalized unions to make negotiations, Walmart would have complete control of these negotiation sessions. Employees would be represented and this could keep employees satisfied for a long time. With employee morale higher, customers could see an increase in better service. This could lead to an increase in sales and customer satisfaction. This alternative also creates a few more jobs available to Walmart employees.

Walmart could implement this plan immediately and effectively. Of course, this option would have to be voted on by all stakeholders of Walmart. Surely, employees would vote to be represented by a union once they were aware of all the benefits it could bring them.

Evaluating the Alternatives

Gender Discrimination

Boosting employee morale by creating a pay equity would be more beneficial for the company than just suggesting more women for promotions. This is because with the pay equity the company can set up a plan for each region that they have to abide by and promotions would be relied more on the opinions of each stores management. The corporation can tell the store to give more women promotions, but if a store manager decides that a man is more qualified they

20 cannot really say anything. You would not want an employee to do a job that they know nothing about just because they are a woman. So setting up a pay equity will give each store manager a set of specific payment rules to follow.

Leadership and Power

Setting up a strict separation of powers gives each employee a specific job to do and someone to report too. This solution makes everyone responsible for themselves and allows management to see who is causing the fraud more quickly. Some employees may complain about more paper work to verify each employee’s job. More paper would be better than more fraud.

For the second solution even if we do extensive background checks on every one who applies for an executive position people will still show favoritism towards certain applicants. Executives and management can easily lie about being involved with applicants but it would at least give somewhat more information about each applicant.

Urban Sprawl

With the limits of minimum number of Walmarts in a given location, the community would thrive better. The roads, traffic, and parking flow would be smoother with less stores.

With fewer stores, although this might bring in less revenue, the morale of the community would be higher for the amount of green would be increased as well.

Suppliers

Although the lessening of standards for the suppliers might seem like a risky idea, it would improve the morale of the partners and help bring in more profit. This idea would be much preferred to the other riskier option of going into a contract that was unbreakable with another company. Things would and could go bad, thus it is better to stick with lowering the

21 requirements high enough to get the quality goods associated with the company, but low enough to take the stress off of the suppliers.

Abandoned Walmarts

The advantages that come with seeking out potential buyers for our abandoned stores are higher than the advantages that follow with providing a tornado shelter for the community. More profit would be seen with new buyers and stakeholders would be easier to get enrolled with this option.

Recall

Increasing the Quality Control on all products would be easier to implement then increasing Quality Assurance from all suppliers. If you try to demand Quality Assurance from your suppliers some might not take that very well. You could end up losing existing or interested suppliers. Instead, if you Increase Quality Control then you keep all issues internal, leaving you in control of all of your own recalls.

Unions

This alternative is better than the other one because the other one would be more difficult to implement. You could end up with each employee having their own union representing them.

This could cause confusion and congestion of cases needing to be heard by the committee.

Recommendation

From the listed unethical issues of Walmart, recommendations have been compiled to get the company back on the right track. To fix the issue of gender discrimination, we recommend creating a pay equity for all employees so that each employee receives equal pay for equal work no matter their gender. In order to avoid another issue with executives, or any employees, stealing money from the company, we recommend setting up a strict separation of powers to

22 ensure that fraud is less likely to happen among executive and the financial departments. When it comes to the treatment of employees, following the law would be a good start, as well as creating a policy for overtime and following through. With the issue of urban sprawl, the best solution would be to set a minimum distance to place stores in order to limit down the amount of them per city. To help with the negative effects on the suppliers of Walmart, the company needs to make less restrictive standards and requirements on the suppliers. For the overflow of abandoned stores, we recommend seeking out buyers to take the buildings. In order to reduce the number of recalls, we recommend that Walmart instate a new Quality Control policy that is strict enough to lower the amount of yearly recalls and one that would not avert supplier interest in the company. Finally, with the issue of unions, we recommend a company-wide based union.

Action and the Implementation Plan

Walmart clearly needs a plan to implement the new alternatives we have come up with in order to fix their ethical issues within the company. Again these issues include discrimination against women, urban sprawl, negative effects Walmart’s suppliers, abandoned stores, the company’s recall policy and the unionization of employees. Provided with the following steps we have proposed Walmart could change the ethical culture of their company.

To create a pay equity or “equal pay for equal work” Walmart would first need to notify the financial department of the corporation to set up a payment plan that would benefit the need of each position. They would then need to relay this plan to all of the regions and districts across each nation. In addition, each regional and district leader would ensure the plan was successful by routinely checking all raises and promotions.

A strict separation of powers would need to be implemented by first dividing up the power or jobs for all departments, but especially the financial department. Next, this department

23 should make some type of verification sheet so that each employee could sign off on the work they did or authorized. These verification sheets and jobs should be routinely monitored by managers of each department.

The first step Walmart should take in respecting employees’ logged hours is making it clear that overtime must be approved by store manager. Next, implement and use a weekly projected overtime report to make sure employees get the overtime pay they deserve. Then, find out what state and national laws are for breaks. Finally, implement breaks according to associates scheduled time whether it is working six hours or less.

In order to fix the issue of urban sprawl, to implement this plan of reducing the amount of stores they have open in a given area, Walmart would need to evaluate the population of the area while considering building a new store. In order to figure out how many, they could look back at how many customers they have a day averaged over a time period of a year in a similar area and then use that data to develop a determination factor. With this factor, the next step is to only make another store if it is needed and fits within the limits.

To solve the negative effects Walmart has on its suppliers, Walmart would start by doing thorough research in who they’re asking to supply to them, making sure they are positive with whom they want to work with for any length of time. Only after they are sure will they then agree to sign with them, and stay true to the word with the supplier. For the suppliers they already have, Walmart would need to do a background check, still, and discuss any concerns they have with the suppliers and address them. If the supplier in consideration is unfit for

Walmart, they need to let the supplier go and find a more reliable company to do business with.

There are three options Walmart could take in order to fix the problem with abandoned stores. First, they need to use the previously “secret” planning team to find buyers for abandoned

24 stores. Secondly, this team should set goals on when they want to get rid of the abandoned property. We suggest within one calendar year. Finally, the company could assess the condition of the abandoned store and see if the property could be reused as some sort of shelter or multi- purpose facility.

We encourage every retail corporation to adopt some type of recall policy for the same reasons we suggest Walmart do something. Quality and safety should be main priorities when you sell multiple products to the masses. First, you should introduce the policy. Next, you should notify all stakeholders of standards in the policy. You could send a memo out explaining the new policy and why you feel it is important to implement this new policy. Then, you have to make sure all requirements are met and all standards are reached by every product. Finally, after all safety requirements are met and all of the testing has been done, you can sell safe products and keep your consumers’ trust.

We encourage every big time corporation to adopt or at least let some kind of union represent their employees and mediate negotiations between employees and management. The first step in doing this is inserting a new policy to allow unions to mediate negotiations between employees and upper level management. The next step in this process would be to enforce the new policy and teach employees and management alike about its procedures via a memo or report that gets handed out to every employee. The third and final step in implementing this new policy would be to uphold its integrity and after a certain amount of time judge whether the new union has helped employee negotiations. If so, keep the new Union policy. If not, do away with it and turn to some other alternative.

25 References

Business dictionary.com: Separations of duties. (n.d.). Retrieved from

http://www.businessdictionary.com/definition/separation-of-duties.html

Ferrell, O. C., Fraedrich, J., & Ferrell, L. (2008). Business ethics: Ethical decision making and

cases.

Fishman, C. (2006). The Wal-Mart effect: how the world's most powerful company really

works-- and how it's transforming the American economy. New York: Penguin Press.

Foxnews.com:supreme court decision in Walmart class-action claim brings praise, anger. (2011,

June 20). Retrieved from http://www.foxnews.com/politics/2011/06/20/groups-blast-

laud-high-court-for-decision-against-nations-largest/

http :// www . walmartstores . com / AboutUs /

Monsterfodder, J. (2005, February 22). [Web log message]. Retrieved from

http :// www . dailykos . com / story /2005/02/22/94452/- Abandoned - Wal - Marts - Litter - Our -

Landscape

Supercenters. (2012, January 24). Retrieved from

http://www.walmartstores.com/AboutUs/7606.aspx

The New York Times. (2011, June 20). Justices rule for Walmart in class-action bias case.

Retrieved from Business Day website:

http://www.nytimes.com/2011/06/21/business/21bizcourt.html?pagewanted=all

U.S. CPSC. "Recalled Products." United States Consumer Product Safety Commission, 23 Jan.

2012. Web. 22 Apr. 2012. .

Walmart. About us. Retrieved from Walmart Corporate website:

26 Zwiebach, E. (2010). Wal-mart delivery proposal could pressure suppliers. Supermarket News,

58(23), 8. http://search.proquest.com/docview/881287952?accountid=14481

27