The corporation ranked number one on the Fortune 500 list may also be its most controversial. Over the past few years Wal-Mart has been the subject of numerous controversies. Hiring illegal workers, putting small retailers out of business, and poor treatment of employees are just some of the accusations. The major retailer has been attempting to repair its image for some time now. The most recent of such attempts occurred on Mar. 2, when Wal-Mart created a new position: director of global ethics. Only time will tell whether this position is primarily aimed at maintaining appearances or if it is a serious attempt at reforming the company's ethics.
Wal-Mart's transgressions have been featured heavily in the media, from books (The United States of Wal-Mart) to movies (Wal-Mart: The High Cost of Low Price) to various news sources. Two of the most significant accusations against Wal-Mart are employee treatment and the effects of Wal-Mart on small businesses.
It has been argued that Wal-Mart employees make less money than those in similar positions that work for different companies and that they receive worse benefits. Not only is this a problem for employees, but it also affects taxpayers who must fund welfare, healthcare, and other such programs for low-income citizens.
The effect of Wal-Mart on small communities is an issue that reaches even more people. The large corporation has been accused of predatory pricing multiple times, though no U.S. court has reprimanded them. Predatory pricing is the act of lowering prices, often to below cost, in order to drive the competition out of business, and then raising price levels once the field has been emptied of competition.
The result of these controversies has been significant community protest, sometimes keeping Wal-Mart out of locations that it would otherwise inhabit. And it is this very fact that makes it obvious why Wal-Mart has decided to take action in improving its business practices. The company's terrible reputation is now affecting its potential profits.
The question still remains as to whether or not this is simply a publicity stunt or a real effort to change things. Looking at the company's past business practices, it is hard to believe that Wal-Mart has finally become concerned about its employees and its communities. This company has demonstrated time and time again that profits are all that matter, and there seems to be little reason to believe that things have changed drastically all of a sudden.
Another fair question is whether or not Wal-Mart is really any worse than any other large corporation in reference to the ethics of their business practices. Wal-Mart argues that it is simply practicing capitalism and is being punished for its success. Many others agree with this claim. With all the blame that goes towards Wal-Mart, people often forget the other culprits: those that shop there. It is hypocritical to only blame the company when it is obvious that so many Americans love to shop at Wal-Mart. The retailer's ability to mass produce has given it a clear competitive advantage, an expected side-effect of capitalism.
Though this is a legitimate argument, it overlooks the route that Wal-Mart took to reach its current status. At its current size, it is obvious that the huge corporation would have a significant competitive advantage. Nevertheless, Wal-Mart was able to grow significantly before having the advantage of such mass production. As a result, it becomes quite evident that the low prices they were always able to provide, a result of low costs, had to come from paying smaller expenses than competitors. It is hard to believe that they ever were paying employees fairly. In fact, founder Sam Walton once argued that his company should not be forced to pay the federal minimum wage.
It is this corporate attitude that has been a significant part of the destruction of Wal-Mart's reputation. Additionally, when one considers the multiple lawsuits filed as a result of employee discrimination and the claims brought under the Fair Labor Standards Act, it becomes hard for Wal-Mart to continue claiming that they are only being targeted because of their size. When there is smoke, there is fire. And it is hard to convince the public otherwise.
Nevertheless, one can still hope that the new director of global ethics can make a difference. Even if Wal-Mart management's intentions are not necessarily good, the holder of this position may surprise everyone and truly attempt to generate significant change in the company's methods of doing business. Another positive is the focus that Wal-Mart's situation has put on big business ethics in general. Large corporations around the country now realize that dishonest business practices will not be tolerated by the public.
