Ethical Issues in Business Valuation
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LOGO
Ethical issues inBusiness valuation
Add your company slogan
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Contents
Ethics1
Ethical issues in Marketing2
Ethical issues in HRM3
Ethical issues in Finance4
Wal-Mart Case Study5
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Ethical Behaviour
Ethics are moral principles and values that
govern the actions and decisions of an individual
or group. In the marketing context, ethics is themoral evaluation of marketing activities and
decisions as right or wrong.
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Individual Factors
Organisational Factors
Perceived Opportunity
Understanding Ethical Conduct
Understanding Ethical Behaviour in Marketing Decisions
Individual
Factors
Perceived
Opportunity
Organisational
Factors
Resulting Ethical or
Unethical Behaviour
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When marketing managers face ethically
challenging situations and are unable to resolve
them all alone, they experience ethical conflict,though they make decisions in their everyday lives
based on their personal concepts of right or wrong.
Individual Factors
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Organizational Factors
Corporate culture refers to a set of values, beliefs,
goals, norms, etc., shared by its members and
expressed in every day working through workhabits, and other activities.
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Perceived Opportunity
Opportunity refers to a set of conditions perceived
as favourable that limit barriers or provide
rewards. Most managers in marketing do notdeliberately take advantage of every opportunity
for unethical conduct in their companies.
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Marketing Related Ethical Issues
Ethical issue refers to some situation, problem, or
opportunity that can be recognised and requires a
person or organisation to select from amongdifferent actions that must be evaluated as right or
wrong, or ethical or unethical.
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Ethical Issues in Marketing
Marketing ethics: Marketers standards of conduct
and moral values
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Marketing costs are too high The marketing system is inefficient
Marketers and the business system collude andcommit price-fixing
Firms deliver poor product quality and service Consumers receive incomplete, false, and/or
misleading information
The marketing system produces health and safety
hazards Marketers persuasively promote unwanted and
unnecessary products to those who least needthem
Criticisms of the Competitive
Marketing System
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Ethical Problems in Marketing ResearchAlleged invasions of personal privacy
Gathering marketing information inexchange for money or free offers
Ethical Problems in Product Strategy
Product quality
Planned obsolescence
Brand similarity
Packaging
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Ethical Problems in Distribution Strategy
Determining the appropriate degree ofcontrol over a channel
Determining whether a company shoulddistribute its products in marginallyprofitable outlets that have no alternativesource of supply
Ethical Problems in Pricing Probably the most regulated aspect
Most unethical pricing behavior is alsoillegal
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Ethical Problems in PromotionalStrategy
The source of the majority of ethical
questions Ethically questionable personal selling
Gifts and bribes
Questionable advertising Promotion of questionable features (air bags)
Questionable WWW related promotionalpractices
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LOGO
Advertising Social/
Ethical and LegalAspects
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Unethical Advertisement
Unethical advertising: is advertising which
degrades or underestimates the substitute orthe competitive products. It gives falsepromises or misleading information about the
value of the product. It fails to giveinformation about the side effects. It could beadvertisements that are obscene or immoral.
The usage of certain words as better, more,
best, largest, tastiest, only can change aethical advertisement into an unethicaladvertisement.
Company Logo
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Unethical advertising promisessomething that cannot be deliveredlike a fitness centre that advertisesthat the customers will loose 50pounds per month with its program.On top of it the fitness centre says theweight loss is guaranteed. Quite
plainly the fitness centre cant deliverthat much of weight loss to everyperson who comes into his centre.
Company Logo
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ADVERTISING ETHICS
There should not be anyracial discrimination.
For e.g.: Benetton
It should not hurt the
sentiments of women.For e.g. Fair and lovely.
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Contd.
It is morally wrong to use manipulative,exploitative , corrupting methods ofpersuasion and motivation
For e.g. Nestle.
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Contd.
The content of communicationshould be communicatedhonestly and properly.
More spending of moneyshould be stopped.
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Contd.
Advertisers are morally responsiblefor what they seek to move people todo.
Advertising may not deliberatelyseek to deceive by what it says, whatit implies or what it fails to say.
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Contd..
Advertisers should not promise whichis impossible and cannot be delivered.
E.g. A fitness centre that
advertises that the customers
will loss of 50 pounds per month
with its program. On top of it the
fitness centre says the weight
loss is guaranteed. Quite plainly
the fitness centre cant deliver
that much of weight loss to
every person who comes into
his centre.
Company Logo
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CODE FOR COMMERCIALADVERTISING
Advertising shall be so designed as toconform to the laws of the country
No Advertisement shall be permittedwhich can hurt some ones emotions.
No advertisement message shall inany way be presented as News.
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Contd
No advertisement shall bepermitted the objectswhereof are wholly or mainly
of a religious or politicalnature.
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Contd.
Indecent, vulgar, suggestive,repulsive or offensive themes
or treatment shall be avoidedin all advertisements
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GENERAL CODE
Criticism of friendly countries; attack on religions or communities;
anything obscene or defamatory;
incitement to violence or anything against
maintenance of law and order; anything amounting to contempt of court;
aspersions against the integrity of thePresident and Judiciary;
anything affecting the integrity of theNation; and
Criticism by name of any person.
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Unethical Advertisement-Tag lines
Outside a bank Nobody likes a fatgirl but everybody likes a girl with afat bank balance.
For a washing machine dont letwashing clothes kill your pretty wife.Let our washing machine do that dirtyjob for you.
Brochure of an office automationcompany Improve your secs(secretarys) life.
Company Logo
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Some Examples of UnethicalAdvertisement
Even big companies
stoop to unethicaladvertising the famousexamples can be.
Company Logo
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1. AP PL170Company Logo
A.P Scooters came out incollaboration with Vespa witha scooter and they named it
AP PL 170. The customersthought PL 170 meant Payload 170. Later a lot ofnegative publicity wasgenerated when thecustomers came to know that
PL 170 does not stand for Payload 170. PL 170 was justsome fancy word work fromthe advertising agency.
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2. Activia Yogurt
Company Logo
Dannon's popular Activia brand yogurt
lured consumers into paying more forits purported nutritional benefits --when it was actually pretty much thesame as every other kind of yogurt.Falsely touting the "clinically" and"scientifically" proven nutritional
benefits of the product, Dannon evengot a famous spokesperson, JamieLee Curtis, for the supposed digestion-regulator. But after a while, somecustomers didn't buy it.A class actionsettlement last year forced Dannon topay up to $45 million in damages tothe consumers that filed the lawsuitand others who said they'd beenbamboozled. The company also had tolimit its health claims on its productsstrictly to factual ones.
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3. Eclipse Breeze
Company Logo
Eclipse gum claimed that its newingredient, magnolia bark extract, hadgerm-killing properties.Consumers sued Wrigley [in 2009] infederal court arguing the subsidiary ofprivately held Mars Inc. made
misleading advertising claims about thegerm-killing properties of Eclipse.As part of the settlement, Wrigley willchange how it markets and labels itsgum. It agreed to pay $6 million to $7million to a fund that will reimburse
consumers up to $10 each for theproduct and cover other costs of thesettlement, according to the law firmsBlood Hurst & O'Reardon and RobbinsGeller Rudman & Dowd.
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4. Taco Bell's seasoned beef
Company Logo
When consumers raised questions about what
was actually seasoning Taco Bell's seasoned beef,the company didn't know how to respond.It was simply using oat filler -- which meansthe meat isn't seasoned beef at all, accordingto USDA standards. The franchise had beentricking its consumers into thinking its
products were of a higher grade than theyactually were.Taco Bell took the opportunity to poke fun atitself, hoping to mitigate the PR disaster. Thecompany even took out a full-page newspaperad thanking complainants for suing. So far, sogood. Taco Bell's proactivity and willingnessto address the controversy have restoredsome faith in the fast food giant.The woman who started all the hullabalooultimately dismissed her lawsuit.
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5. Definity Eye CreamCompany Logo
In 2009, an Olay ad for its Definity
eye cream showed former model
Twiggy looking wrinkle-free -- and a
whole lot younger than her years
(she turns 62 next week). Turns out
the ads were retouched.
British lawmakers yankeddigitally altered spots, citing notonly a gross misrepresentation
of products, but the ad'spotentially negative impact onpeople's body images.
Company Logo
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6.Hyundai and KIA vehicles'horsepower
Company Logo
Hundreds of car owners were extremely
disappointed to find out that Hyundai and Kia
overstated the horsepower in some of their
vehicles.In 2001, the Korean Ministry ofConstruction and Transportationuncovered the misrepresentation, whichfor some models was as much as 9.6percent more horsepower than the carsactually had.A class action lawsuit in southernCalifornia claimed the companies were
able to sell more cars and charge moreper vehicle because of the false claims. Inthe end, the auto powerhouses had topay customers -- the settlement wasestimated to be between $75 million and$125 million.
7 Ri K i i & F t dCompany Logo
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7. Rice Krispies & FrostedMini-Wheats
Company Logo
Kellogg's popular Rice Krispies cereal had a crisis
in 2010 when it was accused of misleading
consumers about its immunity boosting
properties. The Federal Trade Commission
ordered Kellogg to halt all advertising that
claimed that the cereal improved a child's
immunity with "25 percent Daily Value ofAntioxidants and Nutrients -- Vitamins A, B, C and
E," stating the the claims were "dubious."Just a year prior, the company settled withthe FTC over charges that its Frosted Mini-Wheats cereal didn't live up to its ads. The
campaign claimed that the cereal improvedkids' attentiveness by nearly 20%, and wasshot down when the FTC found out that theclinical studies showed that only 1-in-9 kidshad that kind of improvement -- and half thekids weren't affected at all.
Company Logo
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8. SplendaCompany Logo
The Sugar Association says Splenda's
"Made from Sugar" slogan is misleading,and that the sweetner is nothing morethan "highly processed chemicalcompound made in a factory," reportsCBS. In 2008, the association first filed asuit against Johnson & Johnson
subsidiary McNeil Nutritionals, which thencountersued the association engaging ina "malicious smear campaign." The twoparties reached a confidential settlementbefore going to trial.Equal also took its rival to court in 2007,accusing "the makers of Splenda ofconfusing consumers into thinking itsproduct was healthier and more naturalthan other artificial sweeteners." The twoparties also reached a confidentialsettlement.
Company Logo
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9. A New BalanceCompany Logo
A New Balance sneaker that reportedlyhelped users burn calories were called outwhen studies did not find any boosted healthbenefits from wearing the shoe.
The toning sneaker, claimed to use hiddenboard technology, were advertised as calorieburners that activated the glutes, quads,hamstrings and calves. Plaintiffs discoveredthat the shoe was instead an injury hazard,without any secret technology, and areseeking $5 million in compensation. The
sneakers cost about $100.
Company Logo
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10.Classmates.comCompany Logo
Millions of people lit up whenClassmates.com sent them an emailsaying old friends were trying to contactthem, promising to rekindle old friendshipsand flames if subscribers upgraded to a"Gold" membership.
But even with an upgrade, the expectedreunions never came. Turns out the socialnetworking site used the ploy to get usersto pony up extra dollars. In 2008, onemiffed user filed suit alleging the
"deceptive" emails were false advertising.
He eventually bested the website, whichagreed to pay out a $9.5 million settlement-- $3 for every subscriber who fell for thedirty trick -- to resolve the case.
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Unethical Advertisement
LOGO
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LOGO
Ethical Issues in HumanResource Management
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Outline
Ethics, Morality and ValuesNature of Ethics
Sources of Business Ethics
Law Vs EthicsConflicts of Law and Ethics
Importance of ethics
Ethical Dilemmas - Its sources
HR ethical issues
Managing Ethics
Ethical decision making
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Ethics, Morality and Values
Ethics is the study of morality
Morals are the standards used tojudge right and wrong
Values are the degree of convictionabout the way to conduct life
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Nature of Ethics
Two theories are relevant in thecontext of the nature of ethics:
1. The Theory of moral unity
Business should be judged by ethical standards ofthe society
There is only one set of ethical standards for bothsociety and businesses
2. The theory of amorality Business can be amoral
The market mechanism automatically works for thebenefit of the society
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Sources of Business Ethics
ReligionCulture
Law
Reciprocal actions can help explain themaintenance of social norms
Idea of Reciprocity ormutual help
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Law Vs Ethics
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Conflicts of Law and Ethics
Example: Legalbut unethical?
Jim Crow laws that
required discriminationagainst Black Americans
Laws in Nazi Germanythat contributed to the
holocaust
Example: Ethicalbut illegal?
Provide service inviolation of Jim Crow
laws to a Black Americanin a restaurant
Help a holocaust victimescape from Nazi
Germany
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Importance of ethics
If you have integrity, nothing else matters. If you don'thave integrity, nothing else matters.- Alan K. Simpson
Ethics is very basic to mankind
Values create credibility with the publicValues create credibility with the employees
Considered important for companies strivingfor long-term success and growth.
"Not only is ethical behaviour in business life the rightthing to do in principle, we have shown that it pays off infinancial returns. - Philippa Foster Black, The Director,The Institute of Business Ethics (IBE),
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Ethical Dilemmas - Its sources
situations in which they are requiredto define right or wrong conduct
These ethical dilemmas arise fromthree sources
Face to Face Ethics
Corporate policy Ethics
Functional area Ethics
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HR ethical issues
EthicalIssues
EmployeeResponsibility
Cash &Incentive
plans
PerformanceAppraisal
Race, Gender,Age and
Disability
JobDiscrimination
Privacy Issues
Safety andHealth Care
RestructuringLayoffs
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Managing Ethics
Top Management
Code of Ethics
Ethics and Law
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Ethical decision making
MoralIdealism
Intuitionism
Utilitarianism
Seek adviceof an
intelligentperson
Evaluatepros and
cons
Act beforeproblems
occur
Commitoneself
publicly toethics
Ethicalperfection isillusionary
LOGO
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Ethics inFinance
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Overview
Introduction Ethics in Financial Services
Ethics in Financial Markets
Insider Trading Hostile Takeovers
Accounting Ethics
Conclusion
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Ethics?
Ethics represents the attempt to resolvethe conflict between selfishness andselflessness; between our materialneeds and our conscience.
-Demsey
A business that makes nothing but
money is a poor kind ofbusiness.
-Henry Ford
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Introduction
Principal-agent model of relationshipin financial transactions.
Modern capitalist system based onrational-maximizer paradigm-
# Individuals are self seeking.
# Seek to maximize own
interest.
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Introduction
Behavioral assumption for modernfinancial- economic theory runscounter to ideas of-
Trustworthiness
Loyalty
Fidelity
Stewardship
Concern for others
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Ethics in Financial Services
Deception Withholding of relevant information or
giving false or misleading information
What is deceptive?
Choices of what and how much todisclose?
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Ethics in Financial Services
Churning
Breach of fiduciary duty
How much trading is excessive?
Solutions??
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Ethics in Financial Markets
Fairness is importantFraud and Manipulation
Investors depend upon issuer of
information Transparency requirements
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Ethics in Financial Markets
Fairness in markets
Equal Information
Encourage acquiring all information
possible `Legitimacy play by the rules
Equal Access
Equal Bargaining Power
Efficient Pricing
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Insider Trading
Trading of stock or securities byindividual with potential access tonon-public information about thecompany
Insiders when buys or sells basedupon company owned information,violates the contract with
shareholdersThere are legal insider trading and
illegal insider trading
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Hostile Takeovers
Corporate takeover which is carriedout against the wishes of the board ofthe target company.
Original company may be entirelyswallowed up or may operate semi-independently.
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Accounting Ethics
Nature of work of accountantsrequire high level of ethics.
Accounting concepts andconventions- GAAP
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Accounting Ethics
Preparation of financial statements.
Keeping management aware of
present conditions and futureestimations.
Confidentiality of organizations
financial position
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Conclusion
Financial ethics depends on a complexinterlay of FM ,industry leadership andindividuals personal integrity.
It makes the companys activities morelegal and policies more social.
As consumers we must be aware andcautious about the individuals andcorporations who manage our money.
LOGO
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Ethical Concernsin
Business
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Ethics
Whether men understand it or not, they areimpelled by that power behind to become
unselfish. That is the foundation ofmorality. It is quintessence of all ethics,preached in any language or any religion,or by any prophet in the world. Be thouunselfish, Not I, but Thou that isthe background of ethical codes.
- Swami Vivekananda
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Ethics.
Crucially important that our thoughts and actions begoverned by ethical values and habits.
Basis of ethics is to become more and more self less.
Knowledge of the importance of virtue does notdeter people from moving to the evil side of things.This is the illusion covering the consciousness of man,
says the Vedanta.
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Ethics and Success
Try not to become a man of success butrather try to become a man of value.
Albert Einstein 1879-1955
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Gandhi on Entrepreneurial Ethics
Truthfulness in conduct of business is reflective ofimage of the Nation.
Seven Social Sins:
Politics without Principles
Wealth without Work
Commerce without Morality
Knowledge without Character
Pleasure without Conscience
Science without Humanity
Worship without Sacrifice
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Need for Ethics
Social Contract
Guidance to operate business, professions
Business Ethics is the set of principles orreasons to govern the conduct of business at individual or collective level by the
application of ethical reasoning to specificbusiness situations and activities
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Being Ethical
Awareness of Need to comply with rules, laws of the
land, customs and expectations of thesociety, the principles of morality, policies
of organization or institution, generalconcerns for others and fairness
How the products and services of an
organization or institution and the actionsof its members, can affect its employees,the community and society as a whole,either positively or negatively.
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Ethical Dilemmas
Many issues seems straight forward andeasy to resolve but are not always true
Making choices amongst alternatives
Questions between right and wrong
Conflict between right and right
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Benefits of Ethics
Improved society
Maintain moral course in turbulent times
Cultivate strong team work and productivity
Supports employee growth
Ensuring policies are legal
Avoiding criminal acts of omission and lowering fines
Managing values of quality, strategic planning anddiversity
Strong public image
LOGO
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UNETHICAL BUSINESSPRACTICES
Case Study of Wal Mart Stores Inc.,U.S.
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ETHICAL BUSINESS CALL OF TODAY
There is a need do business with an openeye, continuously measuring & evaluating theconsequences & impact of actions taken .
This obligation is seen to extend beyond the
statutory obligation to comply withlegislation and seeing organizationsvoluntarily taking further steps to improve
the quality of life for employees and theirfamilies as well as for the local communityand society at large.
SURVIVAL IS FOR ONLY ETHICAL
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SURVIVAL IS FOR ONLY ETHICALORGANISATIONS
The companies thatsurvive are the ones
that can spot ethicalissues and correct them
before they becomeproblems .
GIANT MONSTER OF USCO O G S
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ECONOMY EATING THE DREAMSOF PEOPLE
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WAL-MART
The first true Wal-Mart opened in 1962 inRogers, Arkansas. Wal-Mart eventuallybecame the world's largest retailer
Company profile and history
http://en.wikipedia.org/wiki/Wal-Marthttp://en.wikipedia.org/wiki/Rogers,_Arkansashttp://www.google.co.in/imgres?imgurl=http://www.brainfleas.com/brainfleas/images/walmart2.jpg&imgrefurl=http://www.brainfleas.com/brainfleas/great_wall_of_mexico/&h=315&w=420&sz=13&tbnid=jvWd-MozOkvidM::&tbnh=94&tbnw=125&prev=/images?q=pictures+of+wall-mart+company+of+US&hl=en&usg=__rsDzXucRXZkk_B-Opqbtv-defh0=&sa=X&oi=image_result&resnum=1&ct=image&cd=1http://en.wikipedia.org/wiki/Rogers,_Arkansashttp://en.wikipedia.org/wiki/Wal-Marthttp://en.wikipedia.org/wiki/Wal-Marthttp://en.wikipedia.org/wiki/Wal-Mart -
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Company profile and history
The Wal-Mart story began in 1962, when Sam Waltonopened the companys first discount store in Rogers,Ark.
Five years later, there were 24 Wal-Mart stores in
Arkansas ringing up $12.6 million in sales. 1968 saw thehiring of Wal-Mart Aviations first full-pilot, whoprovided help to Sam and Bud Walton, as well as theopening of the first stores outside of Arkansas, inSikeston, Mo., and Claremore, Okla.
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The company officially incorporated as Wal-Mart Stores Inc. on October 31, 1969.
Today, 7,390 Wal-Mart stores and Sams Clublocations in 14 markets employ more than 2
million associates, serving more than 200million customers per year.
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Sam Walton. Walton was an entrepreneur with aninnovative vision, started his own company and
made it into the leader in discount retailing that it istoday. In fact, Wal-Mart is considered to be thebiggest company in the U.S. and it has storesworldwide .
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The Wal-mart culture rests upon 3 basic beliefswhich are:
Respect for the Individual
Service to customer
Striving for excellence
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Wal-Mart employs more people than anyother company in the United States outsideof the Federal government, yet the majorityof its employees with children live below
the poverty line.
In addition, Wal-Mart likes to portray itself as a seller ofU.S. manufactured goods but in reality the company hasproducts on its shelves made in foreign countries and atquestionable workshops.
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It would seem that Wal-Mart encourages
made in the USA but it really encouragesproducts made outside the USA.
As a result, Wal-Mart has forced many
manufacturers out of business.
As a matter of fact, this big giant is facing asignificant amount of controversy forunethical business practices. In fact, some ofthese unethical business practices include thefollowing.
GIANT UNETHICAL CORPORATION
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OF AMERICA
UNETHICAL PRACTICES OF WAL MART
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UNETHICAL PRACTICES OF WAL-MART
Open door policy as against labor union
Wal-Mart is a non union organization that
feels itdoes not need third party intervention. So,Instead of
unions, Wal-Mart has an open door policy thatencourages
employees to take their complaints beyondmanagement.
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According to this policy the door of the
managementisalways open for the associates to share
suggestions,ideas, and voice concerns. Whether its help with a
problem, guidance or direction, or simply getting ananswer to a question. Managers also treat all
discussionsfairly, with an open mind, and without bias. They
maintaincomplete confidentially, whenever its possible.They work
with the associates to mutually resolve any issuesor
Analysis of open door
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y ppolicy: 1)The open door policy does little to help its
employees but gives the business the leverage itneeds to terminate unwanted non compliant help.
2) Employees start out at lower wages thanunionized corporations and end up quitting by theend of the first year.
3) Its anti-union policy is a central part of itsobsession with minimising costs.
4) Wal-Mart provides managers with its infamousManagers Toolbox to Remaining Union Free thatstates:Staying union free is a full time commitment. Unlessunion prevention is a goal equal to other goals and
objectives in the organization, management will notdevote the necessary day in, day out attention andeffort. If there is any evidence of moves towardsunionisation, managers are ordered to phone theWal-Mart Union Hotline immediately.
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Un Ethical And
Aggressive policiesof Wal-Mart
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Wal-Mart engages in unit packingandother tactics to prevent organizing efforts.When workers have successfully organized,Wal-Mart has refused to bargain, or has shutdown stores and units where workers haveorganized.
Wal-Mart also prohibits employees fromtalking to union representatives. It is unethicalfor Wal-Mart to prohibit employees to talk tounion representatives since according to theNational Labor Relations Act;employers are
not allowed to discourage employees fromforming a union for they have that right.
Violated Federal Labor Law By
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y"Bribing" Employees To Report On Co-workers Who Favored A Union.
. Therefore, the United Food and CommercialWorkers Union filed a complaint with the NationalLabor Relations Board against Wal-Mart. Thecomplaint, filed with the National Labor RelationsBoard, alleges that Wal-Mart violated federal laborlaw by "bribing. employees to report on co-workerswho favored a union.
In 2005, labor unions also created new organizationsand websites to influence public opinion against Wal-Mart, including Wake up Wal-Mart (United Food andCommercial Workers) and Wal-Mart Watch (ServiceEmployees International Union). But Wal-Mart deniedthe charges that were brought against the company.
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Thus, Wal-Mart is wrong by bribingemployees for it encourages dishonestbehavior. If Wal-Mart wants to avoid ahearing or a lawsuit in this situation,they need to post notices saying the
retailer will not oppose employeestalking to union representatives.
In addition, if Wal-Mart takes more
seriously the employees complaints,it might encourage them not tounionize.
Unfair Treatment ofEmployees:
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Employees:
Wage And Hour Violations :Not only does the company have a historyof methodically violating workers right tojoin a union, the Wal-Mart record on workerrights is a laundry list of abuse. Wal-Mart has
racked up a striking number of wage andhour violations.
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Decreased health care coverage:Wal-Mart has decreased health care
coverage to employees while touting its
commitment to offering affordable care.Evidence suggests that Wal-Mart may haveeven adopted a strategy of eliminating longtime workers and discouraging overweight orotherwise unhealthy workersfrom applying
both as measures to reduce payroll andhealth care costs.
Violations Of Child Labor Laws
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Violations Of Child Labor Laws
One internal audit of 25,000 employees in 128Wal-Mart stores in the USA found 1,371violations of child labor laws, includingminors working too late, too many hours a
day and during school hours.Wal-Mart is proving to be a nation and future
breakerby violating the child labor lawsand spoiling the future of the children toenrich themselves, ignoring seniority.
According to Newsweek magazine
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According to Newsweek magazine
Denial to pay wages and salaries:The Bentonville-based multinational employsthousands of young people to pack its customers'bags. But the 4,300 young teenagers don't receive any
pay from Wal-Mart. Wal-Marts model is fast
becoming the industry standard, as other firms slashemployee wages and benefits in an attempt tocompete with the retail giant .
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Reasoning given by Wal-Mart:So, Wal-Mart succeeds to defend its position
as the undisputed leader of the pack when itcomes to violating fundamental workers'
rights
Payment of low wages:Wal-Mart pays low wages and appears to
aggressively seeks to keep wages down
UNETHICAL PRACTICES OF WAL-
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MART
. Gender Discrimination
The company faces the largest gender discriminationcase in the history of this country. Discriminatorypolicies are as follows:
1. Denied Training: Women had been denied training
and promotion opportunities that are offered to men.2. Under payment: women are underpaid in relation tomen.
According to Hoovers handbook of Americanbusiness, in June 2001 a group of six current andformer female Wal-Mart employees filed a sex
discrimination lawsuit (seeking to represent up to500,000 current and former Wal-Mart workers) againstthe company . The suit was filed because Wal- Martfailed to provide equal employment for women.
Gender Discrimination
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Gender Discrimination
Less Managerial positions to women:In fact, there are over 70 percent of women
working at Wal-Mart, but only a smallamount of those women are managers. So,
men are holding more management positionsthan women.
Less dignity and respect to women: Wal-
Mart is the nation's largest employer ofwomen, but unfortunately they are being
treated without dignity and respect."
Expensive Health Insurance
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Expensive Health Insurance
Wal-Marts health insurance is so expensive that some ofthe employees can not even afford to pay for it.
So, those employees who couldnt afford the health planwill probably have to get their health care benefits through
their spouses or the state from our tax dollars. Wal-Martresponded to this problem by offering discounts on healthcare coverage. Members can save as much as 50% onservices not normally covered by medical insurance.Discounts are not enough.
Wal-Mart still has a moral responsibility to provideaffordable health care to its employees not shift the costonto the American taxpayers. Wal-Mart can also raiseemployees wages so they can afford to pay for theirhealth plan.
No Over Time /Wages not in
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proportion to Work
While wages are low at Wal-Mart, too often
employees didnt get paid at all for overtime. In fact,according to Wal-Marts policy, they are supposed topay employees for every minute they work. But,since Wal-Mart is such a big company, there will becases in which managers might do unethical things.For instance, employees were forced to work unpaid
overtime. As a result, they filed a suit against Wal-Mart for not getting paid for overtime. So inFebruary 2004, a federal judge ruled that Wal-Martshould pay workers for overtime hours .But, thecase is still pending. In fact Wal-Mart claimed theirpolicy is against such work. So Wal-Marts managerswho required overtime were disciplined and fired. In
fact, it is Wal-Marts responsibility to make sure thatpeople get paid. They should settle the suit by payingtheir employees for unpaid overtime. It seems thatWal-Mart needs to periodically examine its paypractices to make sure that all employees are gettingpaid for all the hours worked.
Sufferings below the low Cost
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Offerings to the public
Wal-Mart is leading the race to the bottomby relentlessly squeezing cost efficienciesout of the supply chain. Wal-Mart frequentlyrequires its suppliers to open their books forWal-Mart inspection and tells them exactlywhere to cut costs. When national labour or
environmental standards create a barrier tocost cutting, suppliers are encouraged torelocate to a labour market that will enablethem to produce at the low price Wal-Martrequires. Even where wages are rock-bottom, Wal-Mart insists that its suppliersdrive prices ever lower. To do this lot ofunethical activities crop in to come on to thelowest cost ,lot of people in the supply chain
suffer because of this cost cutting drive
Use Of Illegal Migrants As Workers
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Use Of Illegal Migrants As Workers
Finally, Wal-Mart was under investigation for the use of
illegal immigrants as workers. In fact, in October 2003federal agents uncovered 300 illegal immigrantsemployed by outside contractors cleaning its stores. Asa result, the company became the target of a classaction suit. So, Wal-Mart was accused of breakingimmigration laws. In addition, Wal-Mart cheatedimmigrant on account of
low wages social security payments, federal payroll taxes. Contractual employments No security of tenure No payments for over time.
Immigration experts said the arrests of so many illegal
immigrants at Wal-Marts across the countrydemonstrated that these workers have come to play asignificant role in the American economy. They oftentake the low-end, low-paying jobs shunned by not justAmerican workers, but also legal immigrants. But, Wal-Mart claimed they hired those particular
REPORTINGS BY EMPLOYEES
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REPORTINGS BY EMPLOYEES
I hate wall-mart I worked there 3 years and saw
many bad practices. The final straw that made mequit was the fact that I was a full time departmentmanager, yet only was getting 16-22 hours a week!!!
When I asked why my hours where being cut theytold me it was due to a lack of busness.HELLO you
are WAL-MART a short drop in sales should not leadto me and my family being broke.
get things together wall-mart if you would actuallypay your workers enough to live maybe you wouldsave money in the 'loss prevention' departmentbecause your workers wont have to steal from you to
make ends meat!!!
MikeBismarck, ArkansasU.S.A
- -MART DOES NOT CARE *Rebuttals *Consumer
S ti l
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Suggestion ex-employee.
In a unfortunate incident anemployee was hurt and compensationwas asked but was completely deniedand the small wound was convertedinto cancer because she was poor andcouldn't afford medical treatment. Soin wall mart employees are nottreated as a part of the family andbusiness and have no values in theeyes of management and board aswas reported by the ex-employee.
Success of Wal-Mart in question
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Success of Wal Mart in question
The sentiment behind Wal-Martfounder Sam Walton's promise of a"better life for all" belies questionablebusiness practices - many that havebeen challenged by employees,unions, environmentalists, recordingartists and human rightsorganizations. All these challengesshould be met and it should learnlessons from their mistakes.
Conclusions:
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Conclusions:
The companies that survive are the ones that can
spot ethical issues and correct them before theybecome problems.
In this case Wal-Mart failed to acknowledge thosepotential problems and they are probably going topay for it. Thus, Wal-Marts unethical businesspractices have hurt its companys reputation.
If Wal-Mart wants to survive they will have to tryhard to improve their image. That is, they need toshow that they care about ethics by treatingemployees fairly.
As a result, it will attract good employees andpeople will have no reason to complain about the
company. In addition Wal-Mart needs to be sociallyresponsible in order to avoid economic harm and inorder to maintain the legitimacy granted by society.
Conclusions:
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Conclusions:
As Wal-Mart is not just a threat to thestandard of living of its ownemployees. It damages the standardof living of numerous others in the
economy.In some cases, it forces the closure of
better paying firms. Business Weekestimates for every WM supercenterthat opens, two other supermarketswill close.
We will hail Wal-Mart if it hails thei t t l
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society at large
There should not beany compromise on
ethics and sociallyresponsiblebehaviour,as it is
giving back to thesociety, other wise its
survival will be in
Say no to unethical practices
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Say no to unethical practices
Wal-Mart's immoral,predatory practices
and reprehensiblebehavior has to be
mended which isessential for thesurvival of Wal-Mart
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