Monday, April 15, 2013

Wal-Mart: Foreign Expansion the Wrong Way (2012)

Based on an original paper by Matt O'Connor

Summary by Matt O'Connor


     In January of 2012, many reports surfaced about Wal-Mart, one of the worlds largest companies, using bribes to push themselves into prime locations in Mexico. About 24 million dollars was said to be used to bribe Mexican city officials to redraw zoning maps so that Wal-Mart could build their super centers and storage warehouses in densely populated, and in one case, historic locations throughout the country. They bribed mayors, governors, and members of city zoning boards to help their expansion internationally. There were hundreds of protests from local residents of Mexico City and a small village called Teotihuacan, where ancient pyramids and ruins are held as protected and historic ground.

     According to each of the four normative ethical theories, Wal-Mart was wrong in deciding to issue these bribes. Under theory of individualism, the well being of anyone or 
anything is generally overlooked as long as your business is making profit, except the profits have to be made within the law and in the boundaries of human rights. Since all evidence points toward the fact that they certainly did bribe foreign officials, we must assume for analysis that they will be guilty, and any profits they have received from the illegally built stores will not qualify as acceptable under this theory. Wal-Mart knew that they were breaking the law, and even though Individualism would support the fact that they may have harmed communities of people in order to greatly increase growth and profit, the theory will not agree with them in this case, because the profits were not achieved through legal practice. In another perspective of Friedman’s theory, Wal-Mart’s bribes have also done harm to their company and its image. They are one of the largest publicly traded companies on Earth, and this means that their every move means something in the way of gaining or losing respect and money from the public eye. Company executives have recently been saying that they will lose profit in the coming year because of this scandal. So an individualist would say that it was a horrible choice to go through with the bribes because now they will lose profit for it and the business will lose out. 

     The Utilitarian theory states that overall happiness for all parties or stakeholders involved in a given situation is the most important factor. Successful business is determined not in short, but in the long run, with sustained growth, customer satisfaction, and profit as the forefront. In terms of Wal-Mart’s long term success, they are going to miss out on plenty of profit in the coming years, and as mentioned before, leave themselves in a sticky situation when it comes to stockholders. This means that Wal-Mart is going to walk away from this situation unhappy. Also, the citizens who live locally to the building sites and their city officials were harmed by Wal-Mart’s actions. The people who live around the building sites, like the ancient ruins and pyramids, have had some of their ethnic pride destroyed. Many protested against the relics of their ancestors being built upon, but none were listened to. While the city officials were the ones that took the bribes and put them in this position, it is important to remember that many of these officials are quite poor and took the bribes in a state of financial weakness. This means that Wal-Mart hurt them as well in their actions. As we can see, no stakeholders in this entire scandal have walked away happy. Each one was harmed by the bribes in one way or another, and thus a Utilitarian would show no support for their actions.
     In short, Kantianism holds that we should do what is right, because it is right. Respecting others right to make rational decisions and their individual needs and differences is very important in this theory. Wal-Mart acted against these values in every way. They took advantage of less wealthy officials and in fact enticed them to make an irrational decision. They had no respect for the hundreds of thousands of Mexican citizens that they caused problems for, and did not see their cultural artifacts as important. There was no motivation to good, only to make a profit in whatever way possible. This was their maxim for action. They did not act in a way that was universal to business, since it was against the law, and this corresponds with their motivation, because they simply wanted to make a profit in any way possible. This action is not permissible at all under this categorical imperative of the Kantian Theory. With this being said, it is easy to see that the Kantian theory would not support Wal-Mart’s actions in a single way.

 Finally, the virtue theory is broken into four principals of virtue: Courage, Honesty, Temperance, and Justice. Wal-Mart was unethical according to all the virtues. They had no willingness to stand up for what is right and decide against the bribes. They were not honest to the people of Mexico who would also be their customers, because they ran a bribery operation behind all their backs to try and gain the most possible profit at their expense. Also, trying to cover up the bribes like they are today is not honest. Wal-Mart had absolutely no self control or temperance in this situation. They put their companies name at stake and were extremely greedy. They did not need to break the law to thrive as a business and yet they could not stop themselves from trying to gain an illegal edge on their competition. This also means that they did not use fair practice and took the easy way out instead of being patient and having to work a little harder. A virtue theorist would completely disagree with Wal-Mart's actions.

These facts and analyses are based on an original research paper by Matt O'Connor, “Wal-Mart: Foreign Expansion the Wrong Way” (2013).


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