Thursday, February 13, 2014

Walmart: Foreign Corruption (2014)

Wal-Mart store entrance

Wal-Mart, one of the largest businesses in the world, has been caught up in a scandal in which Wal-Mart has reportedly bribed the market "$24 million" to "win market dominance "(Margo Beller). An investigation was initiated to see whether or not Wal-Mart had "violated the U.S. Foreign Corrupt Practices Act" (Beller). A senior analyst Patrick McKeever, who has covered Wal-Mart for 10 years called it "the most damaging story that I have ever seen" (Beller). Because of this scandal, shares for Wal-Mart have lowered out of fear of the company. Recently, a "Delaware judge ordered attorneys for Wal-Mart to turn over more information to shareholders seeking records on how the company responded to allegations of bribery involving operations in Mexico" (Randall Chase). Clearly, the stakeholders in Wal-Mart are in fear of what this story could do to this global business. There have also been reports that Wal-Mart participated in a "standard operating procedure in Mexico", this according to a former government official in Mexico (Beller). Going deeper into what Wal-Mart exactly did, Wal-Mart "allegedly paid $52,000 to change a zoning map so it could open a store near the ancient pyramid in Teotihuacan" (Huffington Post). There are also reports that the CEO, Mike Duke, knew of the bribery since 2005 which contradicts Wal-Mart's public statements. (Huffington Post). What all this means is Wal-Mart is slowly losing its perfect reputation in the legal ways of conducting business. Though the initial bribery may have started in 2005, the case has extended to present time and is only getting worse for Wal-Mart and its stakeholders.
Things are not looking good for Wal-Mart especially if they are found violating the U.S. Foreign Corrupt Practices Act. When we look at this scandal from an ethical point of view, I believe everyone can agree that something about this case is unethical, whether its bribery, lying to its stakeholder, or paying a country off to extend zones to build next to ancient pyramids. The first ethical view is Utilitarianism. Utilitarianism is the modern day approach to ethics and is defined as "an ethical tradition that directs to make decisions based on the overall consequences of our acts" (24 DesJardins). Also Utilitarianism is identified with the policy of "maximizing the overall good" or "the greatest good for the greatest number" (27). Thus, the decisions that accomplish this are good, while those that do not accomplish this are bad. When we look at what Wal-Mart did with the bribery, is it possible that Wal-Mart did the best thing for the greater good? The answer is no because Wal-Mart shares have been decreasing because of the fear the stakeholders now have because of this scandal. If this scandal blows up, the stakeholders and the company itself, will lose millions of dollars. To rectify this situation, Wal-Mart should have built elsewhere in Mexico, I'm sure there is room other than next to an ancient pyramid. Also Wal-Mart should have just allowed their business to grow slowly overtime instead of bribing the market to become the dominant business. We'll take a look now at another ethical point of view, one known as Kantianism.

The Kantian Theory states that "our fundamental ethical duty is to treat people with respect, to treat them as equally capable of living an autonomous life. But since each person has this same fundamental duty towards each others, each of us can be said to have the rights to be treated with respect, the right to be treated as an end and never as a means only" (DesJardins, 38). Viewing the Wal-Mart from the point of view using the formula for humanity which states that people should be treated as ends and not as means (38). I believe Wal-Mart did follow this ethical approach for the most part. Yes in the long run, the stakeholders are being affected because the shares are going down out of fear. However, Wal-Mart reportedly bribed the market in order to maintain market dominance in order to maintain their shares and their shareholders. In this scandal, there is no evidence in which Wal-Mart treated anyone as a mean and not as in end. Wal-Mart just wanted to make sure their business prospered in Mexico which I'm sure it would have anyway without the bribery. If someone was to say that Wal-Mart did not confirm this ethical theory, what Wal-Mart should have done is not build near ancient landmarks because people look at those for beauty and do not want to see a large Wal-Mart blocking their landmark. Other than that, Wal-Mart treats its employees correctly and in fact, employees many Mexican citizens creating jobs there which is always a bonus.

Doug McMillon, CEO of Wal-Mart
The next ethical point of view is individualism which is Milton Friedman's ethical views. Milton Friedman is considered one of the most important economists of the twentieth century because of this theory and his other work. Friedman states "The only goal of business is to profit, so the only obligation that the business person has is to maximize profit for the owner or the stockholders" Wal-Mart bribed the market to make sure they maintained market dominance in order to keep the shares and the business healthy. When Wal-Mart initially bribed the market, Wal-Mart was following the ethical view according to Milton Friedman, however, when the scandal was released to the world, Wal-Mart took a major hit and is still feeling the repercussions from this because the case is still going on today. The CEO has been caught lying in his statements, and more emails have been released to the public stating that executives in the business including the CEO knew of this bribery since 2005. The public opinion of Wal-Mart before this scandal was what everyone knew of Wal-Mart. They had low prices, and always reliable on these low prices. From a business point of view, the business was clean in the way they do their business. Now Wal-Mart has been found in this scandal has taken a major reputation hit. If Wal-Mart went without the bribery, the store still would have done well in Mexico because everyone will always fall back to the lower prices. Wal-Mart would have still been following the laws of business just like they always have been and wouldn't have to deal with the negative attention.

Virtue Theory
Lastly, we'll take a look at the virtue theory. The "Virtue Theory is Based on Aristotle's Ethics" (Salazar). The four primary virtues in the theory are "courage, honesty, temperance, and justice" (Salazar). Courage is defined in this theory by "risk-taking and willingness to take a stand for the right ideas and actions" (Salazar). Wal-Mart knew what they were doing when the bribes were sent out. They were willing to be risk takers and bribe the market to make sure they were dominant in the market, however it's not the correct risk-taking a business should even be taking. Wal-Mart did not follow the first virtue clearly since these were not the right ideas or actions to be taken to maintain market dominance. The next virtue, honesty, is defined as "in agreements, hiring and treatment of employees, customers and other companies" (Salazar). No, Wal-Mart is not honest with their actions. CEO and executives have been caught lying. They are not fair to other companies because they are bribing to make sure they are atop all the other businesses on the market. Simply, Wal-Mart is not being honest with their current actions in the business world. Temperance, the next virtue is defined as "reasonable expectations and desires". (Salazar). Finally one virtue Wal-Mart can honestly (no pun intended) say they followed correctly. The whole point of this bribery was to make sure they prospered in Mexico which is Wal-Mart's desires. The last virtue, justice, can be defined as " hard work, quality products, good ideas, fair practices" (Salazar). Wal-Mart has hard work, mostly quality products for the price you pay, great ideas, but we reached the end because fair practices are not followed by Wal-Mart. Before the scandal, Wal-Mart could say yes to this, however they have ruined their reputation with this and no longer can say they follow fair practices of the business views.


Beller, Margo D. "Wal-Mart in Mexico: Bribe or Operating Procedure?" N.p., n.d. Web. 13 Feb. 2014.

Chase, Randall, and Caroline Fairchild. "Walmart Criticized For Providing 'Persnickety And Narrow' Information In Mexico Bribery Case." The Huffington Post., 20 May 2013. Web. 13 Feb. 2014.

Fairchild, Caroline. "Walmart Criticized For Providing 'Persnickety And Narrow' Information In Mexico Bribery Case." The Huffington Post., 20 May 2013. Web. 13 Feb. 2014.

DesJardins, Joseph R. "Ethical Theory and Business." An Introduction to Business Ethics. 5th ed. New York, NY: McGraw-Hill/Irwin, 2014. 38-41. Print.

Salazar, Heather. “Kantian Business Ethics,” in Business in Ethical Focus, ed. Fritz Allhoff and Anand J. Vaidya (Broadview Press, 2008).

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