This paper analyzes the pattern of ethical challenges faced by Walmart, the world's largest retail chain. Drawing on financial disclosures, media reports, and watchdog organization claims, the paper explores allegations related to wage-and-hour violations, gender discrimination, inadequate health benefits, environmental infractions, and anti-union conduct. It identifies Walmart's key stakeholders, reviews the company's own recognition of its ethical shortcomings, surveys alternative courses of action available to leadership, and concludes with a normative judgment about which practices are most clearly indefensible — particularly the effective transfer of employee healthcare costs to taxpayers.
The paper uses stakeholder analysis as its primary analytical framework, moving systematically from problem identification to stakeholder mapping to decision-making. This structure mirrors standard business ethics methodology and shows how ethical problems can be organized and evaluated using a recognized managerial lens.
The paper opens with a factual overview of Walmart's scale and the watchdog ecosystem surrounding it, then catalogs specific ethical allegations with supporting data. It transitions into Walmart's internal recognition of these issues (including financial disclosures), identifies the full range of affected stakeholders, surveys available corrective options, and closes with the author's own reasoned judgment. The progression from description to analysis to prescription is clear and well-paced for an undergraduate business ethics essay.
Founded in 1962, Walmart has grown to sales of $405 billion and more than 2.1 million associates worldwide, making it the world's largest retail chain. That explosive growth has also made Walmart an exceptional target for scrutiny. Few companies can claim their own dedicated watchdog organizations whose sole purpose is monitoring performance across a wide range of business ethics issues. According to the website of Walmart Watch, it exists solely to "hold Walmart fully accountable for its impact on communities, the American workforce, the retail sector, the environment and the nation's economy" (Walmart Watch, 2011). Launched in 2005, Walmart Watch's stated purpose is challenging Walmart to "more fully embrace its corporate responsibilities."
Walmart's business ethics have drawn fire in a number of areas. For Walmart employees, the company's approach to benefits, healthcare, wages, and workplace conditions has received heavy criticism. From class action lawsuits alleging gender bias to charges that taxpayers subsidize Walmart's healthcare coverage, concerns about the company's ethical conduct are widespread. Walmart's business practices have also been challenged with respect to community impact, corporate responsibility, and environmental efforts. A growing number of communities have blocked Walmart store openings, citing concerns over predatory pricing, traffic congestion, and environmental problems. Critics argue that Walmart's size allows it to export low wages, pollution, substandard benefits, and various labor abuses to countries around the globe.
Fortune magazine cited a study finding that Walmart's average spending on employee health benefits was 30% less than the average spending of its retail peers. Walmart had also paid millions of dollars to state and federal regulators for violating air and water pollution laws. The same article reported that the nation's largest employer paid so little that a family of four could not live on the then $9.68-per-hour wage of an average Walmart associate — annual earnings of $17,600, which fell below the poverty line. A class-action suit filed in 2001 on behalf of 1.6 million former and current female employees alleged that Walmart systematically favored men over women in pay and promotion. Following charges that Walmart steamrolled local businesses and drove down wages at other stores, communities from Inglewood, CA to Queens, NY blocked new store openings (Gunther, 2006).
Other organizations continued to make similar charges in 2010. Wake Up Walmart, a project run by the United Food and Commercial Workers International Union, claimed that Walmart's average wage was six percent below the federal poverty level for a family of four. The organization also charged that Walmart's move into urban areas, in addition to destroying small businesses, often depressed nearby wages — where similar jobs would otherwise pay as much as 18% more than Walmart. Wake Up Walmart further claimed that the company pays $5,000 less per year to full-time female employees than to their male counterparts. They also repeated the charge that the company's health plan is so inadequate that it forces many employees to rely on publicly assisted healthcare at taxpayer expense. Walmart Watch accused the company of being fiercely anti-union, alleging labor law violations ranging from illegally firing workers who attempt to organize to unlawful surveillance, threats, and intimidation of associates who speak out.
It may be that Walmart's "everyday low prices" strategy is partly responsible for placing it on the wrong side of so many ethical challenges. Walmart as a company is known for living Sam Walton's vision of driving down prices in an effort to improve the quality of life for its customers. In Walton's own words: "If we work together, we'll lower the cost of living for everyone… we'll give the world an opportunity to see what it's like to save and have a better life" (What We Do, 2011). Walmart supporters point to the company's global record of sales growth and job creation as proof of good corporate citizenship. Still, questions about Walmart's commitment to ethical business practices remain.
Several of the business ethics challenges Walmart faces appear directly on its financial statements. The retailer's 2010 Annual Report (Walmart 2010 Financial Report, p. 34) lists ethical issues that carry the possibility of legal and financial consequences: wage-and-hour class actions, exempt status cases, gender discrimination cases, an EEOC lawsuit, and hazardous materials investigations.
While there is no admission of guilt, Walmart is legally obligated to disclose the possibility of being found liable for any or all of these allegations. The company provided some details in its financial report: it was charged with wage-and-hour violations including failure to provide rest breaks, meal periods, or other required benefits, and otherwise failing to pay employees correctly. Walmart was in the process of appealing a $188 million judgment awarded in Braun/Hummel v. Wal-Mart Stores, Inc.
In 2006, Fortune magazine reported on Walmart's efforts to address these ethical concerns. When Walmart announced an ambitious green initiative, many observers greeted the announcement with skepticism. A study by McKinsey & Co., leaked to the press by walmartwatch.com, revealed that up to 8% of shoppers had stopped shopping at Walmart because of its reputation. Then-CEO Lee Scott discussed the company's handling of its ethical challenges: "If we had known ten years ago what we know now, what would we have done differently that might have kept us out of some of these issues or would have enhanced our reputation? It seemed to me that ultimately many of the issues that had to do with the environment were going to wind up with people feeling like we had a greater responsibility than we were at the time accepting" (Gunther, 2006).
Even amid the ongoing publicity surrounding Walmart's missteps, the company recognized its responsibility to promote a philosophy of giving back. Walmart's website listed the following programs and initiatives (Walmart Web site, 2011):
Military support: One of the nation's largest private employers of veterans and those on active duty.
Hunger relief: Walmart committed $2 billion in cash and in-kind contributions to help end hunger in America.
Disaster relief: Contributions to Japan earthquake and tsunami relief, and Chile earthquake and tsunami relief.
Diversity and inclusion initiatives.
Sustainability best practices.
Awards and recognition from minority organizations, including the National Association for Female Executives (NAFE) and the United States Hispanic Chamber of Commerce.
Global Responsibility Reports and Global Sustainability Reports.
Supplier diversity and sustainability programs.
Walmart acknowledged its "vast number of stakeholders" in a 2004 announcement about its stakeholder engagement initiative. The company defined a stakeholder as "anyone who is directly impacted by any part of Wal-Mart's business, including customers, associates, suppliers, communities, governments, media, and non-government organizations." The program was intended to acknowledge the importance of developing relationships with stakeholders and, through dialogue, gain new perspectives, ideas, and approaches on social compliance and global environmental issues.
As part of the stakeholder engagement program, Walmart hired new associates for the team and partnered with Business for Social Responsibility (BSR) to develop a rigorous engagement plan of action (2004 Program Enhancements, 2004).
One of the more significant challenges for Walmart in managing its ethical issues is navigating the vast array of options available to reinvent itself as a more responsible retailer. Some alternatives are straightforward:
Gunther, M. (2006). The green machine. CNNMoney.com. Retrieved June 26, 2011, from http://money.cnn.com/magazines/fortune/fortune_archive/2006/08/07/8382593/index.htm
Walmart Watch. (2011). About. Retrieved June 26, 2011, from
Walmart Web site. (2011). Retrieved June 26, 2011, from
What we do. (2011). Walmart Corporate Web site. Retrieved June 26, 2011, from
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