Business ethics comparative report 1500 words – excel

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Do not remove this notice
Course of Study:
(3006IBA) Business Ethics and Corporate Governance
Title of work:
Business ethics; managing corporate citizenship and sustainability in the age
of globalization, 3rd ed. (2010)
Introducing business ethics pp. 39–43
Author/editor of work:
Crane, Andrew; Matten, Dirk.
Author of section:
Andrew Crane, Dirk Matten
Name of Publisher:
Oxford University Press
and provides a good platform for thinking about why the idea that business ethics is an
oxymoron is so embedded in organizational life. Read the cartoons, have a laugh, and
then consider what needs to change in organizations in order to get people to take
ethics more seriously.
Case 1 :�-
McEthics in Europe and Asia: should McDonald’s extend its response to ethical
criticism in Europe?
This case examines ethical criticisms of the US fast food giant McDonald’s, and
explores demands for the company to extend their vigorous efforts to restore their
dented credibility in Europe to markets in Asia. The case focuses on the problems of
obesity and unhealthy eating that have confronted the company, which are presented
in the context of the broader critique of the chain. These issues cover many of the
key concepts around ethics, globalization, and sustainability that we have discussed
in Chapter 1.
McDonald’s is truly a multinational corporation. By 2009, the firm was operating some
31,000 restaurants in 118 countries, serving almost 60 million customers a day. The market
leader in its industry, and one of the most vigorous exponents of a global business
approach, McDonald’s has pioneered an innovative business model that has since been
widely imitated in the fast food industry and beyond.
However, there are many who are not so positive about the corporation’s approach
and criticisms of McDonald’s have been a common feature of the past three decades.
Nowhere has this been more evident than in Europe, where McDonald’s became the bete
noir of environmentalists and social justice campaigners in the 1980s and 1990s. Not
only did the cornpany gain the distinction of being the subject of England’s longest ever
trial-the by now legendary McLibel case-but anti-globalization campaigners in France
and elsewhere famously targeted the company with store occupations and assaults. More
recently, nutritionists and healthy eating campaigners roundly criticized the company for
its standard fare of high calorie burgers and fries that many saw as a major cause of spiralling
obesity rates, especially among young people. With a loss of market share to apparently
healthier offerings, and governments pushing for increasing regulation of fast food
advertising to children, McDonald’s reached a crisis that saw it attempt an ethical makeover
in the mid-2000s. In came healthy options, such as fresh salads and fruit, as well as
sports campaigns for young people, and enhanced nutritional labelling. Meanwhile, with
increasing affluence in Asia leading to a wave of diet-related problems similar to those in
Europe-such as escalating rates of obesity and diabetes in children and young adultssome
started to question whether the new directions McDonald’s was starting to take in
Europe shouldn’t be replicated in India, China, and other developing countries.
Big Mac under attack
When the epic McLibel trial came to an end in 1997, after more than three years of hearings,
court proceedings, and deliberation, the McDonald’s corporation must have thought
for links to
useful sources
of further
that things couldn’t have got any worse. Although the company was partly vindicated
by the judge’s verdict concerning the veracity of some of the claims made by an obscure
London activist group in the late 1980s, the two unemployed campaigners that the huge
company had spent millions of dollars taking to court were ruled to have proven several
of their claims. These included accusations that the company ‘exploits children’ with its
advertising; was ‘culpably responsible’ for cruelty to animals; ‘strongly antipathetic’ to
unions; paid its workers low wages; falsely advertised its food as nutritious; and risked the
health of its most regular, long-term customers-hardly a positive message to be sending
to its millions of customers and critics across the world. The trial attracted massive international
publicity, and even sparked the publication of an acclaimed book, a TV programme,
a documentary film, and most damaging of all, the McSpotlight website, which immediately
made a wealth of information critical of McDonald’s, much of it used in the trial,
freely available to an international audience.
More trouble was soon to come for the company from across the channel, when Jose
Bove and his radical farmers’ union, the Confederation Paysanne, made international
headlines for his campaign to defend small, local producers and resist the march of
the American multinational in France. McDonald’s continued to meet resistance within
France and other parts of the world throughout the 2000s, due to an upsurge in antiAmerican
feeling following the invasion and occupation of Iraq. However, probably the
biggest ethical challenge faced by McDonald’s in Europe and other developed countries
concerned issues of health and nutrition. With critics claiming that a diet of fast food had
been a major contributor to escalating rates of obesity, McDonald’s, as the world’s leading
fast food company, inevitably found itself first in the firing line. Among the arguments
made by its critics were that the company had failed to provide a balanced menu, that it
provided insufficient nutritional information and guidance, and that it actively encouraged
consumers (especially children) to make unhealthy choices, for example by promoting
‘supersize’ portions.
The hauling over the coals of the company’s nutritional record continued with the
box office success of the film Supersize Me across much of Europe and the US in the mid-
2000s. In the movie, the filmmaker Morgan Spurlock experiments with eating nothing
but McDonald’s for a month and records the subsequent effects on his health. Whilst the
company was aggressive in its response to the film in the US, its European response was
considerably more accommodating, suggesting on a website specifically launched to provide
‘a balanced debate’ on the nutrition issues raised by Spurlock that ‘What may surprise
you is how much of the film we agree with’.
Meanwhile, European governments also started to tackle the fast food industry in efforts
to address health and nutrition issues. The UK government, for example, initiated a Commons
Health Committee inquiry into obesity that saw executives from McDonald’s and
other food companies giving evidence. In France, meanwhile, the government introduced
a tax on all food and drink advertising not bearing a health message.
Big Mac fights back
In the face of such sustained criticism, McDonald’s did not stand idly by, especially once
profits looked to be at risk. The chain launched a substantial turnaround strategy in 2003
where, to many people’s surprise, the firm dropped its supersizing options, and put a range
of new healthy options on the menu, including salads and grilled chicken flatbreads,
porridge for breakfast, and even the opportunity for concerned parents to replace fries
with carrot sticks and fruit in the ubiquitous children’s ‘happy meals’. A huge advertising
campaign emphasizing the firm’s fresh and healthy new approach accompanied the menu
changes, with the slogan ‘McDonald’s. But not as you know it’ splashed across close-up
pictures of fruit and salad. The campaign was also backed by booklets detailing the new
menus and healthy options for children, which were sent to 17m households across the
UK and elsewhere. Extended in-store nutritional labelling also followed-a move once
vigorously resisted by the company.
Beyond its own stores, McDonald’s also launched exercise and sports initiatives especially
targeted at young people. Promoted under the theme of ‘balanced lifestyles’, the company
sought to show young people the two sides to a healthy lifestyle-a balanced diet and exercise.
Country websites in Europe began including sports sections in addition to the usual
information about stores and menus, and have now become a standard feature on national
websites. For instance, in France in 2009 the company was promoting its ‘McDo Sports Tour’,
which enables children to try out Olympic sports for free across the country, as well as the
‘McDo Kids Iron Tour’, a series of triathlons for the under twelves. And not to miss out on
Europe’s passion for its favourite sport, the firm also sponsored the UEFA EURO 2008 Football
Championship and introduced partnerships with football associations in the UK to train
community football coaches and make coaching more widely accessible to young people.
Initially, such developments were viewed with considerable scepticism, especially when
it was revealed that one of the new salads, the Chicken Caesar salad, had more fat and calories
than the much maligned hamburger. However, to this and many other criticisms the
company was quick to respond (in the case of the Chicken Caesar salad by introducing a
lower-fat dressing). Over time it has become clear that the shifts under way at McDonald’s
are part of a long-term strategic realignment towards changing societal values and expectations.
This was further emphasized by 2007 commitments to only serve lOOo/o Rainforest
Alliance-certified sustainably grown coffee in its UK restaurants, as well as switching its
delivery trucks to biodiesel made from its own reprocessed used cooking oil.
In most respects, McDonald’s strategy appears to have been a success. Even though evidence
suggests that the vast majority of McDonald’s customers still order a burger, fries, and
cola, it clearly feels more acceptable to eat at McDonald’s again in Europe because the menu
is healthier, and families especially have greater opportunity now to provide their children
with a more balanced meal under the golden arches. Even the firm’s fiercest critics seemed
to have lost their momentum, with the anti-McDonald’s site McSpotlight apparently abandoned
in 2005. Notably, the strategy seems to have contributed to a turnaround in the firm’s
faltering prospects. From a slump in the early to mid-2000s, sales rebounded following the
menu relaunch-and even in the downturn of the late 2000s, the company was able to
maintain steady growth in profits. Although its ethical commitments had led to some cost
increases and a diversion from its standardized model, the firm’s commitment to good value
continued to attract price-conscious consumers. Remarkably, by 2009 Europe was the firm’s
highest growth region, driven in part by considerable popularity in food-loving France,
where according to The Times, the chain had become the country’s ‘worst-kept dirty secret’.
Big Mac goes East
However, despite the apparent success of the McDonald’s turnaround in Europe, many
of the same threats to its reputation have returned to haunt the company in Asia. With
increasing prosperity in emerging economies such as India and China, the demand for
eating out and for a whole range of convenience foods has expanded substantially in
recent years. In both India and China, the market for eating out now exceeds $120bn
a year, much of it in fast-food restaurants, with further growth widely predicted across
Asia. Capitalizing on this trend, McDonald’s announced in 2009 plans to open a further
500 restaurants in China over the next three years, including more drive-in formats and
24-hour delivery. But as eating habits are changing, so too are health problems. Rates of
obesity in China have doubled in the last ten years, and even though only a few decades
ago famine was a more common threat, the country is said now to be facing an oncoming
obesity epidemic. Other diet and exercise-related problems such as diabetes and heart
disease are also on the rise.
To date, activists and regulators have not challenged fast food companies such as McDonald’s
to the same extent that they were attacked in Europe, but growing pressure is clearly
evident. A 2008 report by the group Consumers International claimed that global brands
take advantage of lax laws in Asian countries to promote calorie-dense and nutrition-poor
foods to children. A follow-up by Ethical Corporation magazine revealed that, although
widespread in Europe, nutritional information was absent on McDonald’s websites for the
Philippines, Hong Kong, and China. Moreover, practices now halted in Europe appeared
to be much in use in Asia-such as dedicated online kids’ zones where the company has
been accused of targeting young children with unhealthy food.
The company this time has been less slow to respond to its critics-a healthy option
corn soup has emerged on the menu in China, a vegetarian burger features in India, and
the games, competitions, and special offers featured on the company’s Asian kids’ zones
have largely been scaled back. But the overall emphasis on healthy eating, exercise, and a
balanced lifestyle has yet to be actively promoted to anything like the same extent as in
Europe. Whether this means that the company is planning a different strategy in Asia or
is simply rolling out a global ethical response over time, remains to be seen.
I Questions
1 Set out the main criticisms that have been levelled at McDonald’s in Europe. To what
extent are these criticisms likely to be replicated in Asia? What differences can be
2 Describe and evaluate the tactics used by McDonald’s in responding to their critics in
Europe? Will these work to the same degree in Asia?
3 Should McDonald’s offer healthy alternatives to the same extent in all the countries in
which it operates, or just those where it has been criticized in the past, or is it expecting
further regulation? What if customers overseas do not want healthy options?
4 How could McDonald’s seek to avoid further criticism in the future? Can the company
realistically present itself as an ethical corporation?
5 How sustainable is the fast food industry from the point of view of the triple bottom line?
I Sources
Chhabara, R. 2008. Brand marketing-catering for local tastes. Ethical Corporation, 13 November:
http:/ / content.asp ?ContentlD=6200.
Choueka, E. 2005. Big Mac fights back. BBC News, 8 July: http:/ /
Frean, A. 2009. McDonald’s sales driven by French hunger. The Times, 10 August: http://www.
Schiller, B. 2006. Consumer health: food fears. Ethical Corporation, 19 June: http://www.
The Economist. 2004. Big Mac’s makeover-McDonald’s turned around. The Economist, 16
Yan, F. and Li, H. 2009. McDonald’s eye 500 stores in China in 3 years: exec. Reuters, 18 February:
http:/ /
· .¢’.. $ ..
For example, Kelemen and Peltonen (2001) analyse the different usage of the concepts of ‘ethics’
and ‘morality’ in the writings of Michel Foucault and Zygmunt Bauman, two leading authors in the
area of postmodern business ethics. They reveal strikingly different distinctions that in fact virtually
provide a direct contradiction to one another.
2 GoodCorporation/GfK Fairness Index Survey: http:/ /
3 KPMG, Fraud and misconduct in Hong Kong: 2006 findings,
4 There is a wide range of literature addressing globalization and its meaning. A good introduction is
provided by Scherer and Palazzo (2008a).
5 See Anon. 2006. Playboy halts operations in Indonesia after protests. Hindustan Times, 21 April: 15.
6 For an early articulation of this relationship, see Meadows et al. (1974). Whilst many of their initial
predictions of growth limits proved to be overly pessimistic, the basic principle of carrying capacity
has become largely accepted.
Copyright Regulations 1969
This material has been reproduced and communicated to you by or on behalf of
Griffith University pursuant to Part VB of the Copyright Act 1968 (the Act).
The material in this communication may be subject to copyright under the Act. Any further
reproduction or communication of this material by you may be the subject of copyright
protection under the Act.
Do not remove this notice
Course of Study:
(3006IBA) Business Ethics and Corporate Governance
Title of work:
Business & society; ethics, sustainability, and stakeholder management, 8th Ed.
Case 1 Walmart the main street merchant of doom pp. 599–607
Author/editor of work:
Carroll, Archie B.; Buchholtz, Ann K.
Author of section:
Archie B. Carroll, Ann K. Buchholtz
Name of Publisher:
South-Western, Cengage Learning
Case 1 Walmart: The Main Street Merchant of Doom 599
Walmart: The Main Street
Merchant of Doom*
The small town was in need of a hired gun. The people
were tired of dealing with the local price-fixing merchant
scum who ran the town like a company store.
This low-life bunch of merchants held the people of
the town in a death grip and were perceived by the
townspeople to overcharge on every purchase. In
spite of what appeared to be a case of collusion, the
law was powerless to do anything. What competition
there was had been effectively eliminated.
Suddenly, coming over the rise and wearing white,
their hired man came riding. The women and children
buzzed with excitement. The men were happy.
Although his methods of getting the job done turned
some people’s stomachs, the local watering hole buzzed
with tales of how this hired gun would change their
world for the better, how someday soon they would
have the benefits long afforded the big city. But, others
asked, at what price?
In his final days, the man appeared to be somewhat too
frail to handle the enormous job. Y et the courage and
self-confidence that he instilled in his associates radiated
a belief in low prices and good value for all to see.
As his associates rode into town, that radiance put to
rest the people’s fears that things had changed. Sam’s
spirit, the Walmart Way, had come to town.
Sam Walton, founder, owner, and mastermind of
Wal-Mart,1 now spelled Walmart in some advertisements,
passed away on April 5, 1992, leaving behind
his spirit to ride herd on the colossal Walmart organization.
To the consumer in the small community, his
store, W almart, was seen as a friend. On the flip side,
many a small-town merchant had been the victim of
Sam’s blazing merchandising tactics. So what is Walmart
to the communities it serves? Is Walmart the consumer’s
best friend, the purveyor of the free-enterprise
system, the “Mother of All Discount Stores,” or, conversely,
is it really “The Main Street Merchant of
• This case, originally prepared by William T. Rupp, University of Montevallo, was
revised and updated by Archie B. Carroll, University of Georgia, in 2010.
Samuel Moore Walton was born on March 29, 1918,
near Kingfisher, Kansas. He was a strong, lean boy who
learned to work hard in order to help the family. He
attended the University of Missouri starting in the fall
of 1936 and graduated with a degree in business
administration. During his time there, he was a member
of the Beta Theta Phi fraternity, was president of
the senior class, played various sports, and taught what
was believed to be the largest Sunday school class in
the world, numbering over 1,200 Missouri students.2
At age 22, Sam joined JCPenney. One of his first
tasks was to memorize and practice the “Penney
Idea.” Adopted in 1913, this credo exhorted the associate
to serve the public; not to demand all the profit the
traffic will bear; to pack the customer’s dollar full of
value, quality, and satisfaction; to continue to be
trained; to reward men and women in the organization
through participation in what the business produces;
and to test every policy, method, and act against the
question, “Does it square with what is right and just?”3
In 1962, at age 44, Sam Walton opened his first
W almart store in Rogers, Arkansas. He took all the
money and expertise he could gather and applied the
JCPenney idea to Middle America. Sam first targeted
small, underserved rural towns with populations of no
more than 10,000 people. The people responded, and
Walmart soon developed a core of loyal customers who
loved the fast, friendly service coupled with consistently
low prices. Later, Sam expanded his company
into the large cities, often with numerous W almarts
spread throughout every part of the city.
By 1981, Walmart’s rapid growth was evident to all
and especially disturbing to Sears, JCPenney, Target,
and Kmart, because Walmart had become America’s
largest retailer. The most telling figures were those of
overhead expenses and sales per employee. The overhead
expenses of Sears and Kmart ran 29 and 23 percent
of sales, respectively, whereas Walmart’s overhead
expenses ran 16 percent of sales. At this time, the average
Sears employee generated $85,000 in sales per year,
600 Case 1 Walmart: The Main Street Merchant of Doom
whereas the average W almart employee generated
By 2001, Walmart Stores, Inc., had become the
world’s largest retailer with $191 billion in sales. The
company employed one million associates worldwide
through nearly 3,500 facilities in the United States
and more than 1,000 stores throughout nine other
countries. Walmart claimed that more than 100 million
customers per week visited W almart stores. The
company had four major retail divisions-Walmart
Supercenters, Discount Stores, Neighborhood Markets,
and Sam’s Club warehouses. As it entered the 2000s,
Walmart had been named “Retailer of the Century” by
Discount Store News, made Fortune magazine’s lists of
the “Most Admired Companies in America” and the
“100 Best Companies to Work For,” and was ranked
on Financial Times’s “Most Respected in the World”
list.5 By 2010, Walmart’s sales had grown to $408
Sam promoted the associate-the hourly employee-to
a new level of participation within the organization. He
offered profit sharing, incentive bonuses, and stock
options in an effort to have his W almart associates
share in the wealth. Sam, as the head cheerleader,
saw his job as the chief proponent of the “Walmart
Way.” The Walmart Way reflected Sam’s idea of the
essential Walmart culture that was needed for success.
Sam felt that when a customer entered Walmart in any
part of the country, he or she should feel at home.
Examples of the culture included “exceeding customer
expectations” and “helping people make a difference.”
He was a proponent of the “Ten-Foot Rule,” which
meant that if a customer came within ten feet of an
associate, the associate would look the customer in
the eye, greet him or her, and ask if the customer
needed help?
As he was growing the business, Sam, the courageous,
borrowed and borrowed, sometimes just to pay
other creditors. Arkansas banks that at one time had
turned him down later competed with banks that Sam
himself owned. Sam, the CEO, hired the best managers
he could find. He let them talk him into buying an
extensive computer network system. This network corporate
satellite system enabled Sam to use roundthe-dock
inventory control and credit card sales control
and provided him with information on total sales
of which products where and when. This computer
control center was about the size of a football field
and used a Hughes satellite for uplinking and downlinking
to each store.
In 1992, Sam, the mortal, died of incurable bone cancer.
At age 73, Sam Walton said that if he had to do it
over again, he would not change a thing. He said, “This
is still the most important thing I do, going around to
the stores, and I’d rather do it than anything I know of.
I know I’m helping our folks when I get out to the
stores. I learn a lot about who’s doing good things in
the office, and I also see things that need fixing, and I
help fix them. Any good management person in retail
has got to do what I do in order to keep his finger on
what’s going on. Y ou’ve got to have the right chemistry
and the right attitude on the part of the folks who deal
with the customers.”8
Sam, the innovator, was responsible for two early
social responsibility innovations: Walmart’s “Buy
American” plan and its “Environmental Awareness”
Walmart’s “Buy American” plan was a result of a 1984
telephone conversation with then-Arkansas Governor
Bill Clinton. The program was a response to Sam’s own
enlightenment: He learned that Walmart was adding to
the loss of American jobs by buying cheaper foreign
goods. Everything Sam stood for came out of his heartfelt
obligation to supply the customer with low-cost
quality goods, but running counter to this inner driving
force was the realization that he was responsible for
the loss of American jobs. This contradiction and
dilemma drove him to find a solution. His conversation
with Governor Clinton inspired Sam to do something
about the problem.
The goal of the Buy American plan was to support
American-based manufacturers by doing business with
them so that they would not go out of business. His
primary method for doing this was to give the manufacturers
large orders or contracts so that they could
stay in business.9
Sam wanted other manufacturers to join him in the
Buy American plan. He wrote to 3,000 American manufacturers
and solicited them to sell to W almart items
that Walmart was currently buying from overseas suppliers.
Walmart’s competitors did not meet the challenge
to “Buy American.” Kmart stated that it would
rather buy American-made goods but that it was
looking for the best deal for the customer. Target said
it was for free trade and that as the customer’s representative
it just wanted the best deal for the customer.
Wall Street analysts responded positively, saying that
Walmart’s plan was possibly the beginning of a change
of direction for American retailers.10
In February 1986, about 12 months after the Buy
American plan had begun, Sam held a press conference.
He showed off all the merchandise Walmart
was now buying domestically. He estimated that
Walmart’s Buy American plan had restored 4,538
jobs to the American economy and its people.11 The
Buy American plan was one of W almart’ s early efforts
at corporate social responsibility.
The Buy American plan morphed over the years
into the well-publicized “Made in the USA” campaign
in which W almart called customers’ attention to these
local products with special labels. Ironically, at some
point in time, Walmart eventually abandoned this program
and became one of the largest purchasers of products
made overseas. In fact, the company in time
became the country’s largest purchaser of Chinese
goods in any industry. Some say that by taking its
orders abroad, Walmart forced many U.S. manufacturers
out of business.12
As awareness of the environment was on the rise, Sam
looked for a way to involve Walmart in the environmental
movement. In August 1989, an ad in The Wall
Street Journal proclaimed Walmart’s “commitment to
our land, air and water.” Sam envisioned Walmart as a
leader among American companies in the struggle to
clean up the environment. John Lowne, corporate vice
president and division manager for Reynolds Metals
Company, stated, “Walmart’s move will indeed set a
precedent for the entire retail industry. I’m surprised
it has taken other retailers this long to follow suit.”13
Walmart wanted to use its tremendous buying
power to aid in the implementation of the campaign.
W almart sent a booklet to manufacturers stating the
At Wal-Mart we’re committed to help improve our
environment. Our customers are concerned about
the quality of our land, air and water, and want
the opportunity to do something positive. We believe
it is our responsibility to step up to their challenge. 14
Case 1 Walmart: The Main Street Merchant of Doom 601
In the stores, shelf tags made from 100 percent
recycled paper informed customers as to the environmental
friendliness of the highlighted product. As a
result of these shelf tags and Walmart’s advertising,
customer awareness had increased, and some environmentally
safe product manufacturers were reaping the
rewards of increased Walmart orders. Linda Downs,
administrative manager of Duraflame, California, said
that Duraflame logs had been proven to burn cleaner
than wood and that Walmart’s campaign had helped
Duraflame to deliver this message. She went on to say,
“W almart has helped drive home the message we have
been trying to promote for years. They have really
given us great publicity.”15
In the Wal-Mart Associates Handbook, new associates
were indoctrinated with the “Walmart spirit.” The
section on the environment said:
As a responsible member of the community, W alMart’s
commitments go beyond simply selling merchandise.
With environmental concerns mounting
world-wide, Wal-Mart has taken action. Home
office and store associates are taking decisive steps
to help the environment by making community recycling
bins available on our facility parking lots.
Other action plans include “Adopt-a-Highway” and
“Adopt-a-Beach” programs, tree planting and community
clean up and beautification. By forming a
partnership with our associates, our manufacturers
and our customers, we’re convinced we can make
the world a better place to live.16’17
Not everyone was excited to see Sam and his mechanized
Walmart army arrive and succeed. Small merchants
across America shuddered when the winds of
the “Walmart Way” began to blow. Kennedy Smith
of the National Main Street Center in Washington,
DC, said, “The first thing towns usually do is panic.”
Once Walmart comes to town, Smith says, “Downtowns
will never again be the providers of basic consumer
goods and services they once were.”18
Some towns learned to “just say ‘no”‘ to Walmart’s
overtures. Steamboat Springs, Colorado, is one such
city. Colorado newspapers called it the “Shootout at
Steamboat Springs.” Walmart was denied permission
to build on a nine-acre parcel along U.S. Route 40.
Owners of upscale shops and condos were very
602 Case 1 Walmart: The Main Street Merchant of Doom
concerned with the image of their resort community,
and Walmart, with its low-cost reputation, just did not
fit. The shootout lasted for two years, and finally Walmart
filed a damage suit against the city. Countersuits
followed. A petition was circulated to hold a referendum
on the matter. This was the shot that made Walmart
blink and back down. Just before the vote, Don
Shinkle, corporate affairs vice president, said, “A vote
would not be good for Steamboat Springs, and it would
not be good for W almart. I truly believe W almart is a
kinder, gentler company, and, while we have the votes
to win, an election would only split the town more.”19
In Iowa City, Iowa (population more than 50,000),
Walmart was planning an 87,000-square-foot store on
the outskirts of the town. A group of citizens gathered
enough signatures during a petition drive to put a referendum
on the ballot to block W almart and the city
council from building the new store (the city council
had approved the rezoning of the land Walmart
wanted). Jim Clayton, a downtown merchant, said,
“Walmart is a freight train going full steam in the
opposite direction of this town’s philosophy.” If businesses
wind up going down, Clayton says, “you lose
their involvement in the community, involvement I
promise you won’t get with some assistant manager
over at Walmart.”20 Walmart spokesperson Brenda
Lockhart commented that downtown merchants can
benefit from the increase in customer traffic provided
“they offer superior service and aren’t gouging their
1 Efforts to stop Walmart and the Iowa
City Council were not successful. W almart opened its
Iowa City store on November 5, 1991.
Meanwhile, in Pawhuska, Oklahoma, as a result of
Walmart’s entry in 1983 and other local factors, the
local “five-and-dime,” JCPenney, Western Auto, and
a whole block of other stores closed their doors. Four
years later, Dave Story, general manager of the local
Pawhuska Daily Journal Capital, wrote that Walmart
was a “billion-dollar parasite” and a “national retail
W almart managers have become very active in
Pawhuska and surrounding communities since that
time. A conversation with the editor of the Pawhuska
paper, Jody Smith, and her advertising editor, Suzy
Burns, revealed that Walmart sponsored the local
rodeo, gave gloves to the local coat drive, and was
involved with the local cerebral palsy and multiple sclerosis
fund-raisers. On the other hand, Fred Wright,
former owner of a TV and record store, said, “W almart
really craters a little town’s downtown.”23
Consider the small town of Kinder, Louisiana (population
2,608), in 1981. On December 31, 1990, the store
was closed. During the time Walmart operated in Kinder,
one-third of the downtown stores closed. The
downtown became three blocks of mostly run-down,
red-brick buildings. The closest place to buy shoes
or sewing thread was 30 miles away in Oakdale,
Louisiana-at another Walmart. Moreover, Kinder
lost $5,500 in annual tax revenues, which represented
10 percent of the total revenues for the city.
The tactics Walmart employed during its ten years
in Kinder left a bad taste in the mouths of some small
retailers. Soon after Walmart’s arrival, a price war
broke out between W almart and the downtown retailers.
The retailers told The Atlanta JournalConstitution
in November 1990, “Walmart sent
employees, wearing name tags and smocks, into their
stores to scribble down prices and list merchandise.”
Lou Pearl, owner of Kinder Jewelry and Gifts, stated
that W almart associates came to her store and noted
the type of art supplies she was carrying. Shortly thereafter,
Walmart began carrying the same merchandise at
discount prices. Sales at Kinder Jewelry and Gifts
dropped drastically, and Pearl dropped the merchandise
line. Within several weeks, so did Walmart.24 Troy
Marcantel, a 29-year-old downtown clothing merchant,
said it best: “What really rankled me was that
they used people we have known all our lives. I still
don’t understand how our own people could do that
to us.”2
By the 1990s, there were dozens of organized groups
actively opposing Walmart’s expansion.26 Some of
these groups were and still are run by social activists
dating back to the 1960s and 1970s. Instead of protesting
the Vietnam War, nuclear proliferation, or the
destruction of the environment, they turned their
efforts to Walmart specifically and capitalism in general.
One of these activists, Paul Glover, who was an
antiwar organizer, defined W almart as the epitome of
capitalism, which he despises. For Glover and others,
Walmart stands for “everything they dislike about
American society-mindless consumerism, paved
landscapes, and homogenization of community
In Boulder, Colorado, Walmart tried to counter these
allegations by proposing a “green” store. Steven Lane,
Walmart’s real estate manager, said that a “green store”
would be built that would be environmentally friendly,
with a solar-powered sign out front and everything.
His efforts were trumped by Spencer Havlick, an organizer
of the first Earth Day in 1970, suggesting that the
entire store be powered by solar energy. Mr. Lane did
not respond.28
Protest organizers united against the spread of the
“W almart Way” differ from the downtown merchants
in that these protesters have no financial stake. Hence,
these activists are attacking on a higher plane, a philosophical
plane. The accusations ring with a tone of
argument that was made by other activists protesting
polluting industries (e.g., the coal, nuclear, and chemical
industries). These activists accuse Walmart of
“strip-mining” towns and communities of their culture
and values.
One possible root of this culture clash may be
attributed to the unique facets of the internal corporate
culture at Walmart’s headquarters. This is a place
where competition for the reputation as the “cheapest”
is practiced. An example is the competition among
employees in procuring the cheapest haircut, shoes,
or necktie. W almart is a place where playacting as a
backwoods “hick” has been an acceptable behavior
within the organization. Consequently, as a result of
the internal culture of Walmart and the external environment,
some analysts believe that a clash of priorities
was inevitable as Walmart moved into larger, more
urban settings.
Some of the greatest opposition to Walmart’s growth
came from the New England area. This area holds
great promise for Walmart because of the large population
and the many underserved towns. These towns
are typically underserved in three ways: in variety of
product choices, in value, and in convenience. The
opposition to Walmart entering these New England
markets includes some high-profile names, such as
Jerry Greenfield, cofounder of Ben & Jerry’s Homemade
ice cream, and Arthur Frommer, a well-known
travel writer.29 In addition to New England, other
areas, such as resort areas, opposed Walmarts because
they wanted to insulate their unique cultures from
Case 1 Walmart: The Main Street Merchant of Doom 603
what they considered to be the offensive consumerism
that is usually generated by Walmart’s presence.
AI Norman, a lobbyist and media consultant, turned
opposition to Walmart into a cottage industry. Norman
publishes a monthly newsletter called SprawlBusters
Alert. He has also developed a Web site
( that has vast information
for citizens who are fighting to prevent Walmart
or other “big box” stores from locating in their
cities or neighborhoods. Norman achieved national
attention in 1993, when he stopped Walmart from
locating in his hometown of Greenfield, Massachusetts.
Since then, he has appeared on 60 Minutes, which
called him “the guru of the anti-W almart movement,”
and has gained widespread media attention. Today
Norman continues to serve as a consultant and travels
throughout the United States, helping dozens of coalitions
fight Walmart. Norman has published two books:
Slam-Dunking Wal-Mart: How You Can Stop Superstore
Sprawl in Your Hometown and The Case Against
Wal-Mart. In his books, he lays out the arguments
against urban “sprawl.”
On the Sprawl-Busters Web page, consumers
around the country are given the opportunity to write
in the details of their fights with Walmart. Examples in
2009-2010 included conflicts in Tuscon, Arizona;
Monroeville, Pennsylvania; Ogden, Utah; and Galt,
California.30 In actuality, conflicts between Walmart
and cities are taking place every day all over the country
Sprawl-Busters is not alone in its focused criticism
of Walmart’s presence in communities. Another organization,
Wal-Mart Watch, has an active Web page
(http:/ /W a! that details what it
believes to be Walmart’s threat to America. Wal-Mart
Watch is a joint project of The Center for Community
& Corporate Ethics, a 501c3 organization devoted to
studying the impact of large corporations on society.31
For its part, Walmart has continued its aggressive
diversification and growth pattern. At a retail industry
convention, Lee Scott, Walmart’s then CEO, was asked
whether W almart was trying to take over the world.
Scott replied, “I don’t think so. All we want to do is
grow.” But as The Economist magazine has asked,
“How big can it grow?”32 In the fall of 2008, Lee
Scott announced his retirement and that beginning
604 Case I Walmart: The Main Street Merchant of Doom
FIGURE 1 Recent Statistics about Walmart
General Facts
• Walmart is the world’s largest retailer with
$405 billion in sales for the fiscal year ending
January 31, 2010.
• In the United States, Walmart Stores, Inc., operates
more than 4,300 facilities including Walmart
supercenters, discount stores, neighborhood
markets, and Sam’s Club warehouses.
• Internationally, Walmart operates more than
4,000 additional stores in 15 markets worldwide,
including Argentina, Brazil, Canada, Chile, China,
Costa Rica, El Salvador, Guatemala, Honduras,
India, Japan, Mexico, Nicaragua, the United
Kingdom, and the United States.
• Walmart employs more than 2.1 million associates
worldwide, including more than 1.4 million
in the United States. Walmart is not only one of
the largest private employers in the United
States, but also the largest in Mexico and one of
the largest in Canada as well.
• Walmart employs more than 257,000 AfricanAmerican
associates, more than 41,000 Asian
and 5,900 Pacific Islander associates, more than
171,000 Hispanic associates, more than 16,000
American Indian and Alaskan Native associates,
more than 869,000 women, and more than
430,000 mature associates who are 50 and older.
• In 2010, Fortune magazine’s ranking of the
world’s most admired companies ranked
Walmart Stores in the top ten of its 50 All Stars.
• Walmart strives to be a good neighbor and to
benefit the communities where it operates. In the
United States, the company and the Walmart
Foundation gave more than $378 million in cash
and in-kind gifts in the fiscal year ending 2009.
• Walmart makes the majority of its charitable
donations at the local level, where it can have the
greatest and most positive impact. Walmart
and its foundations gave $423 million globally in
fiscal year ending 2009.
• Walmart takes pride in being a part of every
community it serves.
Recent Accolades for Walmart*
• 40 Best Companies for Diversity-Black Enterprise
• 2010 Most Valuable Employers (MVE) for Military
• 2010 World Environment Center Gold Medal for
International Corporate Achievement in Sustainable
• 20 Best Companies for Multicultural WomenWorking
• Ranked #1 for Retail and #9 Overall as Fast
Company’s “Most Innovative Companies 2010”
• Donor of the Year by Feeding America, for
providing funds, vehicles, and more than
1 00-million pounds of food
• 2009 Waste Reduction Awards Program Winner-California
Integrated Waste Management
• President’s Trophy-American Trucking Association
• Ranked #3 out of 35 other retailers in the 03 2009
Covalence ethical reputation index
• Ranked #1 Consumer Staples Company-Carbon
Disclosure Project (COP) 2008 report (see page 8)
and scored 89 out of a possible 100
• Green Power Leadership Award for on-site generation
at our California and Texas facilitiesEnvironment
Protection Agency (EPA)
• Corporate Energy Conservation, Energy and
Environment Award-Aspen Institute
*Wai-Mart Stores, Awards and Recognitions, Accessed July 4, 2010.
Sources. Walmart Fact Sheets, Accessed June 10, 2010; “The World’s Most Admired Companies,” Fortune
(March 22, 2010). 121-126; “First,” Fortune (May 3, 2010). 27-28.
on February 1, 2009, Scott’s groomed successor for the
position, Mike Duke, would become the new CEO.
Duke took over a company that had grown significantly
under Scott. In Scott’s final years as CEO, he
had worked hard to improve the image of the company
and, in spite of ongoing criticisms of the retail
behemoth, had succeeded in making the company
more likable. According to The Wall Street Journal,
by 2009, Walmart’s image had moved from demon to
darling as a result of the strategies the company had
employed. 33 Figure 1 provides some revealing current
statistics about W almart.
In the summer of 2010, The Wall Street Journal
reported that there was a new form of opposition to
Walmart’s growth-rival chains that had secretly
funded opposition to Walmart’s entrance into communities.
By 2009, grocery sales had reached 51 percent of
Walmart’s total revenues.- What The Wall Street Journal
learned through investigative research was that in
Mundelein, Illinois, a town about 20 miles northwest of
Chicago with a population of about 35,000, a grocery
chain with about nine stores in the area had hired Saint
Consulting Group to secretly operate an anti-W almart
campaign. It was revealed that Saint had developed a
specialty in fighting proposed Walmarts in communities
and were using techniques it described as “black
Large supermarket chains such as Supervalue, Inc.,
Safeway, Inc., and Ahold NV retained Saint Consulting
to block Walmart’s entrance into communities, according
to pages of Saint’s documents and interviews with
employees that the newspaper was able to obtain. It
was reported that Saint had jokingly dubbed its staff
the “Walmart killers.” Supervalue’s goal in retaining
Saint in the Mundelein, Illinois, case was to block Walmart
from competing with its nine Jewel-Osco supermarkets
located within the area. City officials claimed
that the efforts stalled the development of a major
shopping center for three years and cost the community
millions in lost sales and sales taxes.35 It turns out
that other grocery chains have employed Saint to block
Walmarts in other states. Safeway hired Saint to thwart
Walmart superstores in more than 30 towns in California.
Earlier, in Pennsylvania, Saint had 53 projects
on its books, with most of them targeted toward stopping
W almarts. These were on behalf of Giant Food
Stores. According to Saint’s records for the year 2007,
it had lost one battle in Pennsylvania, defeated 13 projects,
and delayed the remaining ones for four months
to four years.36
The techniques used by Saint Consulting were usually
clandestine. In a typical anti-W almart project, a
Saint executive would drop into the town under an
assumed name and take charge of the local opposition
to the store. They would flood local politicians with
calls, using multiple phone lines to make it look like
they were coming from different people. They would
hire lawyers and traffic experts to derail the project or
stall it. They would flood neighborhoods with flyers
outlining the purported evils of a W almart entering
their area and the subsequent traffic and increased
Case 1 Walmart: The Main Street Merchant of Doom 605
police calls that would follow. They would hope that
the developer would back off, slow down, or drop the
project altogether. They operated in secret. They
deployed their strategies under assumed names and
never revealed their clients’ names because clients
didn’t want their names publicly known for fear it
would draw adverse publicity or lawsuits should they
be known. P. Michael Saint, founder of the consulting
group, was quoted by The Wall Street Journal as saying
that there was nothing illegal in what his company was
doing and that they were protected by the First
Amendment for using such secret processes to thwart
the competition.37
The New York Times has argued that Walmart has
become a nation unto itself. In fact, the newspaper stated
that if Walmart were an independent nation, it would be
China’s eighth-largest trading partner. In terms of its low
prices and impact, some economists say that the company
has single-handedly cut inflation by 1 percent in
some years as it has saved customers billions of dollars
annually.38 It is little wonder the newspaper calls it “The
Walmartization of America.”39 Because of its number
one ranking in the 2010 Fortune 500 listing, based on
size, the magazine referred to the company as “Planet
In addition to domestic growth, W almart continues its
aggressive growth internationally. Today, Walmart
International is a fast-growing part of Walmart’s overall
operations, with 4,1 12 stores and more than 680,000
associates in 14 countries outside the continental
United States. Today, at its 2010 annual meeting,
CEO Michael Duke made it clear that the company’s
future growth trajectory would be in distant lands.
In 2009, the company’s international sales exceeded
$100 billion, accounting for one-fourth of the company’s
$405 billion in revenue. Duke made it clear
that domestic growth would continue, but that the
chain was committed to being “truly global.” CEO
Duke also made it clear that W almart planned to
emphasize mobile shopping and that it was upgrading
its technology to make this happen.41
It was Walmart’s desire to grow globally that caused
the company to ramp up its efforts at lobbying in
Washington, DC. The precipitating event was
606 Case 1 Walmart: The Main Street Merchant of Doom
Walmart’s realization that U.S. negotiators had agreed
upon a 30-store limit on retailers operating in China
when it agreed to support China’s entry into the World
Trade Organization in the late 1990s. As a result of this
realization, the company decided it had to get into lobbying
even though it went against founder Sam Walton’s
policy of staying out of politics. Today, Walmart
has a large number of lobbyists on its payroll and a
number of other hired political consultants to help it.
The company’s political action committee grew to
become the biggest corporate donor to federal parties
and candidates, with more than $1 million in
In spite of its challenges, W almart has millions of supporters.
Over 100 million of W almart’ s customers visit
them weekly. Many consider the company to be
socially responsible in addition to being a provider of
thousands of jobs, low prices, and high value and service.
At the end of the first decade of the new millennium,
W almart has numerous corporate citizenship
initiatives at the local and national levels. Locally, Walmart
stores underwrite college scholarships for high
school seniors, raise funds for children’s hospitals
through the Children’s Miracle Network Telethon,
provide local fund-raisers money and workforce, and
educate the public about recycling and other environmental
topics with the help of “Green Coordinators.”43
In 1998, the Walton Family Charitable Support Foundation,
the charitable program created by Sam Walton’s
family, announced what at the time was the
largest ever single gift made to an American business
school: $50 million to the College of Business Administration
of the University of Arkansas. Helen R. Walton,
the “first lady” of Walmart, said that she and her
husband established the Foundation to support specific
charities, including the University.44
On its own Web site, W almart touts in detail its
achievements. It says the American public appreciates
Walmart’s community-involvement efforts and it has
received many recognitions. Below are some recent
• 2010 Most Valuable Employers (MVE) for Military
• Donor of the Y ear by Feeding America, for providing
funds, vehicles, and more than 100-million
pounds of food
• The National Urban League honored Walmart with
the 2009 Corporate Leadership A ward during the
organization’s 53rd annual Equal Opportunity Day
Awards Dinner.
• Diversity MBA magazine has ranked Walmart No. 2
on their 2009 “50 Out Front Companies for Diversity
Leadership: Best Places for Diverse Manger to
Work” list.
Today, Walmart reports on its corporate citizenship in
a highly visible way. Through its W almart Foundation,
it promotes its support of education, military, hunger
relief, disaster relief, and giving programs.
In spite of its achievements, article titles from recent
newspapers and magazines raise questions about Walmart’s
power and impact. Some of these include the
“The Wal-Martization of America”46
“Is Wal-Mart Too Powerful?”47
“Is Wal-Mart Good for America?”48
“One Nation under Wal-Mart”49
“Wal-Mart Gives Globalization a Bad Name”50
“Attack of the Wal-Martyrs”51
“Wal-Mart’s Midlife Crisis”52
“Planet Wal-Mart”53
Sam, the hired gun, learned his lessons well. The people
who bought at his stores were well satisfied. The
downtown merchants who survived learned to coexist
with the hired gun’s associates. But things would never
be the same. The changes had come rapidly. The social
fabric of the small town was changed forever. The
larger cities continued to fight, but had only limited
The hired gun rode on, searching for that next town
that needed to be liberated from the downtown pricefixing
bad guys. The search has become more complicated
as the opposition has risen, but the spirit of Sam
rides on.
Walmart’s size, power, and impact on local communities
is where criticism of the company began. This
included the threat of putting other merchants out of
business, the creation of urban sprawl, and the traffic
congestion created when the company decides to locate
in a particular area.
In the past few years, W almart has begun to face
other important issues. In addition to antisprawl activists
and merchants, W almart is now facing new opposition
from competitors, labor unions, other activist
organizations, and lawsuits. Its labor practices have
been increasingly questioned. The company has been
accused of paying wages so low that workers cannot
live off them, making employees work “off the clock”
without overtime pay, paying few or low benefits, and
taking advantage of illegal immigrants. In 2004, the
company was hit with a class-action lawsuit on gender
discrimination against women. This class action lawsuit
covers 1.6 million current and former employees,
making it the largest private civil rights case in U.S.
history. This case is still ongoing almost a decade
later. In late 2008, Walmart agreed to pay up to $640
million to settle 63 state class-action lawsuits regarding
overtime. 54
Because these issues are so expansive and important,
they are not addressed in the present case.
Another case, focusing primarily on Walmart’s labor
practices and some of the issues outlined above, has
been prepared for separate discussion. Case 32, titled
“W almart and Its Associates,” may be discussed immediately
following this case or deferred until a more indepth
consideration of employee stakeholders is
Case 1 Walmart: The Main Street Merchant of Doom 607
What is the “Walmart Way”? Explain its impact
on the associate and on the community. What has
happened now that Sam is no longer the motivational
3. W almart was an early leader in the area of corporate
social responsibility. How do the “Buy American”
program and the “Environmental
Awareness” campaign illustrate this? Were these
programs really early examples of corporate social
responsibility or were they gimmicks to entice
customers into the stores? Are the benefits of its
more recent corporate citizenship programs offset
by the company’s detrimental impact on
4. W almart has closed five stores in its short history.
What responsibility, if any, does W almart have to
the employees who are let go? What about its loyal
customers and the community?
5. Walmart continues to find severe resistance to its
expansion into New England and California. From
Walmart’s perspective, draw the stakeholder map.
Define the true goals of the opponents of Walmart.
Include a consideration of the following: (a) stopping
Walmart’s expansion, (b) preserving the status
quo (e.g., downtown community and social
fabric), (c) developing a cause that will pay their
bills, (d) fighting for an ideology, or (e) something
else. What should Walmart do?
6. What is your assessment of competitors secretly
hiring consulting firms to block Walmart’s entry
into new communities? Is this an ethical practice?
Is this a fair trade practice with respect to competitor
7. As Walmart continues its expansion into the
international arena, what problems or issues do
you anticipate it will face? In general, what
should Walmart’s approach be in these other
countries? Is it unethical to change another
1. What are the major issues in this case? Assess country’s culture?
Walmart’s corporate social responsibility using the
four-part CSR model. Is Walmart socially responENDNOTES

sible while it has a devastating impact on small 1. Wal-Mart Stores, Inc. (NY SE: WMT) is the legal
merchants? What about its impact on communities name of the corporation. The name “Walmart,”
in terms of sprawl, traffic congestion, and impact expressed as one word and without punctuation, is
on the appearance of the environment? What a trademark of the company and is used analoresponsibility,
if any, does the company have to gously to describe the company and its stores.
these merchants or to the communities it enters? 2. Vance H. Trimble, Sam Walton: The Inside Story
2. Sam Walton has been called a motivational genius. of America’s Richest Man (New Y ork: Penguin
After reading this case, and with what you have Books, 1990), 30. Also see Bob Ortega, In Sam We
___ _ _



ore, e




_ _ _ –

In this section, outline the ethical dilemma you will be discussing. TIP: You should pick two case studies with the same ethical dilemma. E.g. Dilemmas related to globalisation by companies such as McDonald’s and Walmart. Briefly outline why the ethical dilemma exists.

2.1. CASE STUDY A: (Please insert the title of the case study here)

Identify the ethical issues for the key stakeholders in case study A. You will need to identify two stakeholders for full marks as there are at least two sides to an ethical dilemma. Remember the organisation itself is not a stakeholder. Clearly specify the key internal or external stakeholders you think are involved in the ethical dilemma outlined above and thenapply a relevant ethical theory from the perspectiveof ONE stakeholder. Make sure you apply the theory fully and in detail. E.g. if you are using utilitarianism you must specify whether you mean act or rule utilitarianism.

Warning: Do not just copy and paste what you put in your case study submissions.

2.2. CASE STUDY B: (Please insert the title of the case study here)

Same as above in 2.1.TIP: you will need to draw out the similarities and differences between the cases in the next section so pick a case with similar stakeholders and the same ethical dilemma to compare in this section. E.g. shareholders and customers.

3. COMPARATIVE ANALYSIS (This should be the largest section- at least 700 words)

Compare and contrast the ethical position taken by thekey stakeholder identified above in each case and suggest solutions that would lead to the best outcome (of the ethical dilemma) from the perspective of that stakeholder. E.g. McDonald’s may or may not modify their products for Asia whereas Walmart has shifted away from its buy American program. Note: in this example globalisation is still the ethical dilemma and I would discuss this from the customers’ perspectives. Provide a substantial rationale for why the stakeholder should utilise the relevant ethical theory in their decision making and identify the factors that may play, or have played, a part in the decision-making.

This is not a research assignment so you don’t need to provide references. However, if you copy material from another author instead of writing your own analysis you must include the appropriate references. The focus should be on applying what you have learnt so far far about ethical decision making and ethical theories to a comparison of two case studies. Very low marks will be given for unsubstantiated opinions so make sure you back up your rationale with key facts from the cases.

Total word count for the Workshop Case Study Report is 1500 words maximum.

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