Ethics

Wal-Mart is not just a mega corporation who needs no introduction its a privately controlled economic institution which has managed to impact prices, wages, and economies on a local as well as global scale. Its because of the huge scale on which it operates, its able to command the movement in the market. It works by lowering down the prices of commodities it sells, thereby making the consumers flock to its stores instead of any other store, by shaping there shopping habits, and by driving down the prices of other retailers as well who in order to remain existent in the market have to follow this southward trend else they will have to leave the domain. It has always had a close and tight scrutiny on all the costs involved, whether it be the wages of its employees or deals with its suppliers. The flip side is the unrelenting pressure on its suppliers, low wages, and compromise on quality of products and off shoring of jobs.

The moral questions raised are that does Wal-Mart actually brings jobs to the market it has entered or does it actually lead to loss of jobs due to the other retailers which shut down post the Wal-Mart effect in that region. Though Wal-Mart brings commercial prosperity and business in the region that it opens but inadvertently and unconsciously it also leads to shutdown of various businesses which are not able to survive in front of such a big player who has created monopoly in the market. But its true for every other big established player, if it offers a better proposition to the customers then obviously they will flock to them and not competition.

Thats market dynamics, and its not foul play if a store like Wal-Mart is giving such strong value based propositions to its customers. Wal-Mart being such a big player, the suppliers cant afford to lose it, so they have to go by the terms that Wal-Mart sets. Its not unethical if an organization has grown to that level where it governs the dynamics around it, be it the sourcing price from its suppliers or the price it offers to the end consumers. Its only because of the faith that the customers and the society have reinforced in Wal-Mart that its able to grow to this extent and scale. We the people have allowed it to become mammoth and now we are the ones who are questioning whether this scale is morally acceptable or not. In its pursuit to give the lowest possible prices to the customer, Wal-Mart at times kills that product for every other competitor, but its an open market and even the other stores are free to reduce or increase their price to suit their needs. But the fact of the matter is that due to its scale of operations Wal-Mart can afford to squeeze out the best deals from all ends and hence can shift that benefit to customers as well by giving away low priced goods which probably other retailers fail to do it to such extent. And hence as a result customers flock to Wal-Mart for those products and eventually it hurts the competitors who carry the same products.

Wal-Mart successfully leads to increase in the purchasing power of the consumers and hence boosts economy. So its hard find out if the increase in buying behavior due to reduction in prices offsets the reduction in jobs and wages that happens when Wal-Mart operates in any geography. Wal-Mart has created an ecosystem around it which is very powerful and its we the customers who feed the ecosystem. Its quite possible that in order to offer such low prices, Wal-Mart would have at time compromised on quality, but if it would have been so questionable then why would have customers still bought from it and continued with repeat purchases. It might be very easy to fool people in a region for a while, but its not easy to fool everyone everywhere at all times. We accept the way Wal-Mart has been providing services to us and thats the reason its forever growing. Though it needs to be more open in its information sharing with the industry and also improve upon the benefits that it provides to its employees.

To cite an example of another similar retailer Costco, it has focused on quality and yet has been able to provide lower price to its customers. Its intriguing to know how it has done it. It has paid its employees much above industry standards, provided them with facilities which are more than expected and all of this has led to higher productivity, more ownership for the company and less employee exits in the long run. Though this has not been the most beneficial for the shareholders but it has brought Costco profit and loyalty in the long run. Costco has a limited assortment in a product category which enables it to buy deep into few variants of that product thus enabling it to squeeze better margins from the suppliers. Whereas Wal-Mart offers huge range of products in the same product category. That doesnt imply that either of them is wrong or right, its just that these are two different business models.