Ethical Issues in Business Valuation

7/29/2019 Ethical Issues in Business Valuation

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Ethical issues inBusiness valuation

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Contents

Ethics1

Ethical issues in Marketing2

Ethical issues in HRM3

Ethical issues in Finance4

Wal-Mart Case Study5


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Ethical Behaviour

Ethics are moral principles and values that

govern the actions and decisions of an individual

or group. In the marketing context, ethics is themoral evaluation of marketing activities and

decisions as right or wrong.


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Individual Factors

Organisational Factors

Perceived Opportunity

Understanding Ethical Conduct

Understanding Ethical Behaviour in Marketing Decisions

Individual

Factors

Perceived

Opportunity

Organisational

Factors

Resulting Ethical or

Unethical Behaviour


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When marketing managers face ethically

challenging situations and are unable to resolve

them all alone, they experience ethical conflict,though they make decisions in their everyday lives

based on their personal concepts of right or wrong.

Individual Factors


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Organizational Factors

Corporate culture refers to a set of values, beliefs,

goals, norms, etc., shared by its members and

expressed in every day working through workhabits, and other activities.


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Perceived Opportunity

Opportunity refers to a set of conditions perceived

as favourable that limit barriers or provide

rewards. Most managers in marketing do notdeliberately take advantage of every opportunity

for unethical conduct in their companies.


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Marketing Related Ethical Issues

Ethical issue refers to some situation, problem, or

opportunity that can be recognised and requires a

person or organisation to select from amongdifferent actions that must be evaluated as right or

wrong, or ethical or unethical.


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Ethical Issues in Marketing

Marketing ethics: Marketers standards of conduct

and moral values


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Marketing costs are too high The marketing system is inefficient

Marketers and the business system collude andcommit price-fixing

Firms deliver poor product quality and service Consumers receive incomplete, false, and/or

misleading information

The marketing system produces health and safety

hazards Marketers persuasively promote unwanted and

unnecessary products to those who least needthem

Criticisms of the Competitive

Marketing System


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Ethical Problems in Marketing ResearchAlleged invasions of personal privacy

Gathering marketing information inexchange for money or free offers

Ethical Problems in Product Strategy

Product quality

Planned obsolescence

Brand similarity

Packaging


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Ethical Problems in Distribution Strategy

Determining the appropriate degree ofcontrol over a channel

Determining whether a company shoulddistribute its products in marginallyprofitable outlets that have no alternativesource of supply

Ethical Problems in Pricing Probably the most regulated aspect

Most unethical pricing behavior is alsoillegal


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Ethical Problems in PromotionalStrategy

The source of the majority of ethical

questions Ethically questionable personal selling

Gifts and bribes

Questionable advertising Promotion of questionable features (air bags)

Questionable WWW related promotionalpractices


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LOGO

Advertising Social/

Ethical and LegalAspects


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Unethical Advertisement

Unethical advertising: is advertising which

degrades or underestimates the substitute orthe competitive products. It gives falsepromises or misleading information about the

value of the product. It fails to giveinformation about the side effects. It could beadvertisements that are obscene or immoral.

The usage of certain words as better, more,

best, largest, tastiest, only can change aethical advertisement into an unethicaladvertisement.

Company Logo
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Unethical advertising promisessomething that cannot be deliveredlike a fitness centre that advertisesthat the customers will loose 50pounds per month with its program.On top of it the fitness centre says theweight loss is guaranteed. Quite

plainly the fitness centre cant deliverthat much of weight loss to everyperson who comes into his centre.

Company Logo


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ADVERTISING ETHICS

There should not be anyracial discrimination.

For e.g.: Benetton

It should not hurt the

sentiments of women.For e.g. Fair and lovely.


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Contd.

It is morally wrong to use manipulative,exploitative , corrupting methods ofpersuasion and motivation

For e.g. Nestle.
http://1.bp.blogspot.com/-qi-OjhVcTSw/TWf-WQ5PmiI/AAAAAAAAAKM/PmkMG0HfylY/s1600/Unethics.jpg


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Contd.

The content of communicationshould be communicatedhonestly and properly.

More spending of moneyshould be stopped.


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Contd.

Advertisers are morally responsiblefor what they seek to move people todo.

Advertising may not deliberatelyseek to deceive by what it says, whatit implies or what it fails to say.


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Contd..

Advertisers should not promise whichis impossible and cannot be delivered.

E.g. A fitness centre that

advertises that the customers

will loss of 50 pounds per month

with its program. On top of it the

fitness centre says the weight

loss is guaranteed. Quite plainly

the fitness centre cant deliver

that much of weight loss to

every person who comes into

his centre.

Company Logo


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CODE FOR COMMERCIALADVERTISING

Advertising shall be so designed as toconform to the laws of the country

No Advertisement shall be permittedwhich can hurt some ones emotions.

No advertisement message shall inany way be presented as News.


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Contd

No advertisement shall bepermitted the objectswhereof are wholly or mainly

of a religious or politicalnature.


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Contd.

Indecent, vulgar, suggestive,repulsive or offensive themes

or treatment shall be avoidedin all advertisements


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GENERAL CODE

Criticism of friendly countries; attack on religions or communities;

anything obscene or defamatory;

incitement to violence or anything against

maintenance of law and order; anything amounting to contempt of court;

aspersions against the integrity of thePresident and Judiciary;

anything affecting the integrity of theNation; and

Criticism by name of any person.


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Unethical Advertisement-Tag lines

Outside a bank Nobody likes a fatgirl but everybody likes a girl with afat bank balance.

For a washing machine dont letwashing clothes kill your pretty wife.Let our washing machine do that dirtyjob for you.

Brochure of an office automationcompany Improve your secs(secretarys) life.

Company Logo


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Some Examples of UnethicalAdvertisement

Even big companies

stoop to unethicaladvertising the famousexamples can be.

Company Logo


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1. AP PL170Company Logo

A.P Scooters came out incollaboration with Vespa witha scooter and they named it

AP PL 170. The customersthought PL 170 meant Payload 170. Later a lot ofnegative publicity wasgenerated when thecustomers came to know that

PL 170 does not stand for Payload 170. PL 170 was justsome fancy word work fromthe advertising agency.


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2. Activia Yogurt

Company Logo

Dannon's popular Activia brand yogurt

lured consumers into paying more forits purported nutritional benefits --when it was actually pretty much thesame as every other kind of yogurt.Falsely touting the "clinically" and"scientifically" proven nutritional

benefits of the product, Dannon evengot a famous spokesperson, JamieLee Curtis, for the supposed digestion-regulator. But after a while, somecustomers didn't buy it.A class actionsettlement last year forced Dannon topay up to $45 million in damages tothe consumers that filed the lawsuitand others who said they'd beenbamboozled. The company also had tolimit its health claims on its productsstrictly to factual ones.

C L


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3. Eclipse Breeze

Company Logo

Eclipse gum claimed that its newingredient, magnolia bark extract, hadgerm-killing properties.Consumers sued Wrigley [in 2009] infederal court arguing the subsidiary ofprivately held Mars Inc. made

misleading advertising claims about thegerm-killing properties of Eclipse.As part of the settlement, Wrigley willchange how it markets and labels itsgum. It agreed to pay $6 million to $7million to a fund that will reimburse

consumers up to $10 each for theproduct and cover other costs of thesettlement, according to the law firmsBlood Hurst & O'Reardon and RobbinsGeller Rudman & Dowd.

C L


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4. Taco Bell's seasoned beef

Company Logo

When consumers raised questions about what

was actually seasoning Taco Bell's seasoned beef,the company didn't know how to respond.It was simply using oat filler -- which meansthe meat isn't seasoned beef at all, accordingto USDA standards. The franchise had beentricking its consumers into thinking its

products were of a higher grade than theyactually were.Taco Bell took the opportunity to poke fun atitself, hoping to mitigate the PR disaster. Thecompany even took out a full-page newspaperad thanking complainants for suing. So far, sogood. Taco Bell's proactivity and willingnessto address the controversy have restoredsome faith in the fast food giant.The woman who started all the hullabalooultimately dismissed her lawsuit.

C L


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5. Definity Eye CreamCompany Logo

In 2009, an Olay ad for its Definity

eye cream showed former model

Twiggy looking wrinkle-free -- and a

whole lot younger than her years

(she turns 62 next week). Turns out

the ads were retouched.

British lawmakers yankeddigitally altered spots, citing notonly a gross misrepresentation

of products, but the ad'spotentially negative impact onpeople's body images.

Company Logo


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6.Hyundai and KIA vehicles'horsepower

Company Logo

Hundreds of car owners were extremely

disappointed to find out that Hyundai and Kia

overstated the horsepower in some of their

vehicles.In 2001, the Korean Ministry ofConstruction and Transportationuncovered the misrepresentation, whichfor some models was as much as 9.6percent more horsepower than the carsactually had.A class action lawsuit in southernCalifornia claimed the companies were

able to sell more cars and charge moreper vehicle because of the false claims. Inthe end, the auto powerhouses had topay customers -- the settlement wasestimated to be between $75 million and$125 million.

7 Ri K i i & F t dCompany Logo


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7. Rice Krispies & FrostedMini-Wheats

Company Logo

Kellogg's popular Rice Krispies cereal had a crisis

in 2010 when it was accused of misleading

consumers about its immunity boosting

properties. The Federal Trade Commission

ordered Kellogg to halt all advertising that

claimed that the cereal improved a child's

immunity with "25 percent Daily Value ofAntioxidants and Nutrients -- Vitamins A, B, C and

E," stating the the claims were "dubious."Just a year prior, the company settled withthe FTC over charges that its Frosted Mini-Wheats cereal didn't live up to its ads. The

campaign claimed that the cereal improvedkids' attentiveness by nearly 20%, and wasshot down when the FTC found out that theclinical studies showed that only 1-in-9 kidshad that kind of improvement -- and half thekids weren't affected at all.

Company Logo


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8. SplendaCompany Logo

The Sugar Association says Splenda's

"Made from Sugar" slogan is misleading,and that the sweetner is nothing morethan "highly processed chemicalcompound made in a factory," reportsCBS. In 2008, the association first filed asuit against Johnson & Johnson

subsidiary McNeil Nutritionals, which thencountersued the association engaging ina "malicious smear campaign." The twoparties reached a confidential settlementbefore going to trial.Equal also took its rival to court in 2007,accusing "the makers of Splenda ofconfusing consumers into thinking itsproduct was healthier and more naturalthan other artificial sweeteners." The twoparties also reached a confidentialsettlement.

Company Logo


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9. A New BalanceCompany Logo

A New Balance sneaker that reportedlyhelped users burn calories were called outwhen studies did not find any boosted healthbenefits from wearing the shoe.

The toning sneaker, claimed to use hiddenboard technology, were advertised as calorieburners that activated the glutes, quads,hamstrings and calves. Plaintiffs discoveredthat the shoe was instead an injury hazard,without any secret technology, and areseeking $5 million in compensation. The

sneakers cost about $100.

Company Logo


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10.Classmates.comCompany Logo

Millions of people lit up whenClassmates.com sent them an emailsaying old friends were trying to contactthem, promising to rekindle old friendshipsand flames if subscribers upgraded to a"Gold" membership.

But even with an upgrade, the expectedreunions never came. Turns out the socialnetworking site used the ploy to get usersto pony up extra dollars. In 2008, onemiffed user filed suit alleging the

"deceptive" emails were false advertising.

He eventually bested the website, whichagreed to pay out a $9.5 million settlement-- $3 for every subscriber who fell for thedirty trick -- to resolve the case.


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Unethical Advertisement

LOGO


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LOGO

Ethical Issues in HumanResource Management


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Outline

Ethics, Morality and ValuesNature of Ethics

Sources of Business Ethics

Law Vs EthicsConflicts of Law and Ethics

Importance of ethics

Ethical Dilemmas - Its sources

HR ethical issues

Managing Ethics

Ethical decision making


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Ethics, Morality and Values

Ethics is the study of morality

Morals are the standards used tojudge right and wrong

Values are the degree of convictionabout the way to conduct life


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Nature of Ethics

Two theories are relevant in thecontext of the nature of ethics:

1. The Theory of moral unity

Business should be judged by ethical standards ofthe society

There is only one set of ethical standards for bothsociety and businesses

2. The theory of amorality Business can be amoral

The market mechanism automatically works for thebenefit of the society


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Sources of Business Ethics

ReligionCulture

Law

Reciprocal actions can help explain themaintenance of social norms

Idea of Reciprocity ormutual help


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Law Vs Ethics


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Conflicts of Law and Ethics

Example: Legalbut unethical?

Jim Crow laws that

required discriminationagainst Black Americans

Laws in Nazi Germanythat contributed to the

holocaust

Example: Ethicalbut illegal?

Provide service inviolation of Jim Crow

laws to a Black Americanin a restaurant

Help a holocaust victimescape from Nazi

Germany


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Importance of ethics

If you have integrity, nothing else matters. If you don'thave integrity, nothing else matters.- Alan K. Simpson

Ethics is very basic to mankind

Values create credibility with the publicValues create credibility with the employees

Considered important for companies strivingfor long-term success and growth.

"Not only is ethical behaviour in business life the rightthing to do in principle, we have shown that it pays off infinancial returns. - Philippa Foster Black, The Director,The Institute of Business Ethics (IBE),


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Ethical Dilemmas - Its sources

situations in which they are requiredto define right or wrong conduct

These ethical dilemmas arise fromthree sources

Face to Face Ethics

Corporate policy Ethics

Functional area Ethics


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HR ethical issues

EthicalIssues

EmployeeResponsibility

Cash &Incentive

plans

PerformanceAppraisal

Race, Gender,Age and

Disability

JobDiscrimination

Privacy Issues

Safety andHealth Care

RestructuringLayoffs


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Managing Ethics

Top Management

Code of Ethics

Ethics and Law


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Ethical decision making

MoralIdealism

Intuitionism

Utilitarianism

Seek adviceof an

intelligentperson

Evaluatepros and

cons

Act beforeproblems

occur

Commitoneself

publicly toethics

Ethicalperfection isillusionary

LOGO


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Ethics inFinance


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Overview

Introduction Ethics in Financial Services

Ethics in Financial Markets

Insider Trading Hostile Takeovers

Accounting Ethics

Conclusion

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Ethics?

Ethics represents the attempt to resolvethe conflict between selfishness andselflessness; between our materialneeds and our conscience.

-Demsey

A business that makes nothing but

money is a poor kind ofbusiness.

-Henry Ford


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Introduction

Principal-agent model of relationshipin financial transactions.

Modern capitalist system based onrational-maximizer paradigm-

# Individuals are self seeking.

# Seek to maximize own

interest.

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Introduction

Behavioral assumption for modernfinancial- economic theory runscounter to ideas of-

Trustworthiness

Loyalty

Fidelity

Stewardship

Concern for others


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Ethics in Financial Services

Deception Withholding of relevant information or

giving false or misleading information

What is deceptive?

Choices of what and how much todisclose?


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Ethics in Financial Services

Churning

Breach of fiduciary duty

How much trading is excessive?

Solutions??


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Fairness is importantFraud and Manipulation

Investors depend upon issuer of

information Transparency requirements


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Fairness in markets

Equal Information

Encourage acquiring all information

possible `Legitimacy play by the rules

Equal Access

Equal Bargaining Power

Efficient Pricing


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Insider Trading

Trading of stock or securities byindividual with potential access tonon-public information about thecompany

Insiders when buys or sells basedupon company owned information,violates the contract with

shareholdersThere are legal insider trading and

illegal insider trading


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Hostile Takeovers

Corporate takeover which is carriedout against the wishes of the board ofthe target company.

Original company may be entirelyswallowed up or may operate semi-independently.

i hi


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Accounting Ethics

Nature of work of accountantsrequire high level of ethics.

Accounting concepts andconventions- GAAP

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A i E hi


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Accounting Ethics

Preparation of financial statements.

Keeping management aware of

present conditions and futureestimations.

Confidentiality of organizations

financial position

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Conclusion

Financial ethics depends on a complexinterlay of FM ,industry leadership andindividuals personal integrity.

It makes the companys activities morelegal and policies more social.

As consumers we must be aware andcautious about the individuals andcorporations who manage our money.

LOGO


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Ethical Concernsin

Business


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Ethics

Whether men understand it or not, they areimpelled by that power behind to become

unselfish. That is the foundation ofmorality. It is quintessence of all ethics,preached in any language or any religion,or by any prophet in the world. Be thouunselfish, Not I, but Thou that isthe background of ethical codes.

- Swami Vivekananda


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Ethics.

Crucially important that our thoughts and actions begoverned by ethical values and habits.

Basis of ethics is to become more and more self less.

Knowledge of the importance of virtue does notdeter people from moving to the evil side of things.This is the illusion covering the consciousness of man,

says the Vedanta.


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Ethics and Success

Try not to become a man of success butrather try to become a man of value.

Albert Einstein 1879-1955


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Gandhi on Entrepreneurial Ethics

Truthfulness in conduct of business is reflective ofimage of the Nation.

Seven Social Sins:

Politics without Principles

Wealth without Work

Commerce without Morality

Knowledge without Character

Pleasure without Conscience

Science without Humanity

Worship without Sacrifice


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Need for Ethics

Social Contract

Guidance to operate business, professions

Business Ethics is the set of principles orreasons to govern the conduct of business at individual or collective level by the

application of ethical reasoning to specificbusiness situations and activities


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Being Ethical

Awareness of Need to comply with rules, laws of the

land, customs and expectations of thesociety, the principles of morality, policies

of organization or institution, generalconcerns for others and fairness

How the products and services of an

organization or institution and the actionsof its members, can affect its employees,the community and society as a whole,either positively or negatively.


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Ethical Dilemmas

Many issues seems straight forward andeasy to resolve but are not always true

Making choices amongst alternatives

Questions between right and wrong

Conflict between right and right


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Benefits of Ethics

Improved society

Maintain moral course in turbulent times

Cultivate strong team work and productivity

Supports employee growth

Ensuring policies are legal

Avoiding criminal acts of omission and lowering fines

Managing values of quality, strategic planning anddiversity

Strong public image

LOGO


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UNETHICAL BUSINESSPRACTICES

Case Study of Wal Mart Stores Inc.,U.S.


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ETHICAL BUSINESS CALL OF TODAY

There is a need do business with an openeye, continuously measuring & evaluating theconsequences & impact of actions taken .

This obligation is seen to extend beyond the

statutory obligation to comply withlegislation and seeing organizationsvoluntarily taking further steps to improve

the quality of life for employees and theirfamilies as well as for the local communityand society at large.

SURVIVAL IS FOR ONLY ETHICAL


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SURVIVAL IS FOR ONLY ETHICALORGANISATIONS

The companies thatsurvive are the ones

that can spot ethicalissues and correct them

before they becomeproblems .

GIANT MONSTER OF USCO O G S


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ECONOMY EATING THE DREAMSOF PEOPLE


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WAL-MART

The first true Wal-Mart opened in 1962 inRogers, Arkansas. Wal-Mart eventuallybecame the world's largest retailer

Company profile and history
http://en.wikipedia.org/wiki/Wal-Marthttp://en.wikipedia.org/wiki/Rogers,_Arkansashttp://www.google.co.in/imgres?imgurl=http://www.brainfleas.com/brainfleas/images/walmart2.jpg&imgrefurl=http://www.brainfleas.com/brainfleas/great_wall_of_mexico/&h=315&w=420&sz=13&tbnid=jvWd-MozOkvidM::&tbnh=94&tbnw=125&prev=/images?q=pictures+of+wall-mart+company+of+US&hl=en&usg=__rsDzXucRXZkk_B-Opqbtv-defh0=&sa=X&oi=image_result&resnum=1&ct=image&cd=1http://en.wikipedia.org/wiki/Rogers,_Arkansashttp://en.wikipedia.org/wiki/Wal-Marthttp://en.wikipedia.org/wiki/Wal-Marthttp://en.wikipedia.org/wiki/Wal-Mart


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Company profile and history

The Wal-Mart story began in 1962, when Sam Waltonopened the companys first discount store in Rogers,Ark.

Five years later, there were 24 Wal-Mart stores in

Arkansas ringing up $12.6 million in sales. 1968 saw thehiring of Wal-Mart Aviations first full-pilot, whoprovided help to Sam and Bud Walton, as well as theopening of the first stores outside of Arkansas, inSikeston, Mo., and Claremore, Okla.


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The company officially incorporated as Wal-Mart Stores Inc. on October 31, 1969.

Today, 7,390 Wal-Mart stores and Sams Clublocations in 14 markets employ more than 2

million associates, serving more than 200million customers per year.
http://en.wikipedia.org/wiki/File:1936samwalton.jpg


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Sam Walton. Walton was an entrepreneur with aninnovative vision, started his own company and

made it into the leader in discount retailing that it istoday. In fact, Wal-Mart is considered to be thebiggest company in the U.S. and it has storesworldwide .
http://en.wikipedia.org/wiki/File:1936samwalton.jpghttp://en.wikipedia.org/wiki/File:1936samwalton.jpg


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The Wal-mart culture rests upon 3 basic beliefswhich are:

Respect for the Individual

Service to customer

Striving for excellence


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Wal-Mart employs more people than anyother company in the United States outsideof the Federal government, yet the majorityof its employees with children live below

the poverty line.

In addition, Wal-Mart likes to portray itself as a seller ofU.S. manufactured goods but in reality the company hasproducts on its shelves made in foreign countries and atquestionable workshops.


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It would seem that Wal-Mart encourages

made in the USA but it really encouragesproducts made outside the USA.

As a result, Wal-Mart has forced many

manufacturers out of business.

As a matter of fact, this big giant is facing asignificant amount of controversy forunethical business practices. In fact, some ofthese unethical business practices include thefollowing.

GIANT UNETHICAL CORPORATION


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OF AMERICA

UNETHICAL PRACTICES OF WAL MART
http://www.google.co.in/imgres?imgurl=http://www.lacomuna12.com.ar/imagenes/wall%20mart%20malo&imgrefurl=http://current.com/items/89457293/wal_mart_cutting_us_store_openings_further.htm&h=434&w=369&sz=26&tbnid=yUm5nsZD1tphTM::&tbnh=126&tbnw=107&prev=/images?q=pictures+of+wall-mart+company+of+US&hl=en&usg=__rW63kv3PkfEgAwVAKX7yN9Tp8sQ=&sa=X&oi=image_result&resnum=4&ct=image&cd=1


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UNETHICAL PRACTICES OF WAL-MART

Open door policy as against labor union

Wal-Mart is a non union organization that

feels itdoes not need third party intervention. So,Instead of

unions, Wal-Mart has an open door policy thatencourages

employees to take their complaints beyondmanagement.


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According to this policy the door of the

managementisalways open for the associates to share

suggestions,ideas, and voice concerns. Whether its help with a

problem, guidance or direction, or simply getting ananswer to a question. Managers also treat all

discussionsfairly, with an open mind, and without bias. They

maintaincomplete confidentially, whenever its possible.They work

with the associates to mutually resolve any issuesor

Analysis of open door


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y ppolicy: 1)The open door policy does little to help its

employees but gives the business the leverage itneeds to terminate unwanted non compliant help.

2) Employees start out at lower wages thanunionized corporations and end up quitting by theend of the first year.

3) Its anti-union policy is a central part of itsobsession with minimising costs.

4) Wal-Mart provides managers with its infamousManagers Toolbox to Remaining Union Free thatstates:Staying union free is a full time commitment. Unlessunion prevention is a goal equal to other goals and

objectives in the organization, management will notdevote the necessary day in, day out attention andeffort. If there is any evidence of moves towardsunionisation, managers are ordered to phone theWal-Mart Union Hotline immediately.


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Un Ethical And

Aggressive policiesof Wal-Mart


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Wal-Mart engages in unit packingandother tactics to prevent organizing efforts.When workers have successfully organized,Wal-Mart has refused to bargain, or has shutdown stores and units where workers haveorganized.

Wal-Mart also prohibits employees fromtalking to union representatives. It is unethicalfor Wal-Mart to prohibit employees to talk tounion representatives since according to theNational Labor Relations Act;employers are

not allowed to discourage employees fromforming a union for they have that right.

Violated Federal Labor Law By


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y"Bribing" Employees To Report On Co-workers Who Favored A Union.

. Therefore, the United Food and CommercialWorkers Union filed a complaint with the NationalLabor Relations Board against Wal-Mart. Thecomplaint, filed with the National Labor RelationsBoard, alleges that Wal-Mart violated federal laborlaw by "bribing. employees to report on co-workerswho favored a union.

In 2005, labor unions also created new organizationsand websites to influence public opinion against Wal-Mart, including Wake up Wal-Mart (United Food andCommercial Workers) and Wal-Mart Watch (ServiceEmployees International Union). But Wal-Mart deniedthe charges that were brought against the company.


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Thus, Wal-Mart is wrong by bribingemployees for it encourages dishonestbehavior. If Wal-Mart wants to avoid ahearing or a lawsuit in this situation,they need to post notices saying the

retailer will not oppose employeestalking to union representatives.

In addition, if Wal-Mart takes more

seriously the employees complaints,it might encourage them not tounionize.

Unfair Treatment ofEmployees:


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Employees:

Wage And Hour Violations :Not only does the company have a historyof methodically violating workers right tojoin a union, the Wal-Mart record on workerrights is a laundry list of abuse. Wal-Mart has

racked up a striking number of wage andhour violations.


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Decreased health care coverage:Wal-Mart has decreased health care

coverage to employees while touting its

commitment to offering affordable care.Evidence suggests that Wal-Mart may haveeven adopted a strategy of eliminating longtime workers and discouraging overweight orotherwise unhealthy workersfrom applying

both as measures to reduce payroll andhealth care costs.

Violations Of Child Labor Laws


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Violations Of Child Labor Laws

One internal audit of 25,000 employees in 128Wal-Mart stores in the USA found 1,371violations of child labor laws, includingminors working too late, too many hours a

day and during school hours.Wal-Mart is proving to be a nation and future

breakerby violating the child labor lawsand spoiling the future of the children toenrich themselves, ignoring seniority.

According to Newsweek magazine


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According to Newsweek magazine

Denial to pay wages and salaries:The Bentonville-based multinational employsthousands of young people to pack its customers'bags. But the 4,300 young teenagers don't receive any

pay from Wal-Mart. Wal-Marts model is fast

becoming the industry standard, as other firms slashemployee wages and benefits in an attempt tocompete with the retail giant .


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Reasoning given by Wal-Mart:So, Wal-Mart succeeds to defend its position

as the undisputed leader of the pack when itcomes to violating fundamental workers'

rights

Payment of low wages:Wal-Mart pays low wages and appears to

aggressively seeks to keep wages down

UNETHICAL PRACTICES OF WAL-


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MART

. Gender Discrimination

The company faces the largest gender discriminationcase in the history of this country. Discriminatorypolicies are as follows:

1. Denied Training: Women had been denied training

and promotion opportunities that are offered to men.2. Under payment: women are underpaid in relation tomen.

According to Hoovers handbook of Americanbusiness, in June 2001 a group of six current andformer female Wal-Mart employees filed a sex

discrimination lawsuit (seeking to represent up to500,000 current and former Wal-Mart workers) againstthe company . The suit was filed because Wal- Martfailed to provide equal employment for women.

Gender Discrimination


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Gender Discrimination

Less Managerial positions to women:In fact, there are over 70 percent of women

working at Wal-Mart, but only a smallamount of those women are managers. So,

men are holding more management positionsthan women.

Less dignity and respect to women: Wal-

Mart is the nation's largest employer ofwomen, but unfortunately they are being

treated without dignity and respect."

Expensive Health Insurance


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Expensive Health Insurance

Wal-Marts health insurance is so expensive that some ofthe employees can not even afford to pay for it.

So, those employees who couldnt afford the health planwill probably have to get their health care benefits through

their spouses or the state from our tax dollars. Wal-Martresponded to this problem by offering discounts on healthcare coverage. Members can save as much as 50% onservices not normally covered by medical insurance.Discounts are not enough.

Wal-Mart still has a moral responsibility to provideaffordable health care to its employees not shift the costonto the American taxpayers. Wal-Mart can also raiseemployees wages so they can afford to pay for theirhealth plan.

No Over Time /Wages not in


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proportion to Work

While wages are low at Wal-Mart, too often

employees didnt get paid at all for overtime. In fact,according to Wal-Marts policy, they are supposed topay employees for every minute they work. But,since Wal-Mart is such a big company, there will becases in which managers might do unethical things.For instance, employees were forced to work unpaid

overtime. As a result, they filed a suit against Wal-Mart for not getting paid for overtime. So inFebruary 2004, a federal judge ruled that Wal-Martshould pay workers for overtime hours .But, thecase is still pending. In fact Wal-Mart claimed theirpolicy is against such work. So Wal-Marts managerswho required overtime were disciplined and fired. In

fact, it is Wal-Marts responsibility to make sure thatpeople get paid. They should settle the suit by payingtheir employees for unpaid overtime. It seems thatWal-Mart needs to periodically examine its paypractices to make sure that all employees are gettingpaid for all the hours worked.

Sufferings below the low Cost


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Offerings to the public

Wal-Mart is leading the race to the bottomby relentlessly squeezing cost efficienciesout of the supply chain. Wal-Mart frequentlyrequires its suppliers to open their books forWal-Mart inspection and tells them exactlywhere to cut costs. When national labour or

environmental standards create a barrier tocost cutting, suppliers are encouraged torelocate to a labour market that will enablethem to produce at the low price Wal-Martrequires. Even where wages are rock-bottom, Wal-Mart insists that its suppliersdrive prices ever lower. To do this lot ofunethical activities crop in to come on to thelowest cost ,lot of people in the supply chain

suffer because of this cost cutting drive

Use Of Illegal Migrants As Workers


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Use Of Illegal Migrants As Workers

Finally, Wal-Mart was under investigation for the use of

illegal immigrants as workers. In fact, in October 2003federal agents uncovered 300 illegal immigrantsemployed by outside contractors cleaning its stores. Asa result, the company became the target of a classaction suit. So, Wal-Mart was accused of breakingimmigration laws. In addition, Wal-Mart cheatedimmigrant on account of

low wages social security payments, federal payroll taxes. Contractual employments No security of tenure No payments for over time.

Immigration experts said the arrests of so many illegal

immigrants at Wal-Marts across the countrydemonstrated that these workers have come to play asignificant role in the American economy. They oftentake the low-end, low-paying jobs shunned by not justAmerican workers, but also legal immigrants. But, Wal-Mart claimed they hired those particular

REPORTINGS BY EMPLOYEES


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REPORTINGS BY EMPLOYEES

I hate wall-mart I worked there 3 years and saw

many bad practices. The final straw that made mequit was the fact that I was a full time departmentmanager, yet only was getting 16-22 hours a week!!!

When I asked why my hours where being cut theytold me it was due to a lack of busness.HELLO you

are WAL-MART a short drop in sales should not leadto me and my family being broke.

get things together wall-mart if you would actuallypay your workers enough to live maybe you wouldsave money in the 'loss prevention' departmentbecause your workers wont have to steal from you to

make ends meat!!!

MikeBismarck, ArkansasU.S.A

- -MART DOES NOT CARE *Rebuttals *Consumer

S ti l


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Suggestion ex-employee.

In a unfortunate incident anemployee was hurt and compensationwas asked but was completely deniedand the small wound was convertedinto cancer because she was poor andcouldn't afford medical treatment. Soin wall mart employees are nottreated as a part of the family andbusiness and have no values in theeyes of management and board aswas reported by the ex-employee.

Success of Wal-Mart in question


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Success of Wal Mart in question

The sentiment behind Wal-Martfounder Sam Walton's promise of a"better life for all" belies questionablebusiness practices - many that havebeen challenged by employees,unions, environmentalists, recordingartists and human rightsorganizations. All these challengesshould be met and it should learnlessons from their mistakes.

Conclusions:


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Conclusions:

The companies that survive are the ones that can

spot ethical issues and correct them before theybecome problems.

In this case Wal-Mart failed to acknowledge thosepotential problems and they are probably going topay for it. Thus, Wal-Marts unethical businesspractices have hurt its companys reputation.

If Wal-Mart wants to survive they will have to tryhard to improve their image. That is, they need toshow that they care about ethics by treatingemployees fairly.

As a result, it will attract good employees andpeople will have no reason to complain about the

company. In addition Wal-Mart needs to be sociallyresponsible in order to avoid economic harm and inorder to maintain the legitimacy granted by society.

Conclusions:


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Conclusions:

As Wal-Mart is not just a threat to thestandard of living of its ownemployees. It damages the standardof living of numerous others in the

economy.In some cases, it forces the closure of

better paying firms. Business Weekestimates for every WM supercenterthat opens, two other supermarketswill close.

We will hail Wal-Mart if it hails thei t t l


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society at large

There should not beany compromise on

ethics and sociallyresponsiblebehaviour,as it is

giving back to thesociety, other wise its

survival will be in

Say no to unethical practices


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Say no to unethical practices

Wal-Mart's immoral,predatory practices

and reprehensiblebehavior has to be

mended which isessential for thesurvival of Wal-Mart
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Documents

Ethical Issues in Business Valuation