1. Why do you think Wal-Mart has had a recent number of ethical issues that have been in the news almost constantly? (Please provide a long answer)

WHAT IS WAL-MART DOING TO IMPROVE ITS REPUTATION? Global Ethics Office The Global Ethics Office was established on June 1, 2004. On June 4, 2004, Wal-Mart released a revised "Global Statement of Ethics" to communicate their ethical standards to all Wal-Mart facilities and stakeholders. The Global Ethics Office provides guidance in making ethical decisions based on the "Global Statement of Ethics" and a process for anonymous reporting of suspected ethics violation by calling the Ethics Helpline. The Ethics Helpline allows for an anonymous and confidential way for associates to contact the company regarding ethical issues. Wal-Mart's "Guiding Ethical Principles," added to the revised "Global Statement of Ethics," were designed to assist Wal-Mart associates and suppliers with making the right decision and doing the right thing: 1. Follow the law at all times. 2. Be honest and fair. 3. Never manipulate, misrepresent, abuse, or conceal information 4. Avoid conflicts of interest between work and personal affairs. 5. Never discriminate against anyone. 6. Never act unethically-even if someone else instructs you to do so. 7. Never ask someone to act unethically. 8. Seek assistance if you have questions about the Statement of Ethics" or if you face an ethical dilemma. 9. Cooperate with any investigation of a possible ethics violation. 10. Report ethics violations or suspected violations. Environment Although Wal-Mart has recycling locations at each of its stores, it has tied itself to other initiatives over the past couple of years to improve its environmental impact. Experimental Stores Wal-Mart opened two environmentally friendly stores-one in McKinney Texas, and the other in Aurora, Colorado. The two locations were chosen because they have different weather and climate considerations. The stores should provide examples of the way that building owners, scientists, engineers, architects, contractors, and landscape designers can work together to create stores that save energy, conserve natural resources, and reduce pollution. The stores are living laboratories, testing experimental technologies and products. Wal-Mart hopes to take what is learned at these two stores and use that at future stores. The new stores include pervious pavement, experimental urban forest, water conservation, wildflower meadows, wind turbines, solar energy, recycling efforts, climate control, Xeriscape and bioswale (proenvironmental landscaping methods), and internal lighting and construction experiments. Wal-Mart Acres for America in 2005 Wal-Mart partnered with the National Fish and Wildlife Foundation to conserve critical wildlife habitats for future generations. It has committed $35 million for the next ten years to conserve at least one acre of priority wildlife habitat for every acre developed for company use. This puts the minimum total acres to be protected at 138,000. Energy Conservation Measures There are three main ways that Wal-Mart is conserving energy: Daylighting (skylights/dimming): Most new stores include this feature, which enables the stores to dim or turn off lights as daylight increases and enters through the skylights, thereby reducing the demand for electricity during peak hours. Heating and cooling: The heating and cooling of Wal-Mart stores in the contiguous fory-eight states is centrally controlled in Bentonville, Arkansas, enabling Wal-Mart to actively control and manage energy consumption. Lighting Efficiency Program All new Wal- Mart stores and supercenters use T-8 low-mercury fluorescent lamps and electronic ballasts, a very efficient lighting system. By retrofitting older stores with T-8 lighting rather than the T-12 systems, the amount of energy used by each store will be reduced by approximately 15 percent. Wal-Mart started retrofitting its older stores in 2000 and plans to have completed the process by 2007. Plastic Sandwich Bale Wal-Mart partnered with Rocky Mountain Recycling in 2005 and intro- duced an innovation in the solid-waste and recycling industry. The Plastic Sandwich Bale is a new way to use existing equipment to reduce store waste. Plastic shopping bags, film from apparel bags, and shrink-wrap are "sandwiched" between layers of cardboard and then compacted for ease of plastic recovery within the store and transportation to end markets. From 2001 to 2006, Wal- Mart facilities in the United States have recycled 36,378 tons of plastic. In 2004 it launched a pilot program in 326 stores in Arizona, California, Colorado, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, and Wyoming. It is proving to be a huge success and is keeping 5376 tons of plastic out of landfills per year. Kids Recycling Challenge Wal- Mart introduced a recycling challenge for schools and children, which ran until May 2005. Over thirty-five schools participated, and for each sixty-gallon bag of plastic bags, schools received $5 from Wal-Mart. In the first six months of the program, over two thousand bags of bags were collected, and Wal-Mart gave over $28,000 to schools. The program was such a success that Wal-Mart has extended it, hoping to do it every school year. 2005 Waste News Environmental Award Wal-Mart won the 2005 Waste News Environmental Award. Waste News editor stated that Wal-Mart had made the most significant environmental progress of any business in 2005. IMPROVING ITS IMAGE AMONG CUSTOMERS In 2005 Wal-Mart introduced a website (www.WalmartFacts.com) to counter claims made by its critics. The website has information about the litigation that Wal-Mart faces and what it thinks about the claims and lawsuits as well as information about the actions it is taking to help the environment. There are sections on community impact, an associate center, key topics, Do You Know?" and "Talk with Us," as well as a list of all the awards and recognition that Wal-Mart has achieved. All of this is aimed at reducing misperceptions about Wal-Mart and ensuring that customers are better informed about all the "misleading news that they hear about the retail giant. In 2005 Wal-Mart also launched a full-page ad in more than one hundred newspapers across the country. The ad was a direct letter from Wal-Mart CEO H. Lee Scott, which said it was time for the public to hear the "unfiltered truth" about Wal-Mart and time for the company to stand up on behalf of a work force that includes 1.2 million Americans. Scott called for Congress to increase the minimum wage and said that Wal-Mart has increased spending on health insurance for its workers. The firm says it insures six hundred thousand associates and more than three-fourths of Wal-Mart associates have health insurance. Wal-Mart has also hired the public relations form Hill and Knowlton and dozens of communications specialists to help it improve its overall image. This was combined with an aggressive advertising campaign publicizing the millions of dollars that Wal-Mart contributes to local community organiza- tions, as well as focusing on other key concerns such as how Wal-Mart treats its employees and its employee diversity. Wal- mart has one of the most diverse work forces in the United States and is a leading employer of senior citizens in the United States, employing 164,000 workers aged 55 years or older. Of the fifteen board of director members, two Latinos sit alongside two women. It also employs 139,000 Hispanic associates, 208,000 African American associates, and 775,000 women. More than 76 percent of the management team at Wal-Mart started as hourly associates, and as of 2006, the Wal-Mart website reports that more than 40 percent of Wal- Mart store management are women. WAL-MART AND THE ECONOMY Wal-Mart is a driving force in the U.S. economy. Wal-Mart saves working families $2329 a year, on average, according to a study analyzing the national and regional economic impact of Wal-Mart. The consumer savings continue to be especially meaningful to lower-income and retired consumers. Low prices are due to Wal-Mart's higher levels of capital investment in distribution and inventory-control assets, operational excellence, advanced information technology, low import prices from China, and greater efficiency in its whole supply chain. The study by Global Insight, an independent economic analysis firm, concluded that the efficiencies that Wal-Mart has fostered in the retail sector have led to lower prices for the U.S. consumer. The expansion of Wal-Mart over the 1985-2004 period can be associated with a cumulative decline of 9.1 percent in food-at-home prices, a 4.2 percent decline in commodities prices, and a 3.1 percent decline in overall consumer prices as measured by the Consumer Price Index. The 3.1 percent decline in prices was partially offset by a 2.2 percent decline in nominal wages, but there was still a net increase in real disposable income of 0.9 percent. Wal-Mart also created 210,000 jobs nationwide. in Dallas, Fort Worth, and Arlington, Texas, Wal-Mart's effect has been considerable. The cost savings have been 4 percent, and Wal-Mart has provided sixty-three hundred more jobs and a 2.6 percent increase in real disposable income in the Dallas-Fort Worth area. For a new store with about 150 to 350 employees in an area, Wal-Mart typically increases employment in the area by 137 jobs in the short term, which levels off in the long term to an increase of 97 jobs. This is due to the net job decline in food, apparel, and accessory stores but an increase in building materials, garden supply, and general merchandise store jobs. Although Wal-Mart displaces other retail establishments in the short term, it stimulates the overall development of the retail sector, which leads to an overall positive impact (in terms of retail employment) for the countries in which Wal-Mart has expanded. Wal-Mart has contributed modestly to lower import prices because it has been able to purchase imported goods for 5 percent less than traditional retailers due to the high volume and distribution efficiencies. HURRICANE KATRINA Wal-Mart's response to Hurricane Katrina was fast, efficient, and significant. Wal-Mart contributed $17 million in cash to the hurricane relief effort, more than $3 million in merchandise, $ 15 million to the Bush-Clinton Katrina Fund, $1 million to the Salvation Army, and $1 million to the American Red Cross. Wal-Mart also provided more than $8.5 million in cash assistance to impacted associates through Wal-Mart's Associate Disaster Relief Fund. They gave $20,000 in cash donations to assist various animal shelters and organizations taking in lost animals in hurricane-impacted areas. In addition they also dispatched 2450 Wal-Mart truckloads, donated 70 pallets of clothes to help evacuees, set up donation centers in various shelters to help arriving evacuees needing personal health and beauty products, clothing, food, and water. For example, at the Houston Astrodome, Wal-Mart provided five trucks of relief supplies, forty-five associate volunteers, and a computer, fax machine, TV, VCR, and children's movies. Wal-Mart donated one hundred truckloads of water and other supplies to the afflicted area. They also donated food for one hundred thousand meals and the promise of a job for every one of its displaced workers. Cliff Brumfield, executive vice president of the Brookhaven-Lincoln County Chamber of Commerce, said he was impressed with Wal-Mart's preparations: "They were ready before FEMA was." Scott, Wal-Mart's CEO, appeared on Larry King Live to discuss the chain's response to the storm and was singled out and praised by former Presidents George H. W. Bush and Bill Clinton These measures have attempted to stem the tide of negative publicity that has focused on the company. Although it has tried to address all the major concerns of its various stakeholders, only time will tell whether these measures prove effective and whether Wal-Mart can overcome the negative publicity. Consumers always vote with their money. THE FUTURE Wal-Mart indicates it is willing to accept the challenge of improving stakeholder relationships. The firm claims that it is being singled out because of its large size. Moves by the company to enter into the banking industry were rejected due to the banking industry's fears that the retailer would quickly dominate the field. Wal-Mart has also faced criticism for encouraging suppliers to join a group called Working Families for America, an organization that has more than one hundred thousand members and is helping Wal- Mart counter the wave of negative publicity. But because the group is funded in part by Wal-Mart, its suppliers are worried that if they don't join they will face repercussions. Wal-Mart has denied these claims and says that suppliers who do not join will not face any adverse consequences. There is no doubt that Wal-Mart's size and rapid growth has put it at the center of a debate about its impact on workers, unions, suppliers, local communities, competition, and the environment. Wal- Mart's push to import most of its products from China and to force its suppliers to manufacture in China creates an issue that significantly affects the U.S. economy. However, Wal-Mart is continuing to move into new areas, increasing its focus on organic foods and even moving into more expensive products for upscale clientele. Wal-Mart remains controversial and there are different points of view. Consider these quotes: Some well-meaning critics believe that Wal-Mart Stores today, because of our size, should, in fact, play the role that is believed that General Motors played after World War II. And that is to establish this post-World War middle class that the country is so proud of... The facts are that retail does not perform that role in the economy.-Wal-Mart CEO H. Lee Scott This is one of our nation's great companies... The story of Wal-Mart exemplifies some of the very best qualities in our country-hard work, the spirit of enterprise, fair dealing and integrity.- Vice President Dick Cheney It is extremely troubling when the vice president... praises a company that paye low wagos and benefits, discriminates on the basis of gender, locks its own workers into slones at night, busts unions and violates child-labor laws.-Representative George Miller (D., Calif.) It's time for Wal-Mart to understand that their company practices run counter to the very values that make this country great-fairness, opportunity and equality-Senator Edward Kennedy (D., Mass.)