As an organization goes global, there is a new set of social and ethical issues that arise. In this instance, the organization, Wal-Mart, is considered the giant of retail and one of the largest companies in the world. It has grown as a staple in America as well as on an international platform, touching base in countries such as Japan and China. Wal-Mart is the largest retailer and the largest company in the history of the world in the way it conducts business operations. Wal-Mart management has implemented ways to overcome the challenges that present the ethical and social responsibilities with regard to globalization. This paper will present breakdown how the organization deals with ethical perspectives within this global icon. Wal-Mart is known around the world as a company that offers discounted merchandise to its customers to help them save money.
In researching Wal-Mart’s global operations, the management team finds that what may work in the United States may not work for the other countries in which they are established. For Wal-Mart to compete with other companies that produce similar products in those countries, it had to examine its strategies. For example, Wal-Mart has lost millions of dollars in Germany. Wal-Mart used the experiences in Germany as a template of what to do and what not to do in other countries. Cultural conflicts occur when customers from different countries view the products of a company as inferior than other companies. For instance, Wal-Mart operates stores in 15 countries, each country has its own cultures, and these cultures may influence the performance of this company in the global market (Cultural conflict, n.d.).
According to case study, when Wal-Mart moved into Germany, it tried to run the operation the same as it does in the United States. It did not take into consideration the cultural differences between the United States and Germany (Case Study, n.d.). Companies have to be more sensitive to the local cultures and tailor what they have to offer to the local market. A company must understand the political, social, economic, and cultural aspects of the country in-depth before expanding its business operations into that new country. In Wal-Mart’s case, Germany was selected primarily because of its central European location and the economic attractiveness.
Thorough research on Wal-Mart’s part would have shown that Germany had strong national values resistant to change (Cultural conflict, n.d.). From an ethical perspective, Wal-Mart was known in the market that they do not pay their employees well, and that had a very negative impact on them. Not only that, many labor organizations and communities viewed them negatively. When international corporations do business in countries with significantly different cultures from their own, they must evaluate the way their business will fit into the existing market. Doing business in other countries is different from doing business in the United States.
The cultural values, such as collectivism and large power distance; social expectations; and workplace practices of workers and managers are different from those of U.S. workers and managers. To be sure, they are so different that the U.S. managers working in other countries more than likely find themselves ineffective. The U.S. manager who does not take the effort to learn about these differences and adjust his or her managerial style accordingly probably could become frustrated and disillusioned. Wal-Mart is clearly a financial success both nationally and internationally. Landler and Barbaro noted in 2006 that Wal-Mart closed its stores in Germany (Landler & Barbaro, 2006).
The chain had difficulty breaking into the Korean and Japanese markets as well. Something was not working in Germany, and many believe that some of Wal-Mart’s international problems stem from the company’s arrogance and overestimation of its competence. For a company that boasts seven billion customers a year, a certain degree of confidence is understandable. In some places, Wal-Mart’s attempts to impose its values on the market just do not work, at least not in places such as Germany,Korea, and Japan. Referring to its failure in Germany, a Wal-Mart international spokesperson commented that it was a good lesson for the company and that they have learned to be more sensitive to cultural differences. For example, many Germans found the idea of a smiling greeter at the door of every Wal-Mart like flirting, as interpreted by male shoppers.
Because German companies are closely connected to unions, Wal-Mart believed that they were communists and did not want to be involved. The failure in the German connection with Wal-Mart taught Wal-Mart to use local management that was knowledgeable for what the people of Germany wanted. Even the sale of unfamiliar merchandise was a mistake on Wal-Mart’s part, causing the difference in consumer shopping habits. One of the greatest challenges in the corporate world is coordinating and managing people from different cultures. On an ethical and social responsibility level, Wal-Mart has the philosophy of operating globally and giving back locally. It embraces corporate responsibility locally and globally. For example, in 2005, Wal-Mart showed its responsibility to help during the devastation of Hurricane Katrina and also during the horrific earthquake that devastated Haiti.
Walmart has a Global Ethics Office in place that serves as a guide and resource for ethical decision making, provides a confidential and anonymous reporting system, and leads a continuing ethics education and communication system. In conclusion, companies that operate globally have cultural factors and are very important as they determine whether a company succeeds or fails. Today’s managers must possess the skills to interact with people different from themselves compete in the global and U.S. markets, (Sage, n.d.). The Wal-Mart Company uses a multinational approach as a business strategy and the aspect of different cultures in the different countries lowers its performance in some countries (Culture conflict, n.d.). This approach, coupled with the ethics placed into perspective can be a determining factor if it wishes to continue to build as an international conglomerate.
Case Study: Wal-Mart’s failure in Germany. Retrieved from www.mbaknol.com. Landler, M. and Barbaro, M. (2006, August 2). International Business; No, Not Always.
New York Times, pp. A1, A3.
SAGE: Case Studies in Organizational Communication. Retrieved fromwww.sagepub.com. Wal-Mart Cultural Conflict. Retrieved from http://public-company.ezinemark.com.