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Running head: ASSIGNMENT 2

Assignment 2
MNGT-3711
Ethics and Social Responsibility
in Business and Society

Submitted To: Submitted By:

Ron Lakes Jaspreet Kaur

T00592974
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Part A

Question 1

Do you feel that it is possible to develop a universal set of ethical standards for business,

or do you believe that cultural differences make universal standards impractical and/or

impossible?

I do not believe it is possible to develop a fixed set of universal ethical standards for

business since cultural differences make these standards impractical. According to Donaldson

(1996), in his article “Values in tension: Ethics away from home”, a global ethical standard for

business is unattainable since the economic conditions, cultural traditions and practical realities

differ from society to society. Every business operates in a dynamic and relative world where the

conception of what is right and what is wrong is influenced by certain values in the society,

culture and by the individual interpreting it. These ethical values differ from person to person,

city to city and country to country. In other words, every business has different stakeholders.

Moreover, being unethical doesn’t necessarily make the action illegal and some actions are

difficult to be categorized as ethical or not. For example, Window dressing is a common form of

unethical, yet legal business strategy used to represent the firms financial position in a favourable

way to investors and giving gifts is a common business practice in the world, however it is hard

to determine when a gift becomes a bribe.

However, there are certain common ethical standards in every culture like honesty,

truthfulness and respecting others as well as some common immoral values like theft, lying and

deceitfulness (Lawrence & Weber, 2017). A standard can be developed considering these basic
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moral values, however it still leaves a blurry line when it comes to major corporate ethical issues

in the world like Chiquita Brands International’s ethical dilemma on whether to fund the terrorist

group and protect the lives of its employees and their family or not (Lawrence & Weber, 2017)

which involves complex issues like conflict of interest, conflict of loyalty, and whistle blowing.

A more practical approach would be holding each business responsible for the impact of

its actions in the society and establishing an ethical code of conduct within the organization

based on the values of the society in which the firm operates rather than establishing a global

ethical standard for business.

Question 2

Do corporations have a right and/or a responsibility to influence ethics in the countries in

which they operate? Defend your position.

Corporations do not have the right to influence or force ethics in the countries in which

they operate. Every business operates to earn profit by satisfying customer needs and building a

long-lasting relationship with the consumers. If the corporations are not able to adapt the ethics

from the cultures of the host nation, it would create a dent in the public relations. Every country

will have its own culture and ethical practices. A firm that doesn’t follow the ethics of a society

will not be preferred by society. Moreover, establishing the ethics of the home country of the

business in the host country would mean devaluing the ethics of the host country, favouring

absolutism and forcing ethical imperialism (Donaldson 1996). Chiquita Brands International

tried to protect the employees and business by funding the Colombian terrorist group to guard
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their ethics which eventually backfired as it violated the ethical and legal practices of the host

country and by financing the terrorist activities which claimed the more 300 lives (Lawrence &

Weber, 2017).

However, corporations have a social responsibility towards the country or society they

operate in (Holmes & Watts, 2000) as they use the natural, economics and human resources of

the host society. The natural, economic and human resources in the society combined with the

managerial power and financial resources of these corporations can help the society develop.

Building better infrastructure, sponsoring education and skill developments, and minimizing

corruption by establishing a strong ethical code of conduct within the organization and its

employees will not only promote social welfare but also ensure the stability and growth of the

firm in the foreign soil, guarding the ethics and values of the host nation.
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Part B

Walmart, Target, or other big-box retail giants establishing

operations in Canadian towns and cities

Walmart, the largest discount retail in the United States, marked its legendary entry in the

Canadian retail industry in 1994 by acquiring the network of purchase of the Woolco Canada

stores from the F. W. Woolworth Company and forming Walmart Canada Corp(Adelson,1994).

The retail giant, headquarter in Mississauga, currently operates in 410 locations all over Canada

(Walmart,2018) and provides a wide range of products to the consumers from fresh foods and

groceries to pharmacy and photo processing services. In 2008, Walmart changed their 19-year-

old slogan “Always Low Prices” to “Save Money, Live Better” sticking to the promise to offer

the lowest price to its consumers. Target Corporations also expanded to Canada in 2011 by

acquiring Zellers from the Hudson’s Bay Company and offering similar services like Walmart.

These stores, even though they offer competitive prices and wide choice of products for

the consumers, are questioned for their negative impact in the society. Big-box retail giants like

Walmart has been criticized to destroy the host communities weakening small and medium

business in the economy and for spreading consumerism (Anderson, 2004). This report will

explore the impact of the entry of big retail chain stores in Canadian towns and cities and their

corporate social responsibility.

Corporate Social Responsibility (CSR) refers to the voluntary obligation of every corporation

to support the society and community they operate in (Lawrence & Weber, 2017). Corporations

like Walmart have huge amount of resources to fulfill their voluntary commitment to the society.
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It is a common way companies build their reputation and correct the imbalance it creates in the

community. The major issues discussed in this paper are:

1. Destroying local small and medium business economy; and

2. Retail giants spreading consumerism.

To explore more about the issues, the stakeholders of the issue need to be determined

foremost. The following are the primary stakeholders of the issue;

1. Small and medium business owners.

Small and medium business owners suffer a lot as a consequence of the entry of retail

giants in the local business environment. Retailers like Walmart put a lot of pressure on the local

businesses to offer competitive products. These small and medium business owners can not

compete against the price match offers and product varieties offered by the big box retailer. 98%

of the total businesses in Canada are either micro or small business enterprises and 48% of the

Canadian population is employed by the micro and small businesses enterprises (CBC News,

2011). Yet big box giants like Walmart and Target earn most of the retail revenue in Canada.

The entry of retail giants weakens the local Micro, Small, Medium Enterprises economy to a

large extent forcing many of them to shut down operations.

2. Retail giants

The big retailers are themselves a big component of the ethical issue present here. They

not only introduce the issues of weakening local business economy but also spreads competition.

Moreover, they create a very competitive environment among the big box retailers in the market.

For instance, Walmart is the biggest competitor for Superstore and Costco in Kamloops. All

Target Canada stores were closed down in 2015 as a result of heavy competition among the big
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box retailers (Harris, 2015). It’s easier to think about the condition of MSM Enterprises when

even big retailers exit the market due to competition.

3. Consumers

Consumers are always happy to hear the news when a new big box store is opening in

their neighbourhood. However, when we delve in to it, the scenario changes. The issue direct

effect consumers as these stores spread the plague of consumerism; the idea of high volume

purchases as social standard (Shuman, 2007). Consumerism has become a lifestyle in the twenty

first century replacing the ideals of simply living and buying local. This luxurious lifestyle and

leads to pollution, damaging the environment we live in; consumerism indirectly causes

deforestation, land, water, air and noise pollution due to improper the waste generated,

accelerating the climate change.

The secondary stakeholders of the issue are listed below;

1. Community

2. Non-Government Organizations

While a lot of Non-Government Organization come into light to protect the local business

owners, Walmart and big retail stores successfully tackled the situation by supporting various

NGOs and Foodbanks to support their own community and show their corporate social

responsibility. For example, Walmart launched anti-poverty campaigns and pledged to donate

food produce to local foodbanks to fight hunger in the host community. In 2017, Walmart in a

partnership with the Food Banks Canada, purchased basic equipment’s for Kamloops Food Bank

to increase its impact on the community as a part of Capacity Boost Grant (Cassels, 2018).
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Similarly, Loblaw Companies Ltd supported the Kamloops Food Bank by providing storage

facilities for frozen foods (Cassels, 2018).

Rationale

The above mentioned ethical issue can be addressed and analysed with the ethical reasoning

methods of utility, rights and justice.

1. Utility

According to the utilitarian method of ethical reasoning, the actions of a company can be

justified if the total net benefits from the policy/act/decision exceed the total cost incurred i.e the

goal is to produce maximum benefits at minimum damage to the society (Moira et al, 2010).

However, the approach can also be measured properly with quantifiable data and not qualitative

data. Since the both ethical issues addressed in here are mot quantifiable, it can not be easily

measured using the utilitarian approach. The imbalance created in the economy to the Micro,

Small, Medium Enterprise owners because of the entry of big retail stores can not be easily

quantified. It is the same with consumerism too. On the contrary, Walmart guarantees low price

on all produces to the customers and provides employment to a large population. At the same

time, contribution done to the society in terms of charity work and support is also big: such as

Walmart and Loblaw’s support to build infrastructure for the Kamloops Food Bank. The net

benefit offered by the companies with the issue in question covers a major portion of the damage

it causes.

2. Rights

Another way of analysing ethical issues is by using the rights approach towards the issues in

question. Everyone is legally entitled to certain rights like right to freedom of choices and
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speech, information, safety, basic necessities and right to be heard. It is the duty of every

organization to ensure that the right of consumers and its employees are protected. Every

manager has the obligation to generate economic profits for the firm. Walmart and similar retail

giants follow all the legal regulations and protects the rights of every one of its consumers and

employees.

3. Justice

The third approach for analysing an ethical issue is by the justice method of ethical analysis.

According to this, justice should be given to both consumers and employees alike. It includes

justified ethical actions like offering equal opportunities for employment and development

opportunities for all people i.e no discrimination based on race, creed, sex or origin. Equal and

indiscriminate wage payment to employees is also a part of this. Walmart and similar stores have

been criticized for offering low wages to its employees as a result of the low price guarantee to

its customers.

On a short note, the utilitarian approach gives a better and clearer answer to the ethical

analysis of the issues addressed here.

What does this mean to my family?

As a member of the consumer group and a local micro enterprise owner in Kamloops

where Walmart, Costco, and Superstore operate, these issues put impact me as a primary

stakeholder. My family is struggling with my local business sales as we can not establish a safe

ground competition with the Superstore or Walmart. We are unable to provide the same grocery

and food supplies for the price at Walmart or Superstore. As a consumer, consumerism also

affects me to a large extent. Brand name dropping is not an easy task to follow as it has become a
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part of our lifestyle, thanks to the retail giants. A family grocery shopping at Walmart burnout at

least $100 in a week; including the produces I need and I buy because I think I need them or just

fancies me.

What does this mean to my community?

The issues do not have a direct impact on the community and general public, but they are

indirectly affected, being secondary stakeholders. These issues create an imbalance in the society

due to the increasing consumeristic trend and the loss of business of several MSM Enterprises.

Community will benefit from the “Walmart effect” since they provide employment to a lot of

people in the society and raise the standard of living. On the other hand, its negative effects are

tragic too. The consumerism is never favoured by any community due to its destructive nature

and impact on the environment. At the same time, loss of the small self-employed people in the

community is not a good trend too. Plus, many of these retail giants have been, over the years,

criticized to offer low wages and employee benefits to its employees (Ritholtz, 2013).

From a corporative perspective, they need to fulfill primary economic objective of

earning profits but at the same time is responsible for the welfare of the society it operates in.

The company operates like any other business should by offering better consumer choices and

higher value. The actions are justified from the corporate point of view.

What does this mean to my country?

There will be broader impacts associated with the issue in the country. Entry of

multinational big box corporations into the country’s economy will boost the economic growth

of the nation since a lot of products sold in Walmart Canada stores are also produced in Canada

promoting local economy; this promotes internal trade and control the balance of trade in the
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country promoting a sense of nationalism among the people. However, the situation will also

weaken the MSM Enterprises in the country. The competitive business environment would

attract more competitive businesses to the economy. This will improve the employment rate in

Canada as a whole since big box retailers like Walmart Target, and Superstore(Loblaw) are the

largest employers in the country. A decrease in unemployment rate will boost the economic

growth and productivity level. This will also contribute to government revenue from territorial to

provincial and federal government.

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Reference

1. Adelson, A. (1994). Company news; Wal-Mart entering Canada. New York Times.

Retrieved from https://www.nytimes.com/1994/01/15/business/company-news-wal-mart-

entering-canada.html

2. Anderson, W. (January 05, 2004). Does Wal-Mart Destroy Communities? Mises

Institute. Retrieved from https://mises.org/library/does-wal-mart-destroy-communities

3. CBC News (October 17, 2011).10 surprising stats about small business in Canada. CBC

News. Retrieved from http://www.cbc.ca/news/business/10-surprising-stats-about-small-

business-in-canada-1.1083238

4. Donaldson, T. (1996, September). Values in tension: Ethics away from home. Harvard

Business Review, 74(5), 48-62. Retrieved from https://ezproxy.tru.ca/login?

url=https://search.ebscohost.com/login.aspx?

direct=true&db=bth&AN=9609167696&site=eds-live

5. Harris, S. (April 01, 2015). Target Canada to close all stores by April 12. CBC News.

Retrieved from http://www.cbc.ca/news/business/target-canada-to-close-all-stores-by-

april-12-1.3018677

6. Holmes, R., & Watts, P. (2000). Corporate social responsibility: Making good business

sense. Conches-Geneva, Switzerland: World Business Council for Sustainable

Development

7. Lawerence, A., & Weber, J. (2017). Business and society: Stakeholders, ethics, public

policy. (15th ed.). New York, NY: McGraw-Hill Higher Education.

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8. Moria, T., Christopher, N., May, A., Doug, A., Sameer, G., Brae, S., & BiChen, Z.

(2010). “Wal-Mart is coming to Guelph: hedonic to utilitarian shoppers’ perceptions”.

Qualatative Market Research: An International Journal, Vol. 13 Iss:2, pp.130-153.

9. Ritholtz, A.(December 18, 2013). How Walmart’s low wages cost all Americans, not just

its workers. Huffington Post. Retrieved from

https://www.huffingtonpost.com/2013/12/18/walmart_n_4466850.html

10. Shuman, M. (2007). The Small-Mart Revolution. US: Berrett-Koehler Publishers.