Ethical Challenges at Walmart: Leadership, Governance, and Relativism

This report analyzes the ethical failures of Walmart, particularly focusing on its operations in Brazil and the implications of these failures on the organization's ethical standing. The report explores the concepts of organizational ethics, ethical relativism, and the influence of formal versus informal organizational cultures. It examines the role of leadership, comparing the approaches of US and Brazilian leaders, and highlights the importance of a strong code of ethics and corporate social responsibility. The report also discusses the decision-making process that led to Walmart's entry into Brazil and its subsequent struggles with corruption and unethical practices, including the use of the 'sorceress' contract. It concludes by emphasizing the impact of these ethical lapses on stakeholders and the importance of ethical leadership in maintaining a responsible and sustainable business model. The report references key concepts such as the Foreign Corrupt Practices Act and stakeholder theory, providing a comprehensive overview of the ethical challenges faced by Walmart and the broader implications for global business practices.

Running head: ETHIC AND GOVERNANCE
ETHIC AND GOVERNANCE
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Executive Summary:
The presented report will discuss about the importance and role of ethics in the organizational
conducts.in this notion the report will include the recent legal case of Walmart and will
discuss about how the Brazil chain of the business failed to meet the ethical practices which
had led the organization to loose on a great sum of money. The report will also discuss upon
the role of leadership and stakeholders related to the same.

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Table of Contents
Introduction:...............................................................................................................................2
Discussion:.................................................................................................................................3
Formal Vs Informal Culture System:.....................................................................................3
Relativism between Parent Company and Brazil Subsidiaries:.............................................4
Code of Ethics:.......................................................................................................................4
The Decision of Entering into Brazil:....................................................................................5
How Brazil Leader is Different from US Leader:..................................................................6
Matrix: Egoistic......................................................................................................................7
Importance of Leadership:.....................................................................................................7
Ethical Decision:....................................................................................................................7
Stakeholders: Why Good in US and not in Brazil:................................................................8
Impact:................................................................................................................................8
Conclusion:................................................................................................................................8
References:.................................................................................................................................9

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Introduction:
Organizational Ethics refers to the codes, principles and standards that all the
organizations involve while conducting the business. The ethical grounds of a business can be
viewed through the acts of fairness, honour, responsibility, conducting the duties, maintaining
values and social contributions, and integrity. The prime factor that is to be considered while
practicing ethics within the organizational ground is that the company must involve all the
employees of the organization to maintain ethical grounds and practice ethical conducts
within the business (Johnson. 2018). Therefore, as per the business analyse, the organizations
must discuss the ethical approaches to the students during the time of training.
Therefore, the aim of the following essay is to discuss about, whether in a globalized
world it is ethical and is it still possible to practice ethical relativism. To discuss this, in the
following report the ethical approaches included by Walmart will be discussed. The company
has many chains across the nation. However, in the recent times the company has been seen
to have charged with $407 as the company, for corruption. Walmart had to pay to settle the
US Federal charges for involving into overseas corruption, and funnelling and money
laundering. The US authorities have charged Walmart under the Foreign Corrupt Practices
Act, which essentially deals with bribery and other illegal methods. Therefore, the report will
discuss about the unethical conducts of Walmart and the role of leadership into the whole
matter.
In this notion it is important to mention the importance of involving ethical practices
into the organizational conducts. The organizational ethics include the policies, procedures
and the organizational work culture, and therefore, maintaining a basic ethicality into all
these are included in the ethical practices of the organizations. Ethical factors that are
included in the organizational conducts involve discriminations in the organization, economic

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and financial crises and situations, and the social responsibilities. Maintaining ethics is also
important for maintaining a healthy work culture.
Also, in this notion, the concept of Ethical Relativism must also be discussed. Ethical
relativism refers to the absolute truths involved in the organizational conducts, and this is
characterised by the morality. That is, the organizational conducts which are morally correct
or morally wrong can be termed as ethical relativism. This essentially includes the social
responsibilities of the organizations and the organizational culture involved into the
organizational settings. Also, the most important factor related to the concept of ethical
relativism is the concept of virtue of tolerance (Warren, Gaspar, and Laufer. 2014). This is
essentially dealt with morality of one individual, which constitutes the principles and values
maintained by an individual. It is often seen that the ethics and principles followed by a
person on the individual level, stands in opposite to the ethics and values, that are practiced at
the organizational level.
Therefore, the following report will include the concepts related to organizational ethics, and
the situation of Walmart.
Discussion:
Formal Vs Informal Culture System:
The organizational culture refers to the common values, ethics and policies and
standard that are maintained by an organization. The corporate culture also refers to the
performance management and the management of the organization actions. Therefore, it can
be easily stated that the culture of corporate body or an organization is deep seeded and is
related to the core or the basic principle of the company, and it is rather difficult to change or
redress the organizational culture. Therefore, there are two types of organizational culture,
Formal and Informal. Formal culture of organizations refer to an organizational culture,

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where it is purposefully planned and structured. This includes a hierarchical organizational
culture, where the3 basic rules and code of conducts are in a written format. On the other
hand, an informal organizational culture refers to the interaction system and the
communication structure present among the employees and among the managerial level and
this communicational patterns and systems tend to guide the organizational culture of an
institution (Miller and Rice. 2013). Therefore, the basic relation between the organizational
culture and ethics is that the ethical conducts are more preserved in a formal organization,
which clearly promotes ethical relativism within thee business.
Relativism between Parent Company and Brazil Subsidiaries:
Walmart has its chain almost all across the world, however, the chain in Brazil that the
organization has, contributes the greatest amount in the profit of thy organization. However
the organization failed miserably for Brazil only, because of the organizational culture of the
Brazil chain. In the brazil chian there was a local contract that had been signed within the
organization, which is known as the ‘sorceress’, which was initiated in order to gain the
governmental permission quickly and without any barrier. The basic notion is that the
organization involves middlemen to gain business, however the organizational chain in Brazil
did not involve any middleman into the business. For ages, the company had used it
middlemen to get done with the legal issues and to deal with the government. In India, the
issues related to unethical business conducts are met with bribery, and in China, the money is
funnelled through the local land lord in order to get done with businesses with the
governmental relationship consulting services (Elder and Dauvergne. 2015). Even in the US,
the parent company rigorously involves into bribery, fraudulency, and the like, to get away
with the unethical services, and the top leaders pay only a little attention and did not do
anything about Walmart being involved in bribery and corruption schemes. Therefore, it can

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be seen that the parent company maintains an ethical relativism within its organizational
conducts which cannot be perceived in the conducts of, Walmart Brazil.
Code of Ethics:
The code of ethics of the organization essentially includes the corporate social
responsibility towards both the employees and the society. As mentioned in their policies, the
code of ethics of the company essentially includes three basic principles, respect for the
individual, striving for excellence, and service to the customer. The ethics are further guided
by certain principles that include abiding the law, practice company honesty, showing
integrity through the company practices and company conducts. The company also includes a
consultation policy with the Walmart Global Ethics Office, regarding any issues that arise
with accordance to the ethical behaviour comnducated by the company. The vision of the
company also lies in line with the ethical conducts and the ethical behaviours of the company.
Therefore, the vision of the organization is to or the Global Ethics Office of Walmart is to
promote an ethical and cultural partnership with the stakeholders, globally (Ferrell, and
Fraedrich. 2015). Therefore, each unit of the company follows a policy or a guideline that
makes the each of the units to conform to the ethical guidelines. Therefore, the ethical
policies of the company includes the Anti- Money Laundering Policy, Anti- Trust Policy,
Anti- Corruption Policy, Health & Safety Policy, Health & Wellness Policy, Consumer
Protection Policy, Labour & Employment Policy, Licenses & Permit Policy, Food Safety
Policy, Privacy Policy, Privacy Policy, Trade Policy, Statement of Ethics, and Product Safety
Policy. The practice of code of ethics within an organization is essential as it paves the way to
maintain the ethical relativism within the organization.
The Decision of Entering into Brazil:
Walmart is the biggest retail chain in the world and is conducting its businesses
almost across all the nations. However, in an endeavour to expand its profit base and to

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increase its customer base, the organization had opened a chain in the Latin America, rather
in Brazil. However, the company had failed miserably in dealing businesses in the country.
The company began its chain in the country, during 2009, and had essentially attracted and
invited investors, and some of them had great plan and great propositions to offer. Therefore,
the company has seen to be doing great business in the country, with a turn- over of almost
$9.4 billion, from the 500 stores of the country, but the company was faced with other issues
(Carroll, and Buchholtz. 2014). The main chian in Brazil lacked an integrity within the
system, and was involved majorly in unethical services. There were seen to be great amount
of labour disputes, unintegrated acquisitions and the economic downturn of the company had
also affected the business of the company. According to the market researchers, the coma was
a little greed driven, while taking the decisions to open a china ion the Latin America,
because, when the company had decided to open a chian, the country was perceived with an
economic downturn. Thus had both a positive and negative impact. The positive one is that,
the company was not faced with any rivals, at that point of time, however, the negative
aspects is that in order to lure the customers, at that point of time, Walmart had included a
combination of local e- commerce services and the Brazilian brick- and- mortar operations.
This had essentially contributed in the business initiation (kATIUSCIA MORENO and
VEIGA. 2018). However, this particular endeavour was not documented and there was an
internal understanding. According to the market analysts, the organizational structure or the
organizational model that the company had been being observed in the country is not
effective and if they want to continue in the country, then they would have to change their
organizational model.
How Brazil Leader is Different from US Leader:
The foreign conducts and practices of the company is being observed since 2012. The
company has been involved in many financial fraudulent cases and bribery, and other similar

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financial discrepancies. Therefore, the forgery and the unethical business plan that had been
observed by the chain in Brazil, was being observed by both the government officials and the
media houses, and The New York times had got a Pulitzer Prize for covering the entire cases
and to have disclosed such a matter. Form the projected reports it can be said that the
leadership skills that both the stakeholders of Brazil and the parent branch in US had been
shown, were not to be appreciated, rather to be criticised heavily (Guruprasad. 2018).
However, it can be said that the decision of opening a firm in Brazil, was primarily the idea
of the stakeholders of US, and they wanted to expand their profit base, but the way the whole
business was dealt and conducted by the stakeholders of Brazil, is the primes reason for this
forgery, that, the organization is faced with. Therefore, the basic difference in the US leaders
and the leaders of Brazil, is that the former have a better understanding of business and how
the unethical practices should be done and practised and conducted, and upon evaluation, it
can be said that Walmart follow a tight ethical rule in the home country, however, in the host
countries or in the foreign countries, the company is faced with more unethical practices.
Matrix: Egoistic
The leader of Brazil, for is essentially can be termed with Egoistic. Even after the
whole thing, the chain in the Brazil has not changed its organizational culture and its
organizational structure and, this is the most basic example of an egotistical leader. The
egoistical leaders can bring in change but they are too egoistic that it takes for them some
time to understand and accept the situation, and refocus (Ferrell, and Fraedrich. 2015).
However, they also want a balance in the workplace, which is on the other hand shown
among the leaders of the US branch or the parent company.
Importance of Leadership:
To conduct a business it is important for all the organization to appoint leaders.
Leadership within the organization one of the most important aspects for all the

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organisations. The leadership practice e within the organization helps in initiating actions,
and taking proactive decisions. The leadership also helps in building a work environment and
maintaining the organizational culture and the organisational morale (Antonakis, and Day.
2017).
Ethical Decision:
As mentioned before, the ethical decisions and the ethical conducts conducted and
maintained by the company, help in the business processes and to maintain an organizational
culture.
The ethical decisions of the company help the company to gain and maintain its
positions in the market and to maintain its value within the same, and also helps the company
avoiding the legal issues, that the organizations are often faced with. The ethical decisions
taken within a company provides the basis for maintaining the ethical relativism within the
organization.
Stakeholders: Why Good in US and not in Brazil:
Therefore, from the above discussion, it can be said that the stakeholders of the parent
branch are better than the Brazil chain, as during the whole forgery cases no stakeholder from
the Brazil branch had been seen to take any steps or any measures, while it was the
stakeholders of the parent company who had come to the settlement (Brookes et al., 2017).
Also, the stakeholders of the Brazil branch did not do anything to maintain the organizational
ethics.
Impact:
The role of the stakeholders are much important, and it is evident from the forgery
case of Walmart. The stakeholders are the father bodies who contribute to maintain the

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organizational culture, the organizational policies and ensure that all the organizational
conducts are maintained in the proper way.
Conclusion:
The report has discussed about the ethical practices of Walmart and how has it
negatively impacted the organization and thus have tried to hold up the significance of ethical
relativism within the organizational perspectives. The report has also discussed about the role
of the leaders and stakeholders in maintaining the ethicality and the proper ways of business
conduction.
References:
Antonakis, J. and Day, D.V. eds., 2017. The nature of leadership. Sage publications.
Brookes, S., Dunn, M., Edwards, G., Barth-Farkas, F. and Vera, A., 2014. Power and
transformational leadership in public organizations. International journal of leadership in
public services.
Carroll, A.B. and Buchholtz, A.K., 2014. Business and society: Ethics, sustainability, and
stakeholder management. Nelson Education.
Elder, S.D. and Dauvergne, P., 2015. Farming for Walmart: the politics of corporate control
and responsibility in the global South. The Journal of Peasant Studies, 42(5), pp.1029-1046.
Ferrell, O.C. and Fraedrich, J., 2015. Business ethics: Ethical decision making & cases.
Nelson Education.
Guruprasad, M.L., DYNAMISM IN INTERNATIONAL BUSINESS ECOSYSTEM A
STUDY ON WALMART.
Johnson, C.E., 2018. Organizational ethics: A practical approach. Sage Publications.

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kATIUSCIA MORENO GALHERA, S.B. and VEIGA, J.P.C., 2018. WALMART IN
BRAZIL: FROM GLOBAL DIFFUSION TO NATIONAL INSTITUTIONAL
EMBEDDEDNESS. Walmart in the Global South: Workplace Culture, Labor Politics, and
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Warren, D.E., Gaspar, J.P. and Laufer, W.S., 2014. Is formal ethics training merely cosmetic?
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pp.85-117.