Running Head: GLOBALIZATION ISSUES AND CONCERNS IN BUSINESS
Name:
College:
Course:
Tutor:
Date:
Letter of transmittal
Strategic manager,
Wal-Mart Corporation.
Dear sir/madam
We are pleased to put forward a report that discusses current issues faced by Wal-Mart Corporation business environment. Enclosed are reports on the current issues in business environment. The issues discussed include globalization, globalized culture and international business ethics. An implementation plan to counteract with the issues and relevant recommendations are also outlined.
Kind regards,
Name…………………..
Group chairman
Wal-Mart Corporation
Executive Summary
The concept of globalization is not new to business environment. This business-economic event facilitates and influence many concerns and issues to the international business environments. Its related concerns and issues usually affect businesses positively and others negatively. Business enterprises enjoy the positive benefits of globalizations and there is a need to participate organizations in counteracting the negative effects. Wal-Mart like any other multinational corporations enjoys the many positive benefits of globalization or business internationalization. Major issues currently facing Wal-Mart due to globalization is culture diversity and ethics management. These two issues are critical to the growth and development of any organizations beyond borders of its incorporation. Globalization has changed the conception of stabilizing and making culture independency in organizations. The increased interconnectedness between people from different cultural diversity has expanded organization cultural change.
The different aspects of culture and ethics on international business environments are influenced by employees’ behaviors, attitude, motivational level, convections, norms and values. Initiating a change program in organization regarding these cultural and ethics elements will consequently promote and enhance cultural change. Cultures and ethics are fundamental to the efficiency and effectiveness of attaining customers’ satisfaction. Developing globalized culture and enhancing excellent business ethics in the globalized community will eventually lead to growth, increased market share, increased profits and develop customer, environment and organization relations.
Table of content
Executive Summary………………………………………………………………. 3
Introduction ………………………………………………………………………. 5
Issue and problems………………………………………………………………… 5
Wal-Mart background………………………………………………………… 6
Globalization Issues and Concerns in Wal-Mart……………………………………6
Globalized cultures………………………………………………………………… 7
Globalization and business ethics……………………………………… ………… 9
Conclusion …………………………………………………………………….. 12
Recommendation ………………………………………………………………… 12
Implementation plan ……………………………………………………………… 13
References………………………………………………………………………… 15
Introduction
Most businesses are turning to operate in a global marketing context. There are positives and negatives connected to the globalized business environment. Globalization due to transport costs reductions and new modern technologies are enabling customers from all corners of the world access Wal-Mart products. Conversely, globalization influence many concerns, which Wal-Mart’s business managers and leaders need evaluate and analyze accurately. Globalization refers to the integration of business activities beyond national borders (Shorish, nd). Amongst the many positive and negative issues contributed by globalization, cultural diversity and international business ethics have adversely affected Wal-Mart operations. Hopper, (2007) argue that globalized culture and ethics issues are predominant to all the multinational companies. Culture and ethics in the international markets and business relations need to be accurately managed. Failure to consider globalized culture and ethics issues can ruin international business growth and integration. These issues are enabling the company to become vigorous and vibrant towards goals achievement. The paper evaluates and analyzes issues regarding cultures and ethics due to globalization. Predominantly, the research paper evaluates on globalized culture and international business ethics that chiefly affect Wal-Mart Corporation. It evaluates globalization concerns and issues as related to culture and ethics.
Globalization Issues and Concerns in Wal-Mart
Globalization definitions acknowledge movement of goods, services, people, ideas, and investment capital contributed by economic open up markets and integration. Globalization in business environment provides many opportunities and challenges in operations. Essentially, wide and many market segments translate to increased earnings and customer base. On the other hand, globalization can mean increased marketing and business issues such as cultural diversity and international ethics including the expanded social responsibility at the international level. Wal-Mart need to consider all the merits and demerits of globalization and maximize on its advantages and minimize relevant issues and problems. According to the 2010 corporate social responsibility index report, the company did not appear in the top 10 companies (appendix one). In fact, the company did not appear in The 2010 CSRI 50 companies (appendix one). This indicates that, the company social responsibility that is influence by adoption of globalised culture and business ethics have deteriorated overtime (reputation institute, 2010). Ideally, the company is currently faced by cross cultural challenges and opportunities. In addition, business ethics are currently becoming an issue to its operations contributed by globalized markets.
Wal-Mart background
Wal-Mart opened as a discount retailing enterprise in 1962 by Sam Walton to offer low priced products (Anon. nd). The business has grown explosively in the United States and across the globe. According to market share reports, the company is the world’s largest retailer with over 5,000 stores across the world (Anon. nd). As supported by appendix 2, the company is the market leader compared to other retail Corporations. Wal-Mart growth and expansion is contributed highly by its qualified managers and leaders in the international business arena. As mentioned above the company has opened many branches across the globe. The growth is much attributed to the role of globalization context in the business environment. It is also influenced by efficiency and effective management of the company. Furman, (2005) support that globalization has actually enabled the company to penetrate countries such as china, Korea, Japan, Argentina, and Canada among others. In facts, globalization has greatly contributed to the company growth. It is not an exception of the business affected by the drawbacks of internationalization. International business operations are faced by cultural and ethics issues, problems, and Wal-Mart enterprises are not an exception.
Issue and problems
Economic integrations have caused implementation of new regulations, establishment of new cultures and business ethics promoting new competitiveness and productivity levels in many organizations. Gunarto, (nd) noted that internet communication and electronic commerce increases concerns regarding the prevalence of ethics issues due to globalization accelerated by cyber internet and IT society. Many countries are conservative on cultures and ethics. Therefore, they appreciate and respect their original cultures and business ethics. They are conservative in mode of doing businesses and behavior. Over the years, countries traditional approaches and methods of business practices and management styles are affected by globalization. Business ethics, corporate governance and social responsibility act as the three pillars that govern the company’s relationship with the outsiders and customers. In the international market, arena mangers need to recognize this and change its perception towards globalised culture, business ethics and the role of social responsibility to increase or strengthen relationship with outside business world. Based on the current observations adapting to international perspectives of management and leadership has become a problem to Wal-Mart. In the current professional world where cultures and ethics are diverse, venturing in international markets, depend on how companies manage issues and problems regarding diversity in cultures, business ethics and strengthening world relationship.
Globalized culture
It is with deep concerns that some countries that Wal-Mart operates with differ in their cultural diversity. Many countries have not reacted positively to aspects of American way of doing business and living. Cultures are entrenched in employees within organizations (Hermans, & Kempen, nd). Organizations cultures differ from one company to the other. In addition, multinational companies differ with respect to cultures and management. For example, Wal-Mart’s country of origin, United States of America, shoppers are greeted on the entrance, this is opposite to other countries, which has made the company get a balance to maintain its culture without alienating its potential international customers.
Basically, as held by Vesajoki (2002 in his research paper, different parts of the world markets create organization culture that involves around all cultural diversity elements to make employees feel respected and comfortable. Actually, Wal-Mart prides itself in America because of organizational culture uniformity and understanding. Shorish, (nd) notes that globalization has increased cultural sense in many organizations. As supported further by Shorish, (nd) the company tends to overdo business operations disregarding the role of culture in the globalized economy. Generally, the issues on cultures and globalization have received little attention to Wal-Mart. In part, the reasons why cultures are a problem to today’s international business relations is the fact that cultures are delicate, sensitive and in most cases diverse thereby being confusing. For organizations to know their globalized cultures, management must re-understand the whole world and know diversity, cultures, politics, races, ethnic backgrounds and the how there are manifested in their organizations. Hopper, (2007) highlight that cultural globalization usually affects the public, global events, business transactions, customer satisfaction and the cross-cultural products. In addition, as indicated by Hermans & Kempen, (nd) the world horizon opens up cross cultural business relations and globalised culture symbols. These need to be implemented into multinational and national entities.
The primary concern about cultural issues to Wal-Mart due to new globalization of cultures, is not only the unification of globe cultures, but is the tendency of the organization to “Americanize” these global cultures (Towers, 2004). Many of the company’s products are recognized as integral aspects of cultures. Similarly, many of the United States companies including Wal-Mart are expanding to the international markets fast than companies from other countries. This integration has caused adverse effects to the cross borders cultures identity. Towers, (2004) indicate that McDonalds Corporation is one example that can demonstrate the actions and strategies of Wal-Mart towards culture globalization. Globalization caused McDonalds Corporation to influence cross border habits and tradition change on food. Similarly, Starbucks, which also originated from United States changed cultural perception of coffee in many countries. Considering organizations structures, communication and management styles, many companies are influencing change towards uniform styles to all its international branches. Concerns that globalization actually leads to United States customs and values in Wal-Mart should not be overlooked given the today globalized culture (Hopper, 2007). According to Towers, (2004) the business philosophy of harmonizing organization structures, communication and management style remain a critical issue in the company. Though cultures have changed and evolved, globalization has driven cultural change. However, Wal-Mart corporation change in management styles, organizational structures and other cultural elements in organization, are essentially reflected by customer choice, preference, and the local cultures of market segments (Anon. nd).
Globalization and business ethics
Other than cultural change and global cultural identification, globalizations continue to be an issue and a concern towards business ethics (Hutchings, 2010). Across the globe, businesses are designing, redesigning and implementing corporate ethics programs to address issues regarding ethics, legal, social responsibility and global environmental conservation campaigns. Wal-Mart is not an exemption. Governments, international institutions, labor unions and civil rights activists have engaged in discussions on the role and the responsibility of businesses in the global community. According to Delener, (1995) business ethics especially in marketing entails detailed descriptions of standards, principles, convections, norms and morals governing business institutions and organizations operations. Hutchings, (2010) describes globalized business ethics as the wrong and the right as they apply within the international business environment. Many of international ethical issues are deep-rooted in the ideology that political systems, economic integration and development, cultures and laws vary significantly between countries to other countries (Delener, 1995). Actually, business ethics are regarded as two-sided blade and each edge can affect business operations and performance in their own ways. Multinational business enterprises can behave unethically resulting to harmful effects to the environment, erosion of market share and affect customers loyalty. International trade relations due to globalization have contributed to international procedures, standards and principle on the functional and the expectation of business community on ethical issues. Managers are faced with dilemmas on these ethical issues and unfortunately acting to fulfill their fiducially duties on shareholders neglecting responsibilities to other stakeholders in the global environment (Verstraeten, 2000). The fact remains that all managers act on their discretions to optimize shareholders objectives assuming other stakeholders expectations. In this regard, to promote business conduct operations should adhere to business and professional ethics, organizational ethics, corporate social responsibility, and corporate governance (Verstraeten, 2000). For instance, Enron and WorldCom failure shows how companies’ failure is highly contributed by the non-adherence to business and professional ethics e.g. scandalous practices. In this case, Wal-Mart is not an exception to the ethical problems in business relations. Business and professional ethics and code of conduct requires employees to act in accordance with the provisions of national, international laws and treaties. Business ethics should be clearly portrayed in all company’s dealings and operations acting within the frameworks of all laws. In fact, multinational companies such as Wal-Mart should adhere to fundamental frameworks on human rights including right to life, equal employment, fairness and justice. This become a problem since countries differ from the manner businesses recognize labor relation and business ethics.
Wal-Mart Corporation must operate within international business code of conducts and social responsibility. Globalization has developed new codes of conducts and the levels of social responsibilities. For example, supplying inferior goods without indicating on the quality of its product to its international markets is ultimately unethical. Moreover, international business ethics demand that managers uphold social responsibility by striving to promote quality of life and contributing to well being of all individuals and not destroying it (Hutchings, 2010). Therefore, globalization increases accountability on various unethical practices and social responsibilities. Due to globalization, the standardized quality and ethics have clearly established a close relationship between consumers and the organizations or between customers and the company employees.
Conclusion
Globalization refers to specialization in production, marketing, financial integration and investment in the global market segments. Based on the importance to endorse Wal-Mart growth and development, by increasing global markets share and vibrant international business relations, the company is influenced to analyze and evaluate various globalization concerns and issues. Global Cultural diversity and the business ethics need to be given fore front consideration to enable Wal-Mart expand efficiently and effectively in its global markets. It is evident that businesses around the globe are creating and implementing business ethics and cultural change programs to address the issues relating to legal, ethical, social responsibility, and environmental issues they face. Therefore, Wal-Mart corporations should adapt to the new globalised culture and business ethics rather than ‘Americanizing’ its business transactions, cultures, management styles and relations.
Recommendation
Globalization has become the ideal change process in today’s international business operations. There are numerous advantages on change in perceptions and attitudes towards globalization in all organizations including Wal-Mart Corporation. In essence, globalization is influenced and facilitated by advance in technology that includes communication and information sharing across the globe. Implementation of change in organizations depends on the effectiveness and the capacity of organizations leaders and managers to develop change at the global and national levels. Though the company got gold medal for maintaining employee safety and global culture entrenchment, Wal-Mart can implement change in cultures and business ethics through an initiative from attitude and perception change on employees (appendix three). For this purpose, the company can adopt on more transparent and open approach to change process especially to facilitate change in employees’ perceptions. In addition, the company could institute change committees that can oversight the change process. The implementation committee can visit or tour some of the recognized successful global companies such as General Motors and Ford Corporation. At the global level, there should be a culture and business ethics monitoring system or a department that is responsible and mandated to trace the volatility of the global cultures and required international business ethics. Ideally, changing the current cultural and ethics perception and attitude in the corporation is vital to growth, development and maintain the current level of market share. Similarly, changing Wal-Mart corporation culture and ethics will in return facilitate increased social responsibility and strengthens stakeholders’ relationships. These in return develop customer loyalty and strengthen brand image. In essence, the company should change and implement globalized culture and international business ethics.
Implementation plan
Growth and expansion of multinational companies, increased flow and inflow of labor force between countries, and advanced telecommunication industry has prompted companies to implement new organizations culture and business ethics. As noted by Griffin, & Moorhead, (2007) there is a positive connectedness between cultures and business ethics which is supported by organizations behaviors. Employees act unethically based on the foundation of culture in an organization. Changing organization local to global culture will automatically have an impact to adherence on international business ethics. Leadership and motivation play vital roles in implementing cultural change to all organizations. In their book, Griffin, & Moorhead, (2007) recommend behavior change and subsequently culture change. In an organization, this change can be implemented through the following plan/procedure.
I. Leadership acts as a pillar to cultural change process. Thus, achieving leadership commitment at all levels of management is the corner stone to facilitate culture change.
II. Organization must evaluate and recognize the present culture and identify organizations norms, values and behaviors required to facilitate cultural change.
III. Organization leaders and managers should assess the success or accomplishment of the change process.
IV. Fourth, an organization develops or formulates culture change process.
V. Leaders and senior managers are then held accountable to the change process. The Executives are to be responsible for the implementation process that includes changing values, norms, convections and behaviors of employees.
VI. Training and development programs are enacted to facilitate unfreezing of the existing behaviors that otherwise can challenge change process.
VII. Entity can develop and implement a feed back mechanism that can facilitate monitoring of change process including values and behavior change.
VIII. Set targets and standards. Employees should be coached through training to deliver feedback, and knowledge through developing desired values and behaviors.
IX. Communicate the change process and achievement progress to all levels of organization structures.
X. Finally, organization should measure, evaluate and control implemented culture change, and take appropriate actions incase of deviations.
References
Anon. (nd). Wal-Mart: how strategic management handled Wal-Mart’s reputation. Retrieved from http://www.awpagesociety.com/images/uploads/Wal-Mart_CaseStudy.pdf
Delener, N. (1995). Ethical issues in international marketing. Volume 4. London: Routledge
Furman, J. (2005). Wal-Mart: A Progressive Success Story. Retrieved from http://www.americanprogress.org/kf/walmart_progressive.pdf
Griffin, R. W. & Moorhead, G. (2007). Organizational Behavior: Managing People and Organizations. Edition9, Stamford: engage Learning.
Gunarto, H. (nd). Ethical Issues in Cyberspace and IT Society. RitsumeikanAsiaPacificUniversity. Retrieved from http://www.apu.ac.jp/~gunarto/it1.pdf
Hermans, H. J. M & Kempen, H.J.G. (nd). Moving Cultures The Perilous Problems of Cultural Dichotomies in a Globalizing Society.University of Nijmegen. Retrieved from http://www.huberthermans.com/101.pdf
Hopper, P. (2007). Understanding cultural globalization. Cambridge: Polity
Hutchings, k.2010. Global Ethics: An Introduction. Cambridge: Polity Publishers
Perry, M. J. (2007). Wal-Mart Gets the Gold Medal For Employee Safety. Available from http://mjperry.blogspot.com/2007/05/wal-mart-gets-gold-medal-for-employee.html
Reputation institute, (2010). The 2010 Corporate Social Responsibility Index. BostonCollege. Available from http://www.bcccc.net/pdf/CSRIReport2010.pdf
Shorish, M. M. (nd) Globalization and Culture. University of Illinois at Urbana-Champaign. Retrieved from http://home.hiroshima-u.ac.jp/cice/publications/shorish.PDF
Towers, D. (2004). Wal-Mart a globalized company. Retrieved from http://www.towers.fr/essays/Wal-Mart%20a%20Glocalised%20company.pdf
Verstraeten, J. (2000). Business ethics: broadening the perspectives. Peeters Publishers
Vesajoki, F. (2002). The Effects of Globalization on Culture. A Study of the Experiences of Globalization among Finnish Travelers. Available from https://jyx.jyu.fi/dspace/bitstream/handle/123456789/8059/G0000619.pdf?sequence=1
APPENDIXES
Appendix 1 (Reputation institute, 2010) Available From
Company Rank Global
Rank Company Corporate Social Responsibility Index (CSRI)
Company Rating
1 Johnson & Johnson 82.67
2 The Walt Disney Company 81.33
3 Kraft Foods Inc. 80.56
4 Microsoft 80.18
5 PepsiCo 80.15
6 Apple 80.11
7 Hershey Company 78.24
8 SC Johnson 77.62
9 Kellogg 77.60
10 Google 77.35
11 Caterpillar 77.24
12 Intel 76.98
13 Publix Super Markets Inc. 76.38
14 JC Penney 75.86
15 GreenMountain Coffee Roasters 75.77
16 Campbell Soup Company 75.74
17 Marriott International 75.49
18 Anheuser-Busch InBev 75.41
19 UPS 75.22
20 Adobe 75.17
21 AmerisourceBergen 75.17
22 General Mills 75.13
23 Clorox 75.12
24 Eastman Kodak 75.12
25 Fidelity Investments 75.06
26 Dell 74.92
27 Amazon.com 74.78
28 Avon Products 74.69
29 Lowe’s Home Improvement 74.67
30 Advanced Micro Devices – AMD 74.58
31 Unilever 74.50
32 Goodyear 74.40
33 Dunkin’ Brands, Inc. 74.38
34 Sara Lee 74.38
35 Yahoo! 74.38
36 Coca-Cola Bottlers 74.30
37 Deere & Co. 74.23
38 Procter & Gamble 73.91
39 FedEx 73.57
40 General Electric 73.42
41 New Balance 73.29
42 The Coca-Cola Company 73.10
43 Southern Company 73.01
44 Southwest Airlines 72.98
45 Texas Instruments 72.94
46 Medtronic 72.86
47 Starbucks Coffee Company 72.81
48 Hewlett-Packard 72.80
49 eBay 72.57
50 3M 72.52
APPENDIX 2
industry: General Merchandisers
Rank
Company
500 rank
Revenues ($ millions)
1
Wal-Mart Stores
2
315,654
2
Target
97
52,620
3
Sears Holdings
107
49,124
4
Foncière Euris
198
29,308
5
Federated Dept. Stores
262
23,347
6
PPR
288
22,075
7
Karstadt Quelle
305
21,004
8
J.C. Penney
339
18,968
9
Daiei
452
14,928
10
Marks & Spencer
493
13,909
Appendix 3 (Perry, 2007)
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