Burena MorrisBusiness Law I 13EW1

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Wal-Mart de Mexico’s Moral Compass Road

Everyone will stand at “life’s ethical double road”!

Go LeftDo the wrong

thing!

This Way

Go RightDo the right

thing!

How you use your moral compass will determine which path you will take. Go right and do the right thing or go left and

do what’s wrong!

Wal-Mart de Mexico’s Moral Compass Road

Founded in 1952, Wal-Mart Stores Inc. changed the face of retail through new technologies and experimental store

formats.

Since the company went public in 1970,

sales have grown 21% annually in the

past 45 years.

Walmart is committed to expanding stores to better

serve customers and improve communities.

Rapid growth is credited to low cost combined with a

great shopping experience that keeps customers coming back.

Walmart remains

leader in the retail

industry

Analyst calculated the new store would attract over 250 customers hourly but….

ZONING

Local Merchant & Residential Opposition

ARCHEOLOGYT

RA

FF

IC

4 obstacles stood in their way

It begins with an attraction

Traffic was already congested and building a store would

only worsen matters. Regardless, local traffic

authorities grants approval after receiving a $25,900 bride.

1

2

The zoning map prohibited commercial development on

Mrs. Pineda’s field; nevertheless, executive's authorizes delivery of a

$52,000 cash bribe to have an official redraw the map.

ZONING

T R A F F I C

Teotihuacán pyramids were protected as cultural landmarks, so

to obtain a permit to construct, executives sent a personal gift for $36,000 along with a donation for

$45,000 disguised as one big archeology bride.

After experiencing opposition from local merchants and residents, executives sends former Teotihuacán’s Mayor a $114,000 bribe. Shortly afterwards, Walmart is granted the right to start

construction without all required permits.

3

4

ARCHEOLOGY

Local Merchant & Residential Opposition

Scandal Aftermath

8 senior executives holding critical positions in the international division has left the company

Walmart spends more than $439

million on investigations &

compliance

Pending investigation into possible violations of the Foreign Corrupt Practice Act prohibiting companies from bribing foreign officials.

Future new store opening

slowdowns in Mexico represent

a $1.3 billion loss.

Stock prices lag & shares

tumble 4.7%

Walmart could pay at least $4.5 billion

in penalties.

More than $1 trillion (3% of the world GDP) is paid annually in bribes; in fact, damages from bribery…

Bribery Effects

Lowers economic

growth

Marginalizes & Restricts Global

Markets

Erodes support for economic aid

Puts heavy economic burden on the poor

Lowers the standard of living

Discourages investments

Don’t use bribery to “circumvent bureaucratic red tape”!

Be aware of how your decisions will affect

stakeholders (consumers, management, owners, investors, employees, community and future

generations).

Executives/Managers

Hiding evidence is unethical! It will not fix the problem or maintain public trust.

Corruption will cost you your freedom, integrity, health, wealth and job!

Just Say No to Bribery & YES to…

Transparency is the key method

for preventing corruption.

Transparency promotes robust anti-corruption

behaviors.

Transparency empowers citizens, investors, employees and other stakeholders to hold

companies accountable for their activities.

Advocate greater transparency using three public reporting dimensions; anti-corruption programs, organizational

transparency and country-by-country reporting.

TransparencyBribery

Or, say YES to… Tone at the Top

“Tone at the Top” creates a culture where everyone has ownership and responsibility for doing the right thing.

Understand the prevailing culture

Develop consistent and

visible executive sponsorship for ethical issues.

Leaders must do as they say while enforcing company’s

values and ethical standards.

Develop an open & transparent climate where

good behavior is rewarded and poor

behavior is addressed.

Embed a system that supports Tone at the Top

as business as usual.

5 Key Principles

BALANCE THE ETHICAL SCALE

Create more businesses that believe in protecting stakeholders through…

Ethical

Unethical

Unethical

Anti-Corruption Tools “Tone at the Top”

Transparency

Accountability

POINT YOUR MORAL COMPASS AT RIGHT CHOICES!

References 

Barstow, D. & Xanic von Bertrab, A. (2012). The Bribery Aisle: How Wal-Mart Got Its Way in Mexico. The New York Times. Retrieved from http://www.nytimes.com/2012/12/18/business/walmart-bribes-teotihuacan.html.

Barstow, D. & Xanic von Bertrab, A. (2012). The Bribery Aisle: How Wal-Mart Got Its Way in Mexico [photos]. The New York Times. Retrieved from http://www.nytimes.com/2012/12/18/business/walmart-bribes-teotihuacan.html.

Brown, A. (2012). Mexican Bribery Scandal Could Cost Wal-Mart $4.5 Billion; Shares Down 4.7%. Forbes. Retrieved from http://www.forbes.com/sites/abrambrown/2012/04/23/spooked-investors-sink-wal-mart-nearly-5-after-bribery-revelations-at-least-4-5b-penalty-likely/

Gasiorowski-Denis, E. (2014). New Business tool for Anti-bribery.  International Organization for Standardization. Retrieved from http://www.iso.org/iso/home/about/the_iso_story.htm.

Groves, T., Tomlinson-Roe, I., Osborne, J. & Tracy J. (2012). Tone from the Top: Transforming Words into Action. Price Waterhouse Coopers LLP. Retrieved from http://www.ibe.org.uk/userimages/pwc_tone_from_the_top_2013.pdf.

References

Harris, E. (2014). After Bribery Scandal, High-Level Departures at Walmart. The New York Times. Retrieved from http://www.nytimes.com/2014/06/05/business/after-walmart-bribery-scandals-a-pattern-of-quiet-departures.html?_r=2.

Heineman Jr., B.W. (2014). Who’s Responsible for the Walmart Mexico Scandal? Harvard Business Review. Retrieved from https://hbr.org/2014/05/whos-responsible-for-the-walmart-mexico-scandal/.

Kubasek, N., Browne, M.N., Herron, D.J., Giampeto-Meyer, A., Barkacs, L.L., Dhooge, L.J., & Williamson C. (2013) Dynamic Business Law 2nd Edition.  McGraw-Hill/Irwin.

Walmart Social. (2015). Sam Walton. Wal-Mart Stores, Inc. Retrieved from http://corporate.walmart.com/our-story/history/sam-walton.

Walmart (2015). Walmart Logo [photo]. Walmart.com. Retrieved from http://corporate.walmart.com/.