Wal Mart And Expansion Into Smaller Towns Commerce Essay

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Ethical theory progression dates back to the days of Aristotle and Plato.  The word ethic is derived from the Greek word ethos.  Ethos is simply the perceptible quantity of trustworthiness or integrity that one person believes exists within other persons (Haskins, 2000). An important impact in how successful and persuasive a new business can be within a community is determined by the amount of belief and trust the business instills in the community before it arrives.

The majority of society relies upon its own moral standards when it encounters circumstances in which the well being of others may be in jeopardy or constitutional rights are being compromised (Hosmer, 2008). Obstacles arise due to the fact that moral standards of behavior are personal and subjective. Moral standards fluctuate amid groups given that the values, beliefs, norms and goals to which they depend on vary due to differences in social and economic situations, and religious and cultural traditions (Hosmer, 2008).

Known around the world as the company that helps customers save money so they can afford a better life, Wal-Mart is also known for its distinctive corporate culture. Sam Walton, the forefather of Wal-Mart, built the business on his sense of morals and values. Walton's inimitable culture combined with rules and high moral standards have helped Wal-Mart become one of the world's most admired and established companies today (Wal-Mart Corporate, 2009).

Since 1962, when Sam Walton opened the first Wal-Mart store in Rogers, Arkansas, the culture has rested upon three fundamental beliefs in a way to better serve their customers and each other (Wal-Mart Corporate, 2009).

Beginning with respect for each individual, Wal-Mart describes itself as being a group of everyday, assiduous people who have teamed up to achieve incredible things. While the upbringing and personal beliefs of associates are exceedingly different, everyone is encouraged to treat each other with dignity, show respect, express their ideas and viewpoints and never take each other for granted (Wal-Mart Corporate, 2009).

Wal-Mart prides itself on the exceptional services offered to their customers. Being a savvy business, Wal-Mart understands that customers are the reason they are successful and should be treated as such. Wal-Mart leaders continuously search for opportunities to not just meet customers' expectations but to more often exceed them; quality merchandise at the lowest prices, community support and the best possible customer service (Wal-Mart Corporate, 2009).

Modeled after Sam Walton's own philosophy, the lowest possible price with the highest quality a customer not only expects but deserves, Wal-Mart makes every effort to attain excellence. While the company is proud of all their accomplishments, they are never satisfied. Wal-Mart is continuously in search of new ideas and values to bring to the communities they serve. The question, 'Is this the best I can do?" reveals the passion felt for the business, for the customers, and for the communities (Wal-Mart Corporate, 2009).

Diversity is large part of the Wal-Mart business plan. Wal-Mart encompasses economic, social, religious and cultural diversity which is the basis for the comprehensive, maintainable business model that respects and incorporates differences, serves customers, develops employees, partners with communities, and builds upon a wide-ranging supplier base. Currently the 2.1 million associates in the 8,400 stores located in 14 world markets serve 176 million customers per year. Wal-Mart believes that companies win when every person makes a difference; diversity strength is unfettered when individuals reach their maximum potential (Wal-Mart Corporate, 2009).

Wal-Mart is the mega-superstore offering products and services in a one-stop shopping experience that may include: banking, fast food, photography, nail and hair salons, gas, automotive services and optometry. Are the end results positive or negative when Wal-Mart locates a store on the edge of town in an "untapped" area (Entenza, Maniam, & Leavell, 2005)?

Proponents of the super giant allude to the benefits of new job creation, lower-priced products for the financially strapped economy and increased city and county revenue; all positive effects. Many communities are confident that Wal-Mart will have negative effects such as the destruction of the unique small-town atmosphere as well as the extinction of established smaller "mom and pop" stores (Entenza, Maniam, & Leavell, 2005). Amidst the pros and cons the question remains, what will be the moral impact?

Recognizing the Moral Impacts

Morals are like an inner compass guiding an individual toward the path that his or her conscience knows it should be following. Being in a position where one is forced to make a decision that will affect thousands of people, negatively and positively, one has to make the best decision one can for the good of the people. In the case of Wal-Mart building a store in Petoskey, Michigan there are many benefits to the company as well as the community, but some people feel that there are just as many harms. Here the writer will discuss a few of each to help come to a determination of whether Wal-Mart will proceed with building or move on to another location.


1. Wal-Mart Corporation will obviously benefit by entering a new location and acquiring the business of this region.

2. The local government will benefit from increased tax receipts.

3. The local residents will benefit from Wal-Mart moving in because the store

offers lower prices and a larger selection of products. Therefore the residents

will end up saving money by shopping here.

4. The residents have the potential for more jobs because Wal-Mart will need to

have the staff to run the store. So that is a benefit to them as well.


1. Wal-Mart locating in this region will definitely cause the local small

businesses to feel a strain, and most if not all will actually close.

2. Due to the possible closing of local businesses, employees will become


3. When the stores close, the buildings will be boarded up and the

downtown areas will suffer.

4. The city's scenery will become less appealing because the Wal-Mart structure

is quite large and imposing. The community is afraid that tourists will not want to

come visit because they feel the peace and tranquility will be gone.

5. Due to the local businesses closing and Wal-Mart moving in the community is

afraid that they will be responsible for paying more in taxes.

Based on the above information there are many benefits and harms associated with Wal-Mart settling in this location. The economic benefits can be described just as above with the benefits to the affected parties. The fact that Wal-Mart will provide hundreds of jobs for the community is a major benefit. Consumers will also benefit tremendously from lower prices and larger selection of items.

If the local government grants permits for Wal-Mart to build in Petoskey, Michigan, then the company is fully within its rights to develop a building for that purpose. Therefore, legally they would have no reason to give up and change locations.

Defining the Complete Moral Problem

Is it "right" for Wal-Mart to expand into smaller towns like Petoskey, Michigan? Wal-Mart's expansion into small towns can result in benefits (acquiring business of the mentioned region, tax revenue, and lower prices for goods, larger merchandise selection, and potential increase in job market) for the residents of those small populated areas. It could also result in a loss of tourism, land, and history. A market research study found 47 percent of permanent residents in Petoskey approved the concept and 62 percent of permanent residents of Emmet County also approved the concept (Hosmer, 2008 p. 119). When surveying summer residents, 93 percent opposed the plan (Hosmer, 2008. P. 119). The permanent residents of Petoskey have a right to desire more growth opportunity for their town, summer residents have a right to oppose it, and Wal-Mart has an equal right to expand in areas that meet their target demographics.

Determine the Economic Outcome

An ethical consideration is incomplete without a weighing of the economic consequences of an action or inaction. The guiding principle for this consideration is stated in this manner:

Always take the action that generates the greatest profits for the company because this will generate the greatest benefits for the society, provided that all markets are fully competitive, all customers are fully informed, and all external and internal costs are fully included (Hosmer, 2008, p.119).

The substance of the quote above can be understood more clearly when contemplated in the context of two particular comments from Adam Smith. Smith states, "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from the regard to their own interest" (Smith, 1994, p.15). The point here is that mankind does work for its own benefit. In order for a man or woman to benefit from his or her work, the work must be beneficial and thus valuable to others. Smith also explains:

As every individual, therefore, endeavors as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of a greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it (Smith, 1994, p.484).

This passage is precursor to the famous "invisible hand" comment. The quote basically states that man's attempt to produce more for himself makes the society wealthier. It will be useful to keep the comments above in mind as the writer discusses the economic calculation required of Wal-Mart and its manager.

The writer must first mention that the stated guiding principle is an impossible proposition. It states that profit maximization can only be truly beneficial to everyone if the maximization occurs in an environment of perfect knowledge. This environment does not and will not exist when humans are involved. Perfect knowledge assumes that one can know the costs of all inputs and outputs and determine the millions of alternatives for every item of human use on the planet. It is manifest that such knowledge is impossible. Free markets, through the price mechanism communicate the information mentioned above. It is an imperfect system but the closet thing mankind has to determine distribution. For more on the knowledge problem one can read after F.A. Hayek. This being said the writer believes the guiding principle can be used as a target more than a destination.

Wal-Mart should build the store and the surrounding mall area. The land has been purchased. Considerable time and effort have been expended in researching and developing the site. To cease at this point would be akin to burning money. The location will make a profit for the corporation if it is opened. Wal-Mart's historic record has proven that the corporation is proficient at choosing locations. There is but a slim chance of failure and that failure would stem from improper management and not logistics.

Is the market in Petoskey fully competitive? No, it is not. There are many small shops which are not in direct competition with one another. One would assume the small shops each serve a different function. There may be a grocery store, footwear store, hunting store and so on. Wal-Mart, on the other hand will compete with all shops because it is more of a general store. So Wal-Mart's inclusion will create a more fully competitive market.

Are all consumers in Petoskey fully informed? Yet again, no, they are not. When the Wal-Mart opens, consumers will be more aware of pricing and alternatives. This fact explains the expected closure of the small, hometown shops. If the citizens have been purchasing milk for x amount of dollars and find the same milk can be purchased for less, which store will the consumer choose? Wal-Mart's existence will create a more fully informed customer.

Have all internal and external costs been considered? From Wal-Mart's perspective, the reader can be fully confident that Wal-Mart has considered every internal cost. This is the key ingredient to the corporation's success. External cost deals with outside factors such as the environment and other indirect costs associated with the presence of a business. Will Wal-Mart directly or indirectly affect others? Yes. Many businesses will close because said businesses will not be able to compete with Wal-Mart. Many new businesses can open in niche markets because Wal-Mart is a general-type store. The environment will change also. Downtown will be forced to adapt or become an eyesore. The writer does not believe the mall area around the new Wal-Mart location will become shoddy simply because it is not in Wal-Mart's best interest to allow this.

In conclusion, Wal-Mart should open the location as planned. It is the manager's familial responsibility to provide for his own. In order to do this, the manager must perform his job which is an efficient use of resources in the development of profit maximizing opportunities. This opening is said opportunity. Wal-Mart must consider the shareholders who expect a return on their investment. This opportunity will provide the expected return. The opening will lead to greater price knowledge and greater competition. To borrow from the least-number-hurt philosophy: Wal-Mart will help more than it hurts. Prices will be lower and this will leave the community with more disposable income.

Considering the Legal Requirements

For every situation there are legal ramifications to be considered. In the case of a new Wal-Mart store being built in Petoskey, Michigan, the legal aspects that need to be considered are: to build or not to build. The reason for this question is that the citizens of Petoskey are completely opposed to the store being located in their idyllic vacation spot (Hosmer, 2008, p19). To determine whether to build the store in this town, we must be sure that a compromise of some sort has been reached so that all parties win on some parts of this agreement.

As for the legal aspects of building a Wal-Mart store in any city, the upper management must work with the local zoning department to make sure the location is zoned properly for this type of facility. Wal-Mart has to submit plans to the city to show where they want to build and the size of the project; and once the city approves the plans Wal-Mart has the green light to build their facility. Even though the community opposes the project, Wal-Mart has the right to build their location just as much as the community has the right to try and fight it.

Evaluating the Ethical Duties

In evaluating the ethical duties relating to the Wal-Mart case 4-2, one needs to consider the local setting of the Petoskey. A lovely rural area with established resort area appeal would be seriously compromised by a large cheapening development which would detract from the developed architecture. Business would be damaged by the closing of numerous small businesses forced out by the mega-store approach. Many jobs would be lost for long time employees. Thus, the since of rural tourism-oriented community would be seriously compromised.

As shown, twenty two thousand residents in the surrounding areas opposed this development of a Wal-Mart complex. This fact would be of major interest to the media and would reflect badly on Wal-Mart as the non-caring, overbearing super-store. While Wal-Mart offers many more choices and lower prices, the local community and surrounding county would not justifiably benefit in comparison to the destructive effort on the general quality of life in Petoskey and Emmet county.

These local citizens should be free to accept or reject the proposed plans as seen fit by the majority which would contribute to the greater good. Also, one must consider the individuals whose jobs would be lost as well as loss of property value. Wal-Mart's job replacement does not typically replace these positions, income, or taxes fully usually showing a loss in this area of twenty to twenty five percent in the early years of operation. Wal-Mart's job opportunities offered little chance for a considerable amount of personal skill development. Few could progress significantly within this company's structure.

Overall, one must consider that the genuine spirit of community already built and thriving in Petoskey would not be aided in its evolution by the presence of a mega-mall and the diminishing of local business color within the established setting.

Propose a Convincing Moral Solution

There are basically three competing interests in this case. Wal-Mart has an interest in opening the location for the purpose of profit. Local business owners have an interest in Wal-Mart not opening for the purpose of their own profits. Tourists have an interest in Wal-Mart not opening for the purpose of the vacation environment.

The writer believes the tourist faction to be the least worth worrying with. Many vacation spots have a Wal-Mart, such as Branson, Missouri, and Wal-Mart's existence has not hurt in the least and one could even argue the Wal-Mart has actually helped those on vacation. How so? Imagine being in a vacation area where one does not know where each retail outlet is located. One could spend precious vacationing time searching for items such as swimsuits, toothpaste, and cough medicine. A Wal-Mart alleviates these time consuming searches. One can find most if not all things needed at one location and go on to enjoy one's vacation.

The local business owners have a legitimate interest in Wal-Mart not opening. Many will suffer the loss of their business due to competitive pressure from Wal-Mart. All would enjoy a static future pertaining to profit but this is not realistic. A geographic monopoly, no negative connotation intended, will not last forever. The business owners will have to choose for a modification of their business or an outright closing. In business, competition decides which business lives and which dies. It is a cold, impersonal process but this is what makes the competitive process so just. One is not rewarded with profit because of political connection or feeling. One is rewarded with profit on the basis of how well the customer is served. Thus a business lives or dies by the hand of those who use the particular business. Make no mistake; many who object to Wal-Mart's opening will be the first ones in line for the Grand Opening.

Wal-Mart's purpose is to make a profit. The corporation should open the proposed location. There is no legal requirement which prevents the development and opening. There is no true moral reasoning that should inhibit the corporation. Current objections are basically objections to change. If the citizens and tourists are truly against the Wal-Mart location, they can close the location by failing to frequent it.