Walmart Chinese Suppliers

[pic 1]Closing Case of:[pic 2]

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Topic:

Wal-Mart's Chinese Suppliers 

Class:

BBA(HONS) 1st semester

Submitted to:                           

Sir Sajid                                                          

Lecturer of Introduction To Business

Submitted by: Rizwan Ghafoor , Iqra Ashiq, Irum Nasim, Summan Imtiaz, Zahra Muhammad 

Case Discussion Questions and Answers

Q#1:

       Is it legitimate for an enterprise like Wal-Mart to demand that its suppliers adhere to a code of ethics? What are the benefits of this practice to Wal-Mart? What are the costs?

Answer: Yes, it is. If a supplier wants to do business with them they have the right to request them to have ethical standards within their business. Every organization requires an ethical policy or code of conduct. Ethical supply chain management is becoming a mainstream business issues. A code of ethics mean that they are not going to cheat anyone.

By having a code of ethics conduct there would be:

º No overcharge (that nobody can create demand and supply problem)

º Less  chances of loss                                                             º Appropriate response to offense

º Follow the rules and regulation of organization

º Capable to reduce misconduct or illegal activities         º Establish reporting system

 -Benefits to Wal-Mart: ºCompetitive Advantage (It is the ability this organization that it provides cheaper goods on daily basis to its customers which sets it apart from competitors in the mind of customers). ºCustomer Satisfaction (that they are getting quality goods on lower prices) ºCSR Statements: (Wal-Mart is fulfilling the corporate social responsibility for its employees, customers, investors and environment) ºCheep and efficient labor (Wal-Mart is getting cheap and efficient labor from the under developed countries).

-Costs Wal-Mart is bearing:

 ºLow production

ºChances of fraud from suppliers (Falsifying records)

ºHigh Cost of Production
 

Q#2:

             Wal-Mart is known for constantly demanding the very lowest prices from its suppliers. How might this impact upon ethical behavior at its suppliers?

Answer:  The impact upon ethical behavior at its supplier is that they will start doing cheating like they will pay less to employees but in accounts they will write the full amount of wages or will not pay for the labors overtime but in accounts they will write the full amount or Falsifying the records.  We can consider the Case of Tang Yinghong the manager of Chinese factory (Auditors had found that the factory paid its 3,000 employees less than legal minimum wages and violated overtime rules) When he learned that Wal-Mart was about to inspect his factor. So Tang hired a Shanghai consulting company for 5,000$ with a promise that factory would past the audit. The company told  Tang that how to create fake but authentic  records and suggested Tang on the day of audit hustle with any worker with grievances out of the factory. Company also teaches him  that how to answer the questions of inspecting team. Tang followed all of this advices and the factory passed the audit, even though it changed none of its practices. The suppliers claimed that in order to reducing prices, while meeting Wal-Mart's demands regarding working conditions inevitably raises their costs, the falsifying records may be their only option. On the other hand Wal-Mart has started to work with some of its suppliers to help them improve their efficiency, rather than by keeping pay low.