Ethical Dilemma For Generations: The Policy Of Sears Roebuck

Ethical Dilemmafor Generations The Policy Of Sears Roebuck And Compa

Ethical Dilemma: For generations, the policy of Sears Roebuck and Company, the granddaddy of retailers, was not to purchase more than 50% of any of its suppliers' output. The rationale of this policy was that it allowed Sears to move to other suppliers, as the market dictated, without destroying the suppliers' ability to stay in business. In contrast, Walmart purchases more and more of a supplier's output. Eventually, Walmart can be expected to sit down with that supplier and explain why the supplier no longer needs a sales force and that the supplier should eliminate the sales force, passing the cost savings onto Walmart. Sears is losing market share, has been acquired by K-Mart, and is eliminating jobs; Walmart is gaining market share and hiring.

Paper For Above instruction

The ethical issues surrounding the purchasing policies of Sears Roebuck and Walmart reflect fundamental differences in corporate responsibility, market strategy, and stakeholder impact. This paper examines the ethical considerations involved in the contrasting purchasing behaviors of these two retail giants, evaluates which firm adheres more closely to ethical standards, and discusses broader implications for stakeholders and market fairness.

At the core of the dilemma is the question of ethical responsibility toward suppliers and the broader economic ecosystem. Sears, historically committed to maintaining a balanced purchasing policy, adopted the guideline of not exceeding 50% of any supplier’s output. This approach aimed to foster healthy supplier relationships, promote market competition, and prevent monopolistic dominance that can stifle innovation and supplier viability. By limiting its share, Sears ostensibly upheld ethical standards of fair dealing and sustainable business practices, balancing its interests with suppliers’ survival and success (Weber, 2013).

In stark contrast, Walmart's aggressive purchasing strategy involves increasing its share of suppliers’ output, thereby gaining bargaining power and reducing costs. While this may lead to lower prices for consumers and increased market efficiency, it raises significant ethical concerns. As Walmart consolidates more than 50% of a supplier’s output, it gains disproportionate leverage—potentially coercing suppliers to eliminate sales forces, reduce pricing, and cut costs, often at the expense of supplier sustainability and fair competition (Ghemawat & Reinecke, 2018). Such practices raise questions about power abuse, market monopolization, and the ethical implications of squeezing suppliers to the point where their viability is compromised.

The ethical issues extend beyond supplier relationships to broader stakeholder considerations. Sears’s cautious approach aligns with corporate social responsibility (CSR) principles, emphasizing fair treatment and long-term sustainability. Conversely, Walmart’s pursuit of maximizing market share through aggressive procurement can be viewed as prioritizing shareholder returns at the expense of ethical considerations toward suppliers and potentially employees. The practice of demanding cost reductions and eliminating sales forces may lead to job losses and reduced competitiveness among suppliers, hampering economic diversity and innovation (Luo & Bhattacharya, 2006).

Determining which firm holds a more ethical position involves evaluating their adherence to principles of fairness, sustainability, and stakeholder interests. Sears’s policy of limiting purchase share suggests a commitment to balancing its interests with those of its suppliers, fostering an environment of mutual benefit and sustainability. While it faced challenges leading to market share loss, its ethical stance aligns with responsible business practices aimed at long-term stability.

On the other hand, Walmart’s strategy, though economically efficient in the short term, may compromise ethical standards by exerting excessive power over suppliers, potentially leading to supplier distress, reduced innovation, and job cuts. The ethical critique hinges on whether pursuing powerful market dominance justifies the means, especially when such practices threaten the sustainability of smaller suppliers and employment stability. Critics argue that Walmart’s approach, though legally permissible, raises ethical concerns about power imbalance and social responsibility (Harrison & Wicks, 2013).

In conclusion, the ethical assessment suggests that Sears’s conservative purchasing policy aligns more closely with principles of fair trade, stakeholder consideration, and sustainability. Walmart, despite its economic success, adopts aggressive strategies that may undermine ethical standards related to market fairness and responsible corporate conduct. While economic efficiency is vital, it should not compromise the ethical obligation companies have toward suppliers, employees, and society at large. A balanced approach, akin to Sears’s policy, promotes long-term sustainability and ethical integrity in business practices.

References

• Ghemawat, P., & Reinecke, J. (2018). Strategic management: Globalization and competitiveness. Routledge.
• Harrison, J. S., & Wicks, A. C. (2013). Managing for stakeholders: Survival, reputation, and success. Academy of Management Perspectives, 27(2), 27-43.
• Luo, X., & Bhattacharya, C. B. (2006). Corporate social responsibility, customer satisfaction, and market value. Journal of Marketing, 70(4), 1-18.
• Weber, J. (2013). Business ethics. Pearson Education.