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Fin 370 Ethics and Compliance

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Wal-Mart Ethics and Compliance


OCT 23RD 2010

Wal-Mart Stores Inc.Ethics and Compliance

Give me a “W”, Give me an “A”, Give me an “L”, Give me a squiggly, Give me an “M”, Give me an “A”, Give me and ‘R”, Give me a “T”. What’s that spell? Wal-Mart. Whose Wal-Mart is it? It’s my Wal-Mart! Who’s number one? The customer! Always! This is the motto and cheers that Wal-Mart lives by. Don’t be surprise if you hear the associates shouting this loudly and proudly at your local Wal-Mart store. It is one way they show pride in the company and how much they value its customers. Ethics plays a huge role on why Wal-Mart has been successful and as Sam Walton would say “Just because we work hard, we don’t have to go around with long faces. It’s sort of a ‘whistle while you work ‘philosophy and we work better because of it” In 1962, Sam Walton opened his first store, he implanted many principles and values within the company; Respect for individual, Service to the Customer and Striving for Excellence which were his 3 basic beliefs and remain firmly committed to after his death. The Global Ethics Office in the company promotes ethical culture to all stakeholders worldwide. The statement of ethics gives all associates globally a reference guide to make ethical decisions. Wal-Mart ethical standards exist to strengthened the operation of positive labor and environmental practices in factories. The company encourages anyone that is involved in an ethical investigation to reveal and report all information truthfully. The facts presented should not be of personal opinion, bias or judgment. Several procedures have been put in place within the company that helps compliance in the financial environment. The company complies with the ethical and governance reforms established by the Sarbanes Oxley Act (SOX) The company believes in order to maintain excellence in production, honesty is fortified and realistic expectation are fulfilled. The store managers are updated in intensive training to reduce lawsuits.
The company must follow all the Securities and Exchange Commission (SEC) regulations and guidelines and choosing not to adhere to this guideline will result in heavy fines. Wal-Mart is known by most everyone, if they shop there or not. Being such a huge company they are always scrutinized and in the spot light, this in turn makes their actions and policies quite in the open. They also find themselves in a position of setting the standard and the theme for big business. If Wal-Mart finds them in the middle of some scandal next week it will no doubt be all over every news station and newspaper. Fortunately for them Wal-Mart seems to be transparent with their stockholders and the general public with these policies and practices. Elliot Blair Smith of USA Today wrote in 2005 about Wal-Mart’s actions after it was discovered that seven top managers were violating the ethics policy. Wal-Mart did not identify the fired managers, nor disclosed why they were ousted, but the new published a new amplified ethics policy within weeks of the incident. Wal-Mart attached it in a filing to the Securities and Exchange Commission related to the retirement of Vice Chairman Tom Coughlin, 55, whom the company says voluntarily quit in early December. Wal-Mart spokesman Dan Fogelman said the new policy toughened the company guidelines dealing with internal accounting issues, vendor relationships, and personal conduct. Wal-Mart in accordance with the Securities Exchange Act of 1934 requires all of Wal-Mart’s executive officers, directors and person who own more than 10% of the company stock to file reports of ownership and changes in ownership with the Securities and Exchange Commission (SEC). These reports are also filed with the New York Stock Exchange. A copy of each report is furnished to Wal-Mart. SEC regulations require Wal-Mart to identify anyone who filed a required report late during the most recent fiscal year. In an effort to keep the business and its day-to-day operations ethically sound Wal-Mart has actually established a Global Ethics Office. The Wal-Mart Global Ethics Office promotes the ethical culture to all stakeholders globally. They are also responsible for upholding the Statement of Ethics, which is at least in part what was recreated in 2005 and gives the associates a reference guide to help them make ethical decisions every day. Wal-Mart code of ethics forbids associates to discuss trade secrets or enter into a trade immediately after the company has made public any information like earning details. It also prohibits all of its associates from passing out materials that is price delicate. Any of the employees that are caught breaking this code will be subject to criminal actions including up to ten years in jail and liabilities of $1 million. Another code of ethics that Wal-Mart requires its employees to abide by is the anti-trust law. Anti-trust laws are in place to interpret and enforcer Federal Trade Commission Act. It acts as a vehicle to ensure and protects the consumers. It applies to both business and individuals. The philosophy behind this law is that trust and controls can deteriorates markets and prevent others from engaging in healthy market competition. Wal-Mart anti-trust forbids any employee from making or accepting payments of any value from foreign officials. The Foreign Corrupt Practices Act was enacted for the purpose of making it unlawful for Wal-Mart associate to engage in any bribery or to secure any improper advantage in order to assist in obtaining and retaining business. In an effort to keep abreast on all issues pertaining to operations and how they comply with SEC regulations Wal-Mart publishes quarterly reports and holds stockholders meetings. They also put on a huge event in which the year of Wal-Mart is displayed and celebrated. Wal-Mart showed positive changes in inventory movement, debt management and debt collection from 2009 into 2010, but little elsewhere. However, sales were still strong and the company liabilities were decreasing between the years. The company strong showing in Operation Income Return on Investment is also a positive note, even though it showed no change from the previous year. Despite the lack of change, management at Wal-Mart makes some very good revenue generating decision based on the company’s asset to keep their ration high in this category. Wal-Mart exceptional inventory turnover is a testament to their capacity to move product. They managed to improve inventory turnover from 8.74 in 2009 to 9.1 in 2010. This is such an impressive number given the tough economic times and the current depression. The Accounts Receivable collection time is also down to 97.74 days in the current year to 102.75 in 2009. By looking at the number, it shows that Wal-Mart is more aggressive in collecting debts and using the currency in other parts of the company.

The debt is on a positive note and even though the reduction in their debt ratio isn’t quite impressive, the matter of the fact is any reduction in debt is good. This shows some very educated management decisions regarding liabilities. Their ability to cover their interest is on a positive aspect and has changed drastically from 2009 to 2010. In all, Wal-Mart is in a very good shape financially and in tough times like this, many companies are downsizing or going bankrupt but Wal-Mart has a solid control over their financial and remains as strong as it was in the previous years. Wal-Mart Stores, Inc. serves customers and members more than 200 million times per week at more than 8,500 retail units under 55 different banners in 15 countries. With fiscal year 2010 sales of 405 billion, the company employs more than two million associates worldwide. In conclusion, Wal-Mart has established a new Corporate Compliance team that will oversee all of the company’s compliance in a number of areas, including the company’s obligations to its associates in terms of pay, working hours and time for breaks. The company also does have a statement of ethics in place to guide all of its associates. Wal-Mart conducts business in many countries around the world and the ethics applies to all of the associates worldwide and all members of the board of directors. Appropriate disciplinary action, up to and including termination, may be taken against anyone who conducts violates the statement of ethics or applicable laws and regulation.

Smith, E. (2005). Wal-Mart sets new policy on ethics. Retrieved on 22 October 2010 from
Wal-Mart. (2010). Wal-Mart Global Ethics Office. Retrieved on 22 October 2010 from
Wal-Mart. (2010). Shareholders’ Meeting Online Arena. Retrieved on 22 October 2010 from

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