Ethical and Social Responsibility

Ethical and Social Responsibility

Running head: ETHICAL PERSPECTIVES

Ethical Perspectives

Marilyn Alamo

 University of Phoenix

Ethical and Social Responsibility

ETH/316

Christopher Whetstine

Apr 21, 2014

Ethical Perspectives

The global organization that will be analyzed in this essay will be the Walgreen’s Corporation. Charles R. Walgreens opened its doors in 1901 with one store in Chicago, IL. The company presently has become a family of companies with 8,678 stores nationally with stores in Guam, Puerto Rico and the U.S. Virgin Islands with future expansion planned into Europe with the merger of Alliance Boots. As a large corporation Walgreen’s needs to keep growing and expanding to continue to be a profitable company and globalization is the next step in the business plan.

Walgreen’s announced on June 9, 2012 that it would take a forty five percent stake of the largest drug chain in Europe Alliance Boots for $6.7 billion with the option to gain the other fifty five percent shares in three years. With the announcement of the merger Walgreen’s has become the first Global Pharmacy-led Enterprise. Alliance Boots is one of Europe’s largest wholesale and pharmacy retailers. The combining of the two businesses will bring the total of stores to 11,000 stores in twelve countries throughout the United States, Europe, China, Thailand, and the Middle East. With this merger there will be many ethical perspective challenges that both companies will face on their own and then as the companies merge together.

One ethical issue that Walgreen’s has had to answer to is the pressure by a few large shareholders to move the company’s headquarters from the Deerfield, IL in the United States to the Europe to be able to circumvent paying higher taxes in the United States. The shareholders that are putting pressure on Walgreen’s to re-domicile are the top five percent shareholders of the company which are Goldman-Sachs Investment Partners and several hedge fund managers.  According to the United Kingdom newspaper The Telegraph, “The Chicago-based Company has come under pressure from a group of investors who are lobbying Walgreens’ management to take advantage of Alliance Boots’ Swiss domicile.”(Armstrong, 2014, p.) This move to Switzerland would cause a significant reduction in Walgreen’s tax bill.  UBS analysts recently calculated that Boots' tax rate would be about 20 percent because it is domiciled in Switzerland, while Walgreens' would be 37.5 percent (Grgunich 2014). If the company were to move to Switzerland Walgreen’s savings of over seventeen percent in taxes which would save the company millions of dollars and also the per share earnings would increase by seventy five percent.

 Walgreen’s has not made a definite decision to re-domicile to Switzerland due to the company is worried about political blowback but also consumer retaliation. With so many companies taking jobs out of the United States and outsourcing them other countries to take advantage of lower wages and lower tax bills, Americans have taken to social media and other outlets to boycott the use of these company products or services. This problem is an issue that needs to be considered by Walgreen’s before making any decisions that would affect their bottom line. According to Strategic Consumer Boycott, “We must determine how our American boycott will relate to other nations and their people. We don't want to create an unthinking jingoist movement, but we must begin here in America to protect the rights of our own workers.” (Strategic Consumer Boycott, 2014).  The United States have been losing jobs at alarming rates to other countries that offer the same job at a fraction of the cost. This course of sending jobs overseas has weakened the American economy and has led to large unemployment rates. Americans have realized what the government has allowed big business to do and people are starting to speak up and let their voices be heard through various media outlets and social media.

Another issue is the political blowback that Walgreen’s would experience if the company decides to move to Switzerland to effect a tax inversion.  Representatives from both political parties would have much to say and have in the past called out companies for skipping out of the country for the sole reason to avoid paying higher taxes. In an article in The Hill (Bary) 2010,     "Replacing a job that is based in another country with a domestic job does not stimulate economic growth or enhance the competitiveness of American worldwide companies,"