Waste Mode is a quick way to ensure that stock is accounted for when it has been damaged or cannot be sold for certain reasons. Reasons can include things such as damaged product, promotion, donation, gift or staff allowance. You can create as many different reasons for writing off stock as you wish.
Waste mode, or write offs in general, form an important part of a good stock control management procedure. It allows stock to be accounted for so that when a stock take is performed, the variances are minimal and the true valuation is able to be reached. There's nothing wrong with writing stock off in any business, you just need to make sure that you are recording it so you can identify reasons to minimise shrinkage in the future.