7 Eleven Case Study PDF

Preview

Summary

Ethical issues on 7 Eleven...

Description

7-Eleven Case Study A case study that involves ethical issues is “How 7 Eleven is Ripping Off its Workers” published by Sydney Morning Herald and using a variety of other resources. 7-Eleven is Australia’s largest convenient and petrol retailer and is the third largest private company in Australia. It has grown to become the ‘first choice in convenience” and has approximately 650 stores in parts of Australia generating $3.6 billion in sales every year and profits of $1.44 million. In the article, ethical issues have risen, and ethical dilemmas are faced by the involving parties. Stakeholders were impacted by the issues and decisions were made ethically. Critical thinking is made about the original view of ethics and the view after the completion of this case study essay. To begin with, the case study is revealed through an ABC documentary, ‘Four Corners’, discovering that 7-eleven have been reducing the wage of the workers through exploitation and illegal practices. A dialogue from a whistleblower, “almost 100% of franchisees who engage in wage fraud” (Ferguson and Danckert, 2015) and “head office is not just turning a blind eye, it’s a fundamental part of their business” (Ferguson and Danckert, 2015) explore the fact that wage fraud is planned by the head office in order to reduce the company cost and increase their profits. The workers are being paid for more than half below the minimum wage, especially the young and foreign workers. An example is Mohammed Rashid Ullat Thodi a student who came to Australia to study was paid ten dollars an hour, but after tax and travelling expenses, his income is down to five dollars and hour. Also, if he attempts to resign or complain he will be threatened by his employer of deportation. This highlights the voice of every other international or foreign workers at 7-Eleven. They are suffering from intense conditions as student visas are only allowed to work for twenty hours a week, but they are forced to overwork by their bosses and being paid half of what they are supposed to get. Furthermore, “7- Eleven head office takes a 57 percent cut of gross profit, while the franchisee receives a 43 percent share” (Ferguson and Danckert, 2015) and “franchisees … with petrol pumps receive a 1c per litre commission from the sales… with the remaining income flowing back to head office” (Ferguson and Danckert, 2015) emphasises that the franchisees are basically trapped in a system where they have to exploit the workers or otherwise they are exploited themselves. Moreover, “if a customer drives off without paying, 7-Eleven head office still counts that as a sale and the franchisee must pay the full amount…often the franchisee will make the staff member who was working at the time to pay” (Ferguson and Danckert, 2015) further examines the harsh conditions that the employees are in and have no point in saying no as they fear of deportation. The workers are underpaid and have to spend their money on things that they are not supposed to makes it difficult for them to pay their bills, rent, food and school fee. Additionally, stakeholders that were mostly impacted by the ethical issue are the employed workers who were being paid less than the minimum wage, which resulted them to struggle with their bills and achieving a basic life, such as the money for food, clothing and rent. According from the Fair Work Ombudsman it stated that “during the course of the inquiry, public awareness of our concerns about the 7-Eleven network increased significantly as a result of widespread media coverage” (James, 2016) emphasising the company itself is impacted as their public image and stock prices decreased. This resulted the company to have less customers buying goods from the store and not many individuals would want to be

employed by the company. Even though “the regulator told the owners to pay back what was owed to staff” (Ferguson and Danckert, 2015) but the franchisees threatened the employees to pay the money back after or otherwise they will lose their job, and some were not paid at all. It can be seen that the employees do not always have a choice, they either have to pay the other half of the wage back or else they would lose their job, which meant they will have not enough money for survival and to an extent, they are complicit. According to an employee, some of them were starving and living on the streets due to the fact that they have no money, so they need the job and need the money. Likewise, the franchise owners were also impacted as they are receiving a fifty seven out of forty three percent gross profit shares and “after wages and loan repayments, a number of stores are operating at a loss.” (Ferguson and Danckert, 2015) The franchisees are victims as well as they cannot make any profit if they do not cut the costs and the easiest cost to reduce is the cost of labour. The positive side of the impact is that after the article was published, the company founder and chief executive have resigned and a “compensation scheme has so far paid 30 million to more than 800 employees.” The original view I had about business ethics before attending lectures and completing this case study assignment is that ethics is what the society thinks is right or wrong but has nothing to do with the law. Then I understand that some ethics are illegal such as wage fraud and tax evasion, even though you are benefiting yourself and you think it is just some business action, so you do not think it is wrong, but these types of actions are wrong and illegal. For some, illegal actions are unethical, but for others they think that being unethical does not mean they are breaking the law. To conclude, it can be seen that both the employees and franchisees have their difficulties in the reduction of wages. Even though being unethical is doing good business, however it is only benefiting the higher hierarchy and the front-line staff are losing the most profits.

Reference: Ferguson, A and Danckert, S 2015, Revealed: How 7 Eleven is ripping off its workers, Sydney Morning Herald, viewed 12 September 2018 James, N 2016, Statement on 7-Eleven, Fair Work Ombudsman. Viewed 12 September 2018

Smethurst, M, 2015, 7-Eleven Labor Scandal (2015), Business Ethics Case Analyses. Viewed 12 September 2018...