Business Ethics in the Retail Industry: A CSR Perspective

Running Head: BUSINESS ETHICS
BUSINESS ETHICS
Name of the Student:
Name of the University:
Author Note

1
BUSINESS ETHICS
Introduction
It can be seen in the video Blood, Sweat and Tshirt that the workers who are employed in the
Indian Factories are subject to poor work and health conditions. They are paid minimum wages
and the retailers are not taking any steps to ensure their well being and welfare. It can be stated
that ethical decision making ensures that justice and order is maintained in a society. Thus for
ensuring that the operations of the retailers are conducted in ethical manner, the retailers have the
obligation to adopt a policy of Corporate Social Responsibility. As opined by Schwartz (2017),
Corporate Social Responsibility is defined as the responsibility of business organizations to
operate in a sustainable way with the aim to create social, environmental and economic benefits
for all the stakeholders. The principles of Corporate Social Responsibility can be said to be
closely associated with the corporate ethics (Carroll, 2015). Corporate social responsibility has
also been defined as the ethical expression of a business.
Discussion
Retailing in the Clothing Industry
As stated before, workers who are employed in Indian factories are subjected to extremely
adverse work conditions. Such workers are underpaid and live in extreme poverty. This can be
considered to be the ugly side of the retail industry. For understanding the ethical obligations of
the retail industry it is essential to first have a proper understanding of the functioning of such
industry. As opined by Rabine (2017), retailing can be defined as the interface which exists
between the buyer and the individual who purchases the goods for personal consumption.
Retailing industry can also be defined as the last connection that exists between the individual

2
BUSINESS ETHICS
client and the appropriate assembling chain. A retailer generally engages in demonstration of
pitching product to the individual buyer with a profit margin. Some of the unethical practices of
the retail industry include pitching higher prices of products, misleading stakeholders and
exploiting the workers by paying them lower wages (White, Nielsen & Valentini, 2017).
Analyzing the retail industry by ethical theory
Utilitarianism
According to the theory of Utilitarianism it can be stated that that individuals must act in ways
which ensures that the greatest benefit is created for the maximum number of people (de Lazari-
Radek & Singer, 2017). The actions of individuals are to be assessed by the utility created for the
stakeholders. Utility can be defined as the summation of benefit which is created minus the
efforts required to create such utility (Barrow, 2015). Utilitarianism is one of the main branches
of the consequentialist theories of Ethics.
In order to assess the operations of the Retail industry by the theory of Utilitarianism, it is first
essential to identify the relevant stakeholders involved in the process of retailing. The primary
stakeholders in the retail industry are the workers who are employed in the factories for
manufacturing clothes. As shown in the video Blood, sweat and Tshirt, the workers who are
employed in the Indian factories for manufacturing garments live in poverty and are exposed to
adverse working conditions. They are underpaid. The retailers outsource the task of
manufacturing clothes to developing nations so that they can hire cheap labor and get the job of
manufacturing clothes done at a cheap rate. However they do not take any steps to ensure the
wellbeing of the workers. Such retailers only focus on profit maximization. Thus by the
application of the ethical theory of Utilitarianism it can be stated that operations of the retail

3
BUSINESS ETHICS
industry re inherently unethical as it does create any benefit for the primary stakeholders
involved.
Corporate Social Responsibility of the Retailing Industry
As stated before Corporate Social Responsibility is defined as the choices of businesses to
conduct its operations in a ways which have positive impacts on the society, environment and the
economy. As stated by Pedersen (2015), Corporate Social responsibility has a triple concern
which includes individuals, benefit and the planet. Corporate Social Responsibility and the retail
industry are very closely interrelated. It has been perceived by the retailers that Corporate Social
Responsibility is a great opportunity to reach out to the masses. Due to globalization the process
of outsourcing has increased significantly and its best use has been made by the retail industry
(Rabine, 2017). The retail industry in the modern times outsources the task of manufacturing,
assembling and disseminating clothes to the developing nations.
The rationale behind outsourcing the task of manufacturing to the developing nations is
that labor is cheaper in Countries like India and China which are developing nations. According
to Razalan et al. (2017), Retailers all over the world aim to take measures which ensure the well
being of the employees, maintain quality and of the products in all the stores of the retail
network. However such a task has become more complicated than ever before due to
globalization. The clothing industry is centered in the hands of large corporations which have
vast chains of supply that are based on outsourcing. Thus it means that such measures as
discussed need to be implemented all throughout the network of retailing. It can be said that the
textile and the clothing industry are closely related (Dabija, Pop & Postelnicu, 2016). The textile
industry form the vertical linkages of the Clothing industry. It can be stated that for a garment to
be sold, it has to go through a lengthy process from manufacturing, to designing to reaching the