Business Ethics in the Retail Industry: A Study on Corporate Social Responsibility and Ethical Standards

Running Head: BUISNESS ETHICS
BUISNESS ETHICS
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Introduction
Corporate Social Responsibility is defined as business’s responsibility to conduct
business in a sustainable manner which ensures economic, environmental and social benefits for
all the stakeholders involved. Businesses also have the responsibility to make positive impacts on
the society (Carroll, 2015). The rationale behind this is that businessesare allowed to exist in the
society as it creates benefits for the society. Thus the principles of corporate social responsibility
are also applicable in the Retail industry. Adopting a policy of Corporate Social Responsibility
helps business to take ethical decision and thus ensure a sense of order and justice. As opined
byTai& Chuang(2014), the principles of corporate social responsibility are closely related to the
principles of corporate Ethics. CSR can thus be described as a business’s ethical obligation
Retailers engaged in fashion and clothing industry have the ethical responsibility to
ensure that they create benefits for the stakeholders especially the workers who are employed in
the factories. Thus retailers must comply with ethical standards for the purpose of ensuring the
wellbeing of the workers and their families. Retailing has a significant role in the economy of the
world. Retailing can be considered to be the link that exists between the manufacturers and the
final consumers. Therefore, complying with ethical standards is a must for those involved in the
retail sector as the actions of the retailers have significant impacts on its stakeholders. The
documentary “Blood, Sweat and Tshirt” presents a grim image of the dark side of the retail
industry. It is clearly evident in the documentary that workers in the Indian Factories who
manufacture garments live in adverse living conditions. They are paidvery low wages and are
made to work in adverse working conditions.
Discussion
Ethics in the Retail industry
Ethics is defined as a branch of philosophy. Its objective is to uplift the moral values of the
people and evaluate whether the actions of the individuals are morally right or wrong(Crane,
&Matten, 2016). The actions of the retail industry can also be analyzed by the ethical standards.
For the assessment, it is primarily essential to identify the stakeholders who are impacted by the
actions of the retail industry. As mentioned above the retail sector is the direct link between the
manufacturers and the final consumers. Therefore all the parties who are engaged in services

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ranging from production to final consumptions are impacted by the retail industry. Retailers
often indulge in unethical practices to acquire a higher profit margin and in the process mislead
customers by concealing the truth about the products sold or charge higher prices from such
customers (Freise&Seuring, 2015).
However they should refrain from such practices and reveal the characteristics of the products
that are sold by them. They should always charge fair prices for the products sold by them.
Retailers also have ethical responsibilities towards the workers who are employed in the factories
and manufacture the garments. In the documentary “Blood, Sweat and T Shirt” it is clearly
evident that that the retailers do not take any steps to ensure the wellfare of the workers
employed in the factories, instead they are exploiting them. The wages paid to the workers are
very less compared to the profits made by the retailers by selling the garments produced by the
manufactures to the final customers. It can be mentioned that the retailers employ a large number
of workers and therefore such retailers must formulate policies and procedures to promote fair
recruitment, selection and training of employees (White, Nielsen &Valentini, 2017).. It can be
said that for assessment of the ethical obligations in the retail sector of the clothing industry it is
important to have a good idea of how the retail industry functions. It has been opined by Crane
&Matten (2016), the retail industry can be described as the link existing between the
manufacturer and the person who buys the goods for personal consumption. It is the link that
exists as the in between assembling chain and the individual client.
Analyzing the operations of the Retail sector by Ethical theory
To analyze whether the actions of the retail sector of the clothing industry are in line with the
ethical standards, it is important to relate such operations with the ethical theories. The ethical
theory that can be applied in this given scenario to assess the actions of the retailers who buy
garments from the India factories is Utilitarianism.
The theory of Utilitarianism is one of the versions of consequentialism which states that the
consequences of the actions are the only standards of determining whether the action is right or
wrong (Mill, 2016). However as opposed to the theory of egoism, the theory of Utilitarianism
focuses on the interests of the individuals equally. The ethical theory of Utilitarianism states that
only those actions can be considered to be ethical which produce the maximum utility for the

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most number of stakeholders (Mulgan, 2014). Utility of actions can be defined in terms of the
well being of the entities (de Lazari-Radek& Singer, 2017). Some of the key proponents of
Utilitarianism are Jeremy Bentham, John Stuart Mill and Peter Singer. The proponents of
Utilitarianism believe that the basic purpose of morality is to enhance the quality of life by
significantly increasing the good impacts such as happiness and pleasure and reducing the
negative impacts such as unhappiness and pain (Barrow, 2015).
In order to assess the actions of the retailers as provided in the given documentary, it is first
important to identify the stakeholders who are relevant in this given scenario. The primary
stakeholders that are involved in this given scenario are the workers who manufacture garments
in the Indian factories. They are given the primary responsibility of manufacturing the clothes
which are then sold by the retailers. However the retailers do not take any steps to ensure their
well being. Rather they exploit such workers by paying the low wages and providing them with
adverse working conditions. The retailers however earn huge profits by selling the garments that
are produced by the workers of such factories, however in the documentary it has been shown
that the workers live in acute poverty. It can be said that retailers outsource the task of
manufacturing the garments to the developing countries so that they can employ workers at a
cheaper wage rate. Thus by applying the ethical theory of Utilitarianism, it can be stated that the
retailers’ actions are inherently unethical as such actions do not create any utility for the workers
who are employed in the Indian factories. Such actions can also be called immoral as they do not
enhance the quality of life of the stakeholders.
Corporate social responsibility of the retail industry
Corporate Social Responsibility(CSR) as mentioned earlier is the choice of a business to
perform its operations in ways which impact on the environment, economy and the society
positively (Tai, F. M & Chuang, 2014). As opined by Schwartz (2017), adopting transparent,
sustainable and responsible CSR methodologies not only strengthen the reputation of the
business but also positively impact the community and the marketplace of the community.
Adopting a CSR policy reflects the values and the objectives of the organizations and aims to
create a beneficial and sustainable future for the organization. The principles of Corporate Social
Responsibility can be successfully implemented into the retail sector of the fashion and clothing
industry. Such retail sectors should perceive the CSR policy as an opportunity to communicate to