7-Eleven Case Study: Ethics and Exploitation

This assignment analyzes the ethical controversies surrounding 7-Eleven, particularly regarding wage theft and unfair labor practices. It explores how these issues reflect broader concerns in the retail industry and delves into the company's attempts to address the situation. Students are encouraged to consider the impact of such ethical breaches on 7-Eleven's brand reputation and corporate social responsibility.

Running head: CASE STUDY
Case Study
Name of the Student:
Name of the University:
Author’s Note:

1CASE STUDY
Table of Contents
1.0 Introduction................................................................................................................................2
2.0 Ethical Dilemmas in the Case Study.........................................................................................2
3.0 Application of Theories in Case................................................................................................3
3.1 Application of Utilitarianism Rule Theory............................................................................3
3.2 Application of Virtue Theory of Ethics.................................................................................4
4.0 Ethical Solution to Dilemma.....................................................................................................5
4.1 Compliance with Fair Work Employment Practice...............................................................5
4.2 Effective Governance Arrangement......................................................................................5
4.3 Staff Consultative Forum.......................................................................................................6
4.4 Fair Treatment with Employees.............................................................................................6
5.0 Conclusion.................................................................................................................................6
Reference List..................................................................................................................................8

2CASE STUDY
1.0 Introduction
Ethical Dilemma is a decision-making problem between two feasible moral imperatives,
where neither of which is unambiguously preferable or accepted (Schwartz 2013). This study
will select the ethical dilemma of 7-Eleven Organization in Australia. The study will explore the
facts of the 7-Eleven ethical dilemmas. Furthermore, the study will also align utilitarian ethical
theory and virtue theory ethics with the case study of 7-Eleven. Apart from that, the organization
will also suggest some appropriate solutions to the ethical dilemma of 7-Eleven.
2.0 Ethical Dilemmas in the Case Study
Fair Work Ombudsman has conducted an investigation over the organizational practices
of 7-Eleven in Australia. The investigation has revealed various unethical organizational
practices of the organization. As per the investigation, the managers of 7-Eleven franchises in
Australia deliberately exploit the employees in the workplace. According to Smh.com.au (2016),
7-Eleven has constantly been alleged with wage fraud. Moreover, the managers of the
organization force the employees to work long working hours. The employees are being forced
to work beyond the normal working hours. However, the employers are reluctant to adequate
payment to the employees. Most of the migrant employees are being forced to work for more
than 48 hours. On the other hand, Fair Work Ombudsman (2016) opined that the managers of 7-
Eleven Franchises have also been alleged with falsification of the payroll of the employees. The
payroll of the employees has recorded half the hour recorded in the payroll, which causes ethical
dilemma.

3CASE STUDY
ABC News (2017) pointed out that long working hours of the employees have actually
created mental stress and physical stress for them. The underpayment practice of the organization
has also created financial crisis for the employees. On the other hand, NewsComAu (2016)
opined that 7-Eleven has been majorly alleged with the Visa cancelation of the foreign students,
which use to work in the organization for earning some money. Moreover, the foreign students
have been provided with the threats of Visa cancelation on breach of student visa rules.
Therefore, the students have become scared of informing any legal authorities regarding the
breach of employment laws of the organization. Furthermore, Smh.com.au (2016) stated that 7-
Eleven is also involved in unethical employment practice of cash back system. In this unethical
practice, the employees are initially paid adequate rewards for avoiding any legal issues, but later
on, they are to give some portion of salary back to the organization.
3.0 Application of Theories in Case
3.1 Application of Utilitarianism Rule Theory
Utilitarianism theory places focus on the fact that right and wrong of an action is solely
dependent on its consequence. According to Pivato (2016), the best action is the one, which can
maximize the utility of the action. In this context, utility defines sum of pleasures resulted from
an action minus the sum of all pains suffered from the same action. Moreover, Baron et al.
(2015) opined that the ethical and right action provides maximum amount of pleasure and
minimize the pain of the people. While applying this theory to the case of 7-Eleven, it can be
seen that the organization practice of the organization actually harmful for the employees.
Moreover, the long working hours has created physical and mental stress for the employees.
Apart from that, the underpayment practice of 7-Eleven has created financial crisis for the

4CASE STUDY
migrant employees (Terry-Armstrong 2016). Moreover, the organizational practice of 7-Eleven
has maximized the overall pain of the employees rather than minimizing the pain. Therefore, as
per this theory, the employment practice of 7-Eleven is unethical.
Playford, Roberts and Playford (2015) pointed out that ethical actions always spread
greatest amount of good for greatest amount of people. Moreover, ethical actions spread
maximum happiness to the people. The policies of the ethical actions are directed towards the
betterment of large group of people. While aligning Utilitarianism theory with the case of 7-
Eleven, it can be seen that the employment practice of the organization is ultimately spreading
unhappiness to the employees. Moreover, the employers of the organization are deliberately
exploiting the employees by forcing them to work long hours and underpaying them. Therefore,
this theory has proved that the employment practice of 7-Eleven is quite unethical for the
employees.
3.2 Application of Virtue Theory of Ethics
Virtue theory of Ethics has emphasized on the virtue of mind and character of human
beings. According to Bright, Winn and Kanov (2014), Virtue Theory of Ethics defines the
character of individuals as the prime element of ethical thinking. Moreover, this theory focuses
more on the moral character of the people taking any decision rather than the consequence of that
decision. Virtue is the quality or habit, which allows individuals in getting success at their
purpose. The theory also explains that moral character of the people also leads them to take right
decision, which can spread happiness among the people. While aligning the Virtue Theory of
Ethics with the case of 7-Eleven, it can be seen that the employers of the organization have
falsified the payroll for exploiting the employees. The immoral character of the employers can be

5CASE STUDY
identified from this employment practice. Therefore, the employment practice of 7-Eleven has
been proved to be unethical as per Virtue Theory of Ethics.
Ferrero and Sison (2014) opined that Virtue Theory of Ethics focuses on generosity and
honesty, which not just the tendency to do honest and generous things, but it is the honest and
generous character of the people. It defines the honest intension of the people towards taking
honest and generous decision. Moreover, moral character of the people leads them towards
taking honest and generous decisions. While assessing the case study of 7-Eleven through Virtue
Theory of Ethics, it has been found that the employers of the organization have threatened the
migrant employees with fear of Visa cancelation (Tham 2016). There is a dishonest intention of
the employers towards deliberately exploiting the employees. Therefore, the intention of the
employers of 7-Eleven has been proved to be unethical as per this theory.
4.0 Ethical Solution to Dilemma
4.1 Compliance with Fair Work Employment Practice
7-Eleven has been alleged both unethically and illegally for unfair employment practices.
It is actually damaging the reputation of the organization in the market. Therefore, the
organization should always comply with the fair employment practices for the moral and ethical
employment practices. Such compliance with fair employment practice will help the organization
towards maintaining fair, safe and equal opportunities for the employees. In this way, such
practice will facilitate the organization in getting effective solution over the ethical dilemma.
4.2 Effective Governance Arrangement
7-Eleven can effectively ensure fair employment practices through effective governance
arrangement. Moreover, effective governance arrangement will also ensure equal right and fair

6CASE STUDY
benefits for the employees in the organization. Furthermore, effective governance can also
ensure the compliance of the organization with the federal workplace laws, which in turn will
ensure ethical employment practice in the organization. Therefore, effective governance
arrangement will provide effective solution to the ethical dilemma of 7-Eleven.
4.3 Staff Consultative Forum
Effective employment relation is mostly dependent on agreed terms and conditions
between the employees and employers. It needs an intermediate between the employers and
employees towards minimizing the gaps between the employees and employers. Moreover, the
employers should have an intermediate for raising their concern and issues to the employers and
getting immediate solution. Therefore, 7-Eleven should have staff consultative forum for
minimizing the gaps between the employers and employees. Such consultative forum will help in
performing effective collective bargaining. It will also help in providing adequate right and value
to the employees, will ensure ethical employment practices.
4.4 Fair Treatment with Employees
7-Eleven has been alleged with unfair employment treatment with the employees.
Therefore, the organization should demonstrate fair treatment with the employees. The
organization should provide fair wage as per their working hours. Furthermore, the organization
should also set fair working hours for the employees. Such fair treatment with the employees will
ensure ethical employment practices in the organization.
5.0 Conclusion
While concluding the study, it can be said that 7-Eleven has been alleged with wage fraud
to the employees. The organization is deliberately exploiting the employees through forcing

7CASE STUDY
them to work more than normal working hours. On the other hand, the organization has also been
alleged with underpaying the employees. Apart from that, the employers of the organization have
threatened the migrant students, who used to work as employees in the organization. Moreover,
such migrant students have been threatened with the fear of Visa cancellation on breach of Visa
rule. Furthermore, the employers of the organization have been alleged with wage back system,
where the employees are rewarded initially, but, later on, forced to pay some money back to the
organization from their salary. As per utilitarianism theory, ethical work is the one, which spread
greatest amount of good and minimize the pain of the people. However, the employment practice
of 7-Eleven has increased the pain of the employees rather than increasing their happiness. As
per Virtue Theory of Ethics, the employers of 7-Eleven have deliberately exploited the
employees with dishonest mentality. Therefore, 7-Eleven should immediately start fair
employment practice with the employees.

8CASE STUDY
Reference List
ABC News. 2017. 7-Eleven court penalties top $1 million, says Fair Work Ombudsman. [online]
Available at: http://www.abc.net.au/news/2017-07-25/7-eleven-court-penalties-now-top-1-
million/8740706 [Accessed 5 Oct. 2017].
Baron, J., Scott, S., Fincher, K. and Metz, S.E., 2015. Why does the cognitive reflection test
(sometimes) predict utilitarian moral judgment (and other things)?. Journal of Applied Research
in Memory and Cognition, 4(3), pp.265-284.
Bright, D.S., Winn, B.A. and Kanov, J., 2014. Reconsidering virtue: Differences of perspective
in virtue ethics and the positive social sciences. Journal of Business Ethics, 119(4), pp.445-460.
Fair Work Ombudsman. 2016. Fair Work Ombudsman. [online] Available at:
https://www.fairwork.gov.au/about-us/news-and-media-releases/2016-media-releases/april-
2016/20160409-7-eleven-presser [Accessed 5 Oct. 2017].
Ferrero, I. and Sison, A.J.G., 2014. A quantitative analysis of authors, schools and themes in
virtue ethics articles in business ethics and management journals (1980–2011). Business Ethics:
A European Review, 23(4), pp.375-400.
NewsComAu. 2016. How long can 7-Eleven survive?. [online] Available at:
http://www.news.com.au/finance/business/retail/panel-member-says-jury-is-out-on-whether-
7eleven-can-survive-without-underpaying-staff/news-story/
8f9545ba197f4b58482d05c260ba5586 [Accessed 5 Oct. 2017].

9CASE STUDY
Pivato, M., 2016. Asymptotic utilitarianism in scoring rules. Social Choice and Welfare, 47(2),
pp.431-458.
Playford, R.C., Roberts, T. and Playford, E.D., 2015. Deontological and utilitarian ethics: a brief
introduction in the context of disorders of consciousness. Disability and rehabilitation, 37(21),
pp.2006-2011.
Schwartz, M.S., 2013. Developing and sustaining an ethical corporate culture: The core
elements. Business Horizons, 56(1), pp.39-50.
Smh.com.au. 2016. Smh.com.au. [online] Available at:
http://www.smh.com.au/business/retail/7elevens-wage-fraud-sparks-170-billion-blow-back-
20160826-gr264h.html [Accessed 5 Oct. 2017].
Terry-Armstrong, N., 2016. 7-Eleven: A case study of a flawed franchise model. Busidate, 24(2),
p.8.
Tham, J. 2016. 7-Eleven is the tip of the iceberg in worker exploitation. So who's turning a blind
eye? | Joo-Cheong Tham. [online] the Guardian. Available at:
https://www.theguardian.com/commentisfree/2016/may/12/7-eleven-is-the-tip-of-the-iceberg-in-
worker-exploitation-so-whos-turning-a-blind-eye [Accessed 5 Oct. 2017].