Ethical Dilemmas at 7-Eleven

This assignment examines the ethical crisis that unfolded at 7-Eleven, focusing on issues of wage theft, exploitation, and a lack of organizational justice. Students are tasked with analyzing the company's actions and their consequences for employees and stakeholders. The assignment requires an understanding of concepts like fairness, organizational justice, leadership ethics, and utilitarianism to evaluate the situation and propose potential solutions.

Running head: MANAGEMENT THEORY AND PRACTICES
Management Theory and Practices
Name of the student:
Name of the University:
Author note

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MANAGEMENT THEORY AND PRACTICES
Introduction
Every individual on this planet have their own specific moral and ethical imperatives that
compel them into acting in a specific and unique way. Dilemmas arise when conflict arises
amongst these varied individual opinions. Thus, an ethical dilemma might take place wither
inside the kind of the person or among two or more individuals (Lo, 2012). Workplaces are
deemed as being a breeding ground of different ethical dilemmas among individuals as people
from different socio-economic background and principles. Cases of ethical dilemmas happened
between the employer and the employees (Banks, 2012). This essay would be looking into this
subject of ethical dilemma in the context of organizations and then identify the existing dilemma
in that workplace. Theoretical concepts from managerial ethics would be applied to the situation
and the dilemma would be examines critically. Further, these theoretical concepts would be
examined and critically evaluated to see how they have an effect on managerial practices in the
organization. Based on the analysis, recommending steps would be discussed on how leadership
approaches would be helpful in ensuring in making organizational decisions that are ethical in
nature. The selected organization in this case is 7-Eleven. 7-Eleven is the biggest convenience
store chain in the world that has more than 60,000 stores in 18 countries under operations,
franchising and licensing. The organization is focused on meeting the requirements of
convenience-oriented customers by means of providing a wide selection of superior quality and
fresh products and services by faster transactions, fair prices, and an environment-friendly
shopping environment (7-Eleven, 2017). However, the company is engaged in unethical conduct
and exploitation of their employees in Australia. The employees are getting paid half of the fixed
$24.50 an hour award rate, at times even less. The 7-Eleven franchisees have even falsified
reports to show their revenue and there has been instances of systematic non-compliance with the

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local federal workplace laws. Fairfax Media had published reports on how the company has the
capacity of forking up to $100 million in back pay for more than 2000 former and present
employees. This scandal with 7-eleven is the biggest incident of wage fraud in the history of
Australian companies (Ferguson & Danckert, 2016). To discuss the ethical dilemmas inside this
organization, two theoretical concepts from managerial ethics can be applied - utilitarianism and
justice approach. The utilitarianism approach provides a comparatively direct method of deciding
the ethically correct course of action for any specific situation that one might themselves in. The
justice approach to ethics says that every individual must be treated equally and fairly. These two
approaches to managerial ethics would be used to examine the ethical dilemma inside 7-eleven
critically and find out their influence on the managerial practices inside it (Shapiro & Stefkovich,
2016).
Discussion
It is in the hands of an organization to espouse the highest standards of ethics, however, if
those are not backed and imposed they are simply appealing looking nice statements. The
headline news ate 7-eleven in Australia regarding the treatment of franchisees and their staff
appalled the common public. For surviving and maintaining their high rate of profits several of
the 7-eleven franchisees shifted towards the underpayment of staff by a standard of 50%. The TV
expose and press reports point out some multiple breaks of corporation law, employment
legislation, occupational health and safety legislation, and taxation legislation (Terry-Armstrong,
2016). Majority of the concentration at present is on those students who have become stuck
inside the wages scam. The whole chain of 7-Eleven benefitted from this scam. Their head office
acquired huge amounts of profits, the franchisees were able to reduce their wages bill by up to
50%, which is their primary cost under the franchise arrangements, and the students started

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reducing reduced payment. Whereas, in some cases there might have been some aspects of
coercion that is put to use for keeping the students employed and engaged, all of them entered
the deal voluntarily. Most of the losers in this scam were the people who have relied on the
workings of the law and have carried out their businesses honestly. The people of this group
faced a major ethical dilemma, either they had to go out of business or they had to bend the law
accordingly for surviving the completion with a chain that was designed for allowing extensive
malpractice (Ferguson, 2015).
The major failing was not in terms of ethics at 7-eleven chain: the corrosion of the ethical
standards are generally slow and stealthy. The main issue seems to be the different government
agencies that have the responsibility of enforcing the law. Over many decades government
departments have been consistently disrobed of resources and these days they only have the
option of properly responding to the main concerns – they have a compulsion of assuming
ethical behavior by majority of the people majority of the time and when they would receive
advice regarding obvious breaches they would generally ignore the issue if that is considered as
something minor. One example of a regular breach confronted is of the Australian Competition
and Consumer Act 2010. One of the fundamental requirement of the Act is to display honesty in
advertisements, the advertised price of any products or services needs to be the minimum price
for the customer to pay. Routinely, it has been observed that Google advertisements targeted at
the market offer extra cheap prices. This strategy is implemented deliberately by some unethical
organizations as the lower prices gets people to visit their website and inertia has the capacity of
keeping them there so that they finally end up into making higher payments, more than what is
actually necessary for anything equivalent. The practice is so extended, especially in case of

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overseas based provider that the question arises in the minds of the people that if the prices are
real or not and how much would they actually pay (Regan, 2016).
At the time when ethical standards start slipping a lot of things start happening, with
ethical people moving away somewhere they would not find ethical standards getting challenged.
At the same time, less ethical people move in and the standards further degrades and most of the
just start learning how to ignore the problem. As soon as unethical or corrupt attitude turns out
normalized, reversal of the situation would be extremely tough. Reports have suggested that
some of the 7-eleven franchisees that have been forced into paying proper wages would now be
making sue of extortion for demanding 50% of the money back form their employees or the
worker would be losing their job.
Utilitarianism is one of the most well-known and influential of the moral theories. Just
like any other type of consequentialism, the core idea of this notion is that the idea of if any
action is morally and ethically correct or not is dependent on their effects. More particularly, the
sole impact of action that pertinent are the positive and negative effects that are being produced.
Act utilitarian concentrate on the impact of individual actions all the while rule utilitarian
concentrate ion the impact of forms of actions. Utilitarians consider that the main objective of
morality is of making the lives of people better by means of the increment of the amount of good
things like pleasure and happiness in the world and the decrease in the number of negative things
like pain and unhappiness. They are into the rejection of moral systems and codes that are
comprised of different forms of commands or taboos that has been based in different traditions,
conventions, customs and orders that are issues by leaders or supernatural things. Instead of that
utilitarians believe that what is making morality true or justifiable is their positive investment
towards human beings (Albee, 2014).

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Utilitarianism is the one of the normative theories, which is based on the morality of the
organization. This is one of the most influential and known theories of ethics; the core idea of
the theory is whether the actions are morally right or wrong and it depends on the consequences
of the action. This is a philosophical theory, which evaluates things based on the action and
choices made by the people. Utilitarianism is a form of consequentialism that is based on the
consequences of the actions. This is a simple theory as it consist of a single principle and states
that people should do that thing which will produce the best result. However, there are lot of
contradictions in this theory, as definition of good is not clear. The things that are good for one
person may not be good for the other person. This theory can be used for different purposes that
can be moral reasoning or rational decision-making. It can also be used for the reflection about
the interest of different personnel. The utilitarianism measures good for an individual or a group
but it can also be used for the analysis of the overall population in some circumstances (Hayry,
2013; Barrow, 2015).
In the context of utilitarianism, the main purpose of morality is requested for making sure
of an improved place for living and striving. One must be focused on delivering the greatest
good by the comprehension of the right and wrong acts that are based on definite circumstances.
In the case of 7-Eleven, the conduct of the franchisee has a particular scope of self-interest. It is
not reflecting on the activity of doing the better good, therefore it must not be considered as
ethical according to the theory of utilitarianism. To more prove unethical behavior the business
made use of the act of recording the pay rates of employees at half hours for displaying that they
were of provision with double rates by comparing with the real flat rate (Mulgan, 2014). The
organization was largely failing in properly recording the employment for every single of the
workers with the thoughtful discarding of each and every record. Evidences have proved that

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involvement was existing from the sides of both the directors in these infringements under the
possibility of directing the determination and mind all through the business. In the context of
utilitarianism theory, the quantity of pain that any action is providing would also require being
considered at the time of measuring happiness. From both the franchisor and the franchisee in 7-
Eleven did not deliberate the adverse impact that would be brought to their employees. There is a
need of facing long hours of work, overload of work, underpayment, threats of bosses who are
working in 7-Eleven and that opposition to utilitarianism theory of happiness maximization for
everyone.
Justice approach can be considered to be one of the most political and moral concepts.
This approach is based on the teachings of the ancient Greek system, which means that people
who are equals will be treated equally whereas the people who are unequal will be treated
unequally. However, this approach shows favouritism to some people without any reason, which
means that it, is biased to some people. This approach will provide benefits to people without
any specific reason and it cannot be justified. This discrimination has imposed burdens on the
people who are not different from those people who are availing the benefits. This policy of
discrimination and favouritism is wrong and unjust. This approach focuses on the actions of the
people to identify the degree of fairness in the distribution of benefits and burdens among group
of people. This approach also checks for consistency among the distribution of the burden and
benefits in a group. The main bottom line of the principle that people should be treated in a
similar manner unless they are morally different from each other (Brosnan, 2013).
Arguments regarding justice of fairness have been in tradition for long. In fact, no idea
other idea in the history civilization has been more constantly linked with ethics and morality
than this very well-known idea of justice. Starting from the Republic written by Plato, the

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ancient Greek philosopher, to A Theory of Justice, written by John Rawls, the late Harvard
philosopher, all the main works on ethics has shown that justice approach is a crucial part of the
main core of morality. Justice implies providing every person with what they deserve or more
conventionally providing every person with their due. Justice and fairness are closely related and
today are used interchangeably. Justice generally has been made use of with reference to a
benchmark of rightness, whereas, fairness has most often than not has been made to use in the
context the ability of judging with not reference towards one’s feelings or interests. Fairness has
also been put to use for referring to the capability of making judgments that are not excessively
generic but are strong and definite for any specific case. In any situation the idea of desert is very
vital for the justice and fairness. At the time when people are differentiating over what they are
actually believing must be distributed, or at the time when decisions needs being made regarding
eth way benefits and burdens must be distributed amongst any group of people, the questions
related to justice and fairness unavoidably rise up. Factually, majority of the ethicists in today’s
time are of the view that there exists no point of talking or discussing about anything that is
related with justice or fairness if it was not just for the sake of the conflicts or interest that gets
created at the time when any goods and services get short of supply and the people are differing
over who must be getting what. At the time when these kind of conflicts are arising inside out
societies, there is felt the need of principles of justice that can be accepted by everyone as being
reasonable and of fair standards for the determination of what is deserved by people (Blader &
Tyler, 2013; Colquitt & Rodell, 2015).
7-Eleven are group of retail outlets who have been in the highlight for their unethical
practices and the management issues. The organization has been accused of forcing their
employees to work long hours and is paid less. The majority of the employees in the organization

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are foreign student who have the permit to work for only 20 hrs a day. The students were even
blackmailed that they if they complain they will be deported back to their respective countries.
The evidence shows that the organization has been facing these issues since the last six years,
which clearly indicates the unethical practices in the organization. Therefore, when linking with
the justice theory it can be seen that these practices were adopted in some of the stores of the
chain, which suggests that there has been discrimination with the foreign students who were
working there on a part time basis. These practices are unethical and according to the justice
theory this will considered as discrimination where the local employees are treated differently
and are provided with all the benefits. Moreover, the business model of the organization suggests
that the organization is not following the rules and regulations suggested by the Australian
government. There are lot of issues in the leadership of the organization, which suggest that the
organization will be unable to be profitable and sustainable if they have to follow the law of the
government in Australia (Thornthwaite, 2017). The justice approach provides the individual with
the opportunity to analyse and reflect upon the fairness of the policies and decisions taken by the
organization. In this scenario, reflecting upon the practices in the organization it can be seen that
the organizational structure, strategy and the model are built on ethical principles and should be
allowed to work in the working environment of Australia.
Conclusion
On a concluding note, it has been understood that every individual on this planet have
their own specific moral and ethical imperatives that compel them into acting in a specific and
unique way. Dilemmas arise when conflict arises amongst these varied individual opinions.
Workplaces are deemed as being a breeding ground of different ethical dilemmas among
individuals as people from different socio-economic background and principles. Cases of ethical

9
MANAGEMENT THEORY AND PRACTICES
dilemmas happened between the employer and the employees. This essay looked into this subject
of ethical dilemma in the context of organizations and then identify the existing dilemma in that
workplace. 7-Eleven is the biggest convenience store chain in the world that has more than
60,000 stores in 18 countries under operations, franchising and licensing. The organization is
focused on meeting the requirements of convenience-oriented customers by means of providing a
wide selection of superior quality and fresh products and services by faster transactions, fair
prices, and an environment-friendly shopping environment. However, the company is engaged in
unethical conduct and exploitation of their employees in Australia. The employees are getting
paid half of the fixed $24.50 an hour award rate, at times even less. The 7-Eleven franchisees
have even falsified reports to show their revenue and there has been instances of systematic non-
compliance with the local federal workplace laws. Fairfax Media had published reports on how
the company has the capacity of forking up to $100 million in back pay for more than 2000
former and present employees. This scandal with 7-eleven is the biggest incident of wage fraud
in the history of Australian companies. To discuss the ethical dilemmas inside this organization,
two theoretical concepts from managerial ethics was applied - utilitarianism and justice
approach. Theoretical concepts from managerial ethics was applied to the situation and the
dilemma was examined critically. Further, these theoretical concepts was examined and critically
evaluated to see how they have an effect on managerial practices in the organization. Based on
the analysis, recommending steps were discussed on how leadership approaches would be
helpful in ensuring in making organizational decisions that are ethical in nature.

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MANAGEMENT THEORY AND PRACTICES
References and Bibliography
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Blader, S. L., & Tyler, T. R. (2013). How Can Theories of Organizational justice Explain the
Efl’ects of Fairness?. Handbook of organizational justice, 329.
Brosnan, S. F. (2013). Justice-and fairness-related behaviors in nonhuman primates. Proceedings
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